The Australian sharemarket climbed to an 11-week high on Tuesday, tracking a relief rally on Wall Street spurred by a temporary truce in the US-China trade war. The ASX 200 rose 0.4 per cent, or 35.5 points, to 8269 points, reaching its highest level since late February. Seven out of the 11 sectors saw gains, particularly in the technology sector, which mirrored a strong rally in the US.
Wall Street celebrated the news that the US and China agreed to dramatically lower tariffs on each other for 90 days and committed to continued communication. The Nasdaq surged 4.4 per cent, led by tech giants such as Amazon, which leapt 8.1 per cent, and Meta, which gained 7.9 per cent. The positive sentiment also boosted commodities, driving iron ore prices back near the $US100 a tonne mark and Brent oil above $US64 a barrel.
In contrast, gold prices slumped as investors favored riskier assets. Stephen Innes, managing partner at SPI Asset Management, remarked on the market’s unexpected positive reaction. “[This was] a de-escalation that, frankly, wasn’t even in the top 10 most optimistic scenarios – it was the equivalent of a lottery ticket that cashed,” he said.
Australian technology stocks followed Wall Street’s lead, with major players seeing significant gains. Energy and iron ore mining stocks also rose, mirroring higher commodity prices.
Positive sentiment drives ASX gains
Woodside Petroleum jumped 3.7 per cent to $21.57, while an iron ore giant rose 2.1 per cent to $39.21. However, gold stocks declined alongside gold prices, with Genesis Minerals dropping 10.7 per cent to $3.67. Consumer staples, real estate, and communications sectors, typically seen as defensive during market stress, posted losses amid the prevailing risk-on mood.
Key companies in these sectors saw declines, with significant drops over 3 per cent. Stocks with significant US exposure rallied as investors bet that the 90-day tariff pause would bolster US economic activity. Corporate Travel Management soared 9.9 per cent to $13.27.
Meanwhile, pharmaceutical stocks recovered from a steep sell-off on Monday, triggered by US President Donald Trump signing an executive order to reduce US prescription drug prices. Clarity Pharmaceuticals surged 15.32 per cent to $2.56. In merger and acquisition news, Abacus Storage King rose 1.7 per cent to $1.53 after rejecting a takeover bid deemed undervalued by an independent committee.
Furthermore, a medical research company saw its stocks rally 14.4 per cent to $1.67 following positive results from a study on its wound-healing product NovoSorb. Overall, the Australian sharemarket benefited from the easing trade tensions between the US and China, leading to widespread gains across various sectors and setting a positive tone for the upcoming trading period.
Image Credits: Photo by PiggyBank on Unsplash
