Source : THE AGE NEWS
By Gemma Grant
Welcome to your five-minute recap of the trading day.
The numbers
The Australian sharemarket has jumped after US stocks rallied overnight amid bets that the White House will clinch crucial trade deals, and after President Donald Trump this morning Australian time said he “won’t play hardball” with China.
The S&P/ASX200 was up 124.3 points, or 1.6 per cent, to 7,941 as of 12pm AEST. Ten of the 11 industry sectors were trading in the green on the second day of this short trading week, led by energy, health and IT stocks. Following the long Easter weekend, the market will be closed again on Friday for Anzac Day.
US stocks rebounded overnight on hopes the trade war could de-escalate.Credit: Bloomberg
The Australian dollar was trading at US63.98¢ at midday. The ASX finished flat on Tuesday, with falls in tech and energy stocks offset by rises in materials, financials and consumer staples.
The lifters
Gains on the local bourse were led by the energy sector, with Woodside Energy climbing by 2.6 per cent and Santos gaining 4.7 per cent. Ampol was also up by 2.4 per cent shortly after midday.
Tech stocks also performed well, with embattled tech company WiseTech Global adding 4.5 per cent to its value. Software company TechnologyOne saw a 2.9 per cent bump, while data centre operator NextDC climbed by 4.2 per cent.
The laggards
Evolution Mining was in the red at lunchtime, plummeting by 8.6 per cent. Fellow gold miners Northern Star Resources (down 8 per cent) and Newmont (down 4.7 per cent) also lost ground as gold prices retreated overnight. But the materials sector overall was buoyed by strong gains elsewhere, with iron ore giant BHP lifting by 2.9 per cent and Fortescue adding 2.9 per cent.
The lowdown
The strong morning performance came as a degree of optimism emerged for a de-escalation in Trump’s trade war. The US president said late on Tuesday [Wednesday morning AEST] he will substantially lower his unprecedented 145 per cent tariffs on Chinese goods in recognition the bitter trade war between the world’s two largest economies cannot last.
His comments came after US Treasury Secretary Scott Bessent told a closed-door meeting with investment bankers the negotiations with China would be a “slog” but neither side considered the status quo sustainable and that he expects the situation to de-escalate.
Asked about Bessent’s comments after the close of US trading, Trump said America was “doing fine” with Beijing, and pledged to “be very good to China.” The final tariff on China, Trump predicted, would not be “anywhere near” the 145 per cent level he has set.
EXPERT HERE
On Wall Street overnight, the benchmark S&P 500 index jumped 2.5 per cent – its best day in two weeks – while the Dow Jones Industrial Average and the Nasdaq both climbed 2.7 per cent.
A volley of tariff-related headlines continued to fuel outsized market moves on Wall Street as fast-twitch investors pour over news reports for clues on how to trade the crisis. White House Press Secretary Karoline Leavitt said that progress was being made on trade deals and that the “ball is moving in the right direction with China.” It followed a Politico report that the White House is nearing agreements with Japan and India on trade.
“We are in a period of extreme uncertainty, where one should not react too much to daily moves,” said Anwiti Bahuguna, Northern Trust Asset Management’s CIO of global asset allocation.
Market attention after the bell shifted to Tesla, which reported its worst quarterly result in five years. Profits plummeted by 71 per cent in the March quarter as the electric car company counts the cost of Elon Musk’s alliance with Trump and his trade war. In a conference call with analysts, Musk signalled he would start to pull back “significantly” his work with the Trump administration from May, which pushed the stock up 5.4 per cent in after-hours trading.
In the bond market, US Treasuries still posted smaller moves overnight, showing greater stability after Monday, when investors were worried about the implications of any effort to replace the Federal Reserve Chair by Trump, who has berated Jerome Powell for being slow to cut interest rates. While the 10-year Treasury yield barely budged on Tuesday, two-year yields briefly rose to 3.82 per cent after lacklustre demand for an auction.
Gold pared gains after rising to a record high past $US3,500. Bitcoin advanced more than 4 per cent and was trading at $US91,345 this morning.
After the close of trading on Wall Street, Trump also said he had “no intention” to fire the Fed chief. He kept up the pressure though, maintaining that energy and grocery prices were falling, so the Fed should cut its benchmark rates because inflation was no longer a threat to the US economy.
Trump’s policies and his broadsides against the Fed have forced a reappraisal of the US currency and Treasuries as havens in times of stress. The IMF said the latest escalation in the trade war risks saddling China and the US with losses — and that it could only get worse after this year.
Yet, some traders are waiting to see how the negotiations play out with allies.
“We are looking at more successful trade negotiations with key trading allies. I put Europe, India, Japan, South Korea, Australia in that category,” said Stuart Kaiser, head of equity trading strategy at Citigroup. “I think we will see good progress there and that is good for markets.”
The US said it’s made “significant progress” toward a bilateral trade deal following talks between Vice President JD Vance and Indian Prime Minister Narendra Modi. Vance on Tuesday called on India to buy more American goods, particularly energy and military equipment. Trump has repeatedly criticised the country for high tariffs.
Tweet of the day
Quote of the day
“It wasn’t a great day for the MAGA crew.”
Stephen Bartholomeusz
But Tuesday was a good day for financial markets, writes senior business columnist Stephen Bartholomeusz. You can read more of his opinion piece here.
With Bloomberg
