The Australian sharemarket rallied broadly on Wednesday as traders rotated back into the major banks, snapping a long losing streak, with a trade deal between the US and Japan buoying investor sentiment.

The benchmark S&P/ASX 200 Index advanced 0.7 per cent, or 60 points, to close at 8734.20, just shy of the record 8757.20 set last Friday as 10 out of the 11 industry groups climbed, led by the miners and the banks.

US futures point to further gains for Wall Street overnight after Japan struck a trade deal with the US, easing concern about US President Donald Trump’s escalating tariff war. Under the agreement, Japan will invest $US550 billion into the US in exchange for 15 per cent levies on imports.

Steering sentiment

“The big wildcard is whether Trump’s August 1 tariff threats materialise or morph into new deals,” said Moomoo Australia’s dealing manager Paco Chow. “Either way, trade policy will likely steer sentiment in the week ahead.”

On the ASX, the major banks provided support to the bourse in the afternoon session with ANZ up 2.5 per cent at $30.57, Westpac 1.4 per cent to $33.11, and Commonwealth Bank turned an earlier drop into a 0.5 per cent increase to $173.30. That’s after its biggest one-day drop since early April pushed the shares near correction territory.

The iron ore miners, meanwhile, consolidated gains even as iron ore futures retreated 0.6 per cent on Wednesday. The steelmaking ingredient has surged more than 4 per cent this week, as a mega-dam project in Tibet bolstered the demand outlook.

Fortescue Metals rose 2.3 per cent to $18.21, Rio Tinto by 1 per cent at $119.47, and BHP added 0.9 per cent to $41.85.

Energy also leapt off the back of the US-Japan trade deal as oil traded near $US69 per barrel.

Woodside Energy advanced 1.5 per cent to $25.21 as it reported a 2 per cent jump in production of 50 million barrels of oil equivalent. Whitehaven Coal was the best performer on the ASX 200, up 6.5 per cent, as Chinese officials cracked down on coking coal overproduction.

Stocks in focus

In company news, Iluka Resources advanced 4.1 per cent to $5.39 after the mineral sands explorer achieved the full-year production guidance for zircon by June 30.

Cancer diagnostic giant Telix Pharmaceuticals plunged 15.1 per cent to $21.32 after the US Securities and Exchange Commission issued it with a subpoena seeking information about disclosure related to the development of the company’s prostate cancer therapies.

Paladin Energy dived 11.3 per cent to $7.25 as investors questioned production and sales targets for its flagship Langer Heinrich Mine in Namibia. It has forecasted production of between 4 million and 4.4 million pounds of uranium oxide (Uranium-308) this financial year.

Ampol rose 3.3 per cent as it flagged first-half earnings of about $640 million, as resilient convenience and New Zealand operations helped offset soft volumes and a weaker refining environment.

And Insurance Australia Group rose 3.2 per cent to $8.51 after UBS analyst Kieren Chidgey upgraded the stock to buy, citing improved earnings resilience and upside risks to consensus forecasts.