Boost for ASX as Japan secures US trade deal; banks break losing streak

Welcome to your five-minute recap of the trading day.

The numbers

The benchmark S&P/ASX 200 index on Wednesday gained 60 points, or 0.7 per cent, to 8737.2, while the broader All Ordinaries rose 59.9 points, or 0.7 per cent, to 9001.4. Ten of the 11 sectors finished the session in positive territory.

Over the past five days, the index has gained 2.1 per cent. The Australian dollar was buying US65.65¢, from US65.14¢ about 5pm on Tuesday.

Wall Street giants are starting to reveal the effect of Trump’s tariffs.Credit: AP

The lifters

Materials was the best performing sector, gaining 1.3 per cent and 6.4 per cent for the past five days. Fortescue and BHP jumped 0.8 per cent and Rio Tinto surged 1 per cent. Whitehaven Coal was the winner of the session, rising 6.5 per cent.

Energy giant Woodside was up 1.5 per cent after reporting robust production numbers in the second quarter. Woodside also announced its $16 billion Scarborough project gas project 375 kilometres off the coast of Western Australia was 86 per cent complete and on-track to deliver its first LNG cargo in the second half of 2026.

Ampol increased 3.3 per cent as the petrol company said its convenience retail business had continued its track record of growing earnings in the first half.

Major banks rebounded after a shaky start to the week, with the CBA turning its biggest one-day drop since early April into a 0.5 per cent rise, to $173.30. Westpac rose 1.4 per cent and ANZ gained 2.5 per cent.

The laggards

NAB edged 0.1 per cent lower, with chief Andrew Irvine saying it had been a “difficult” past week in his first public comments after it was reported that investors had raised concerns about his management style and drinking at customer events.

NAB CEO Andrew Irvine has had a difficult week. Credit: Sitthixay Ditthavong

Paladin Energy tumbled 10.8 per cent as the uranium miner announced a 33 per cent quarter-on-quarter rise in production at its Langer Heinrich mine in Namibia.

In healthcare, Telix Pharmaceuticals slid 13.4 per cent as the radiopharmaceutical company announced shares worth $1 million would be released from voluntary escrow next week. It was the worst-performing stock on Wednesday. Clarity Pharmaceuticals plunged 6.7 per cent.

Santos defied the energy sector boost, falling 0.8 per cent.

The lowdown

The local sharemarket gained ground after a US-Japan trade deal announced by US President Donald Trump eased fears of a global trade war, with mining stocks shining on the back of strengthening iron ore prices and the major banks snapping their losing run.

Trump announced on Wednesday morning (AEST) that the US and Japan had reached a trade deal, that will set tariffs on Japanese imports at 15 per cent and see the key American ally invest $US550 billion ($839 billion) into the US.

“I just signed the largest trade deal in history – I think maybe the largest deal in history – with Japan,” Trump said at an event at the White House after announcing the deal on social media. “And that was done with Japan. They had their top people here and we worked on it long and hard and it’s a great deal for everybody.”

While the details of the trade deal were limited and there might be some disagreement from the Japanese side, its impact appeared to be positive, IG market analyst Tony Sycamore said.

“Reaching an agreement there would significantly help to defuse the impact and lessen the importance of the August 1 deadline,” he said on Wednesday.

Economists at Goldman Sachs expect the US baseline “reciprocal” tariff rate will rise from 10 per cent to 15 per cent, with a 50 per cent levy on copper and critical minerals – an outcome that threatens to fuel inflation and weigh on economic growth.

In Australia, iron ore miners continued to extend gains for the third session this week, bolstered by reforms to China’s steel industry. China’s decision to build a $US167 billion hydropower project in Tibet is expected to lift demand for steel and construction metals.

Iron ore prices lost value after a 2025 peak in mid-February. They started to recover over the past few weeks on signs that supply-side reforms in China may be gaining traction, with iron ore and steel prices now at a four-month high in China.

The ASX is 0.5% off of its 52-week high and consumer data suggests optimism is creeping back into the economy on the back of rate cut hopes.

Shoppers spent $19.2 billion online from the start of April to the end of June, up 15 per cent compared with the same period in 2024, Australia Post’s quarterly e-commerce report reveals.

“With inflation cooling and consumer confidence returning, we’re seeing more Australians shop online, with higher expectations,” Australia Post’s Chelsea O’Reilly said.

Economists now expect Australia’s Reserve Bank will deliver three more interest-rate cuts by early 2026, up from two seen previously, bringing their outlook into line with money market pricing.

The central bank will take its cash rate to 3.1 per cent in the first quarter of 2026, from 3.85 per cent now, and then pause for a prolonged period, according to the median estimate of 40 economists in a Bloomberg survey released on Wednesday.

Trump has labelled Fed chief Jerome Powell a “numbskull”.Credit: AP

On rates in the US, Fed chair Jerome Powell has been insisting he wants to see more data about how Trump’s tariffs are affecting inflation and the economy before the Fed makes its next move. That’s despite often angry criticism from Trump, who has been lobbying for more cuts to rates to happen sooner.

Powell has been insisting he wants to see more data about how Trump’s tariffs are affecting inflation and the economy before the Fed makes its next move. That’s despite often angry criticism from Trump, who has been lobbying for more cuts to rates to happen sooner.

Powell is a “numbskull” who has kept interest rates too high, but he will be out in eight months, Trump said at a news conference on Tuesday.

“I think he’s done a bad job, but he’s going to be out pretty soon anyway. In eight months, he’ll be out,” he said from a meeting at the White House with Philippine President Ferdinand Marcos Jr.

Powell’s term as Fed chair runs until May 15, and he has repeatedly said he will not leave the post early. Eight months would mean Powell would remain in place until mid-March. It was not immediately clear why Trump picked that time frame.

With AP

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