Source : THE AGE NEWS
By Nick Newling
The Australian sharemarket has continued to rise through the morning, extending a global sharemarket rally that started on Wednesday when President Donald Trump appeared to back off his criticism of the US Federal Reserve and softened his tough talk on the trade war against China.
The S&P/ASX 200 was up 44.9 points, or 0.6 per cent, to 7965.40 as of 12.59pm AEST. Six of the local bourse’s 11 industry sector were in the green, with miners, the big banks and tech stocks driving the market gains. The Australian dollar was trading at US63.55¢, slightly down from this morning.
It’s the ASX’s last trading session this week, with the exchange closed on Friday for Anzac Day. The local market rose 1.3 per cent on Wednesday after Trump said he has no intention to fire the Fed’s chair and that his 145 per cent tariffs on China imports would end up being much lower.
It’s been another strong session on Wall Street overnight.Credit: Bloomberg
Gold miner Newmont jumped 4.2 per cent, despite posting its highest quarterly costs in at least nine years, as gold rebounded from a steep, but brief decline following Trump’s more conciliatory tone. Bullion this week surged past $US3500 an ounce for the first time, as Trump’s tariff agenda and geopolitical tensions prompted investors to seek safe assets.
Iron ore giants BHP, Fortescue and Rio Tinto also pushed higher, up 1.1 per cent, 1.8 per cent and 1.1 per cent, respectively, amid expectations that America’s tariffs on China won’t be as punitive now as initially flagged, and become less damaging for Australia’s biggest export market.
The big four banks were also all trading stronger by lunchtime, with CBA – the largest stock on the ASX – up 0.4 per cent, Westpac adding 0.9 per cent, National Australia Bank rising 1 per cent and ANZ Bank up 1.3 per cent.
Mining and financial stocks make up more than half of the ASX, so even smaller moves can drive the market.
IT stocks followed their peers on Wall Street higher, with local tech giant WiseTech Global up 2.9 per cent, while accounting software firm Xero rose 1.1 per cent.
But it was dual-listed sleep device maker ResMed which posted the biggest rise this morning, climbing 6.9 per cent, after it reported an 8 per cent increase in revenue to $US1.3 billion ($2 trillion) for the third quarter. Other top gainers were US-focused home sidings maker James Hardie, which was up 3.6 per cent, and rare earths miner Lynas, which was up 2.7 per cent.
On the flip side, the energy sector fell 0.6 per cent as oil prices softened overnight, with oil and gas giants Woodside and Santos taking hits of 1.6 per cent and 1.1 per cent, respectively. Consumer staples fell 0.8 per cent, with supermarket giants Coles down 1.3 per cent and Woolworths down 0.7 per cent.
On Wall Street overnight, the S&P 500 climbed 1.7 per cent, while the Dow Jones Industrial Average added 1.1 per cent and the Nasdaq composite rose 2.5 per cent. Wall Street’s gains followed strong share moves higher across much of Europe and Asia, continuing a dizzying up-and-down run for financial markets as investors struggle with how to react to so much uncertainty about what Trump will do with his economic policies.
The US market’s latest move was up in part because Trump’s softened stance on Jerome Powell. Trump had been angry with the central bank chief, whom he had called “a major loser” because of the Fed’s hesitance to cut interest rates.
While cutting rates could give the economy a boost, it could also put upward pressure on inflation. Economists say Trump’s tariffs are likely both to slow the economy and to raise inflation, at least briefly.
Trump’s tough talk had frightened investors because the Fed is supposed to act independently, without pressure from politicians, so that it can make decisions that may be painful in the short term but are best for the long term.
Trump may have recognised the market’s fear about a move against Powell. He may also be looking to keep someone around whom Trump could blame later if the economy does fall into a recession, according to Thierry Wizman, a strategist at Macquarie.
“Indeed, if the Fed cuts its policy interest rates aggressively, Trump would have little excuse for a recession apart from the pugnacity of his tariff policies,” Wizman said.
Markets also rose after Trump said that US tariffs on imports coming from China could come down “substantially” from the current 145 per cent. “It won’t be that high, not going to be that high,” Trump said.
The hope along Wall Street has been that Trump would lower his tariffs after negotiating trade deals with other countries, and Trump said he would be “very nice” to the world’s second-largest economy and not play hardball with Chinese President Xi Jinping.
“There is an opportunity for a big deal here,” US Treasury Secretary Scott Bessent said overnight.
If Trump brings his tariffs down by enough, investors believe a recession could be averted.
US businesses say they’re already feeling the effects of the trade war. A preliminary reading of US business activity fell to a 16-month low, as the threat of tariffs helped push up prices charged for goods and services at the sharpest rate for just over a year, according to S&P Global’s latest survey released this week.
That’s why one of the few predictions many along Wall Street are willing to make is only that sharp swings for financial markets will continue for a while. The market will “more likely than not continue to be dictated by Trump’s latest whims regarding tariffs and trade,” said Tim Waterer, chief market analyst at KCM Trade.
The S&P 500 remains more than 12 per cent below its record set earlier this year after briefly dropping roughly 20 per cent below the mark. The swings for markets have also been coming hour to hour, not just day to day, as Trump and officials in his administration continue to surprise investors. On Wednesday alone, the S&P 500 charged to a 3.5 per cent gain in the morning, only to more than halve that gain as the day progressed.
Trump’s latest comments had a relaxing effect on the bond market, where US Treasury yields eased. It’s a turnaround from earlier this month, when spiking Treasury yields raised fears that Trump’s actions were scaring investors away from US investments and weakening the US bond market’s reputation as one of the safest places to keep cash.
The yield on the 10-year Treasury fell to 4.38 per cent from 4.41 per cent late on Tuesday. It dropped as low as 4.26 per cent earlier in the morning.
On Wall Street, big tech helped lead stock indexes higher.
Nvidia rose 4.3 per cent to claw back more of the sharp losses it took last week, when it said US restrictions on exports of its H20 chips to China could hurt its first-quarter results by $US5.5 billion ($8.6 billion). The chip maker’s stock was the strongest single force lifting the S&P 500.
Other stocks in the artificial intelligence technology ecosystem also drove higher. Vertiv Holdings, which traces its roots to the industry’s first manufacturer of computer room air conditioning, jumped 9.5 per cent after reporting stronger profit and revenue for the latest quarter than analysts expected. It said it’s continuing to see accelerated demand from AI data centres.
Tesla revved 7.5 per cent higher after CEO Elon Musk said he’ll spend less time in Washington and more time running his electric vehicle company, which reported a 71 per cent plunge in quarterly profits. It’s been struggling because of backlash against Musk’s efforts to lead cost-cutting efforts by the US government.
In other international markets, indexes jumped 2.1 per cent in France, 2.4 per cent in Hong Kong and 1.9 per cent in Japan. Stocks in Shanghai were an exception, where they dipped 0.1 per cent.
AP, with staff writer
