ASX closes higher as energy stocks and miners rally

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

The numbers

Australian shares closed higher on Thursday, buoyed by a rally in energy stocks, consumer staples, real estate players and gold miners after the precious metal hit a new high amid investor concerns about the economic toll of US President Donald Trump’s trade war.

The ASX 200 opened higher on Thursday despite expectations of a dip after Wall Street sank overnight.Credit: Getty Images

The S&P/ASX 200 finished 0.8 per cent, or 60.2 points, higher at 7819.1 as the energy sector gained 3.8 per cent and miners jumped 1.5 per cent.

The rise followed a weak night on Wall Street, after tech giant Nvidia said US government rules restricting its exports of chips to China would hit its profits, causing trouble on the American bourse.

The lifters

Energy stocks rallied to keep the index in the green, supported by a 7.7 per cent lift in refining business Ampol, 3.9 per cent gains from Woodside and a 2.9 per cent increase from Santos.

BHP shares rose 1.1 per cent after the company reported record production of iron ore and copper, and its chief executive, Mike Henry, said China held the key to mitigating a world recession.

“Despite the limited direct impact of tariffs on BHP, the implication of slower economic growth and a fragmented trading environment could be more significant. China’s ability to shift toward a consumption-led economy and for trade flows to adapt to the new environment will be key to sustaining the global outlook,” Henry said.

AMP shares finished 3.2 per cent higher after it said assets under management on its wealth platforms had fallen 1 per cent to $78.8 billion due to negative market movements. The update from AMP also said outflows had slowed in its superannuation business. The loan book in AMP Bank was steady at $23.3 billion.

The laggards

Most sectors finished relatively flat. Healthcare was 0.1 per cent lower, dragged down by CSL’s losses of 1.1 per cent.

The poorest performer of the day was Star Entertainment, which dipped 9.1 per cent as investors pulled out of the flailing casino operator. Nanosonics fell 8 per cent and Kelsian Group dipped 3.1 per cent.

Gold hit another high overnight. Bullion gained as much as 0.4 per cent to US$3357.78 an ounce, after adding 3.5 per cent on Wednesday in its biggest one-day gain since March 2023. Gold miners including Northern Star (up 1.2 per cent) and Evolution Mining (up 1.7 per cent) made gains.

Following reports this morning that ASIC is formally investigating WiseTech Global founder Richard White’s share trading, and the company’s market disclosures, the group’s shares fell 2.2 per cent.

The lowdown

Figures on Thursday showed Australia’s unemployment rate had edged up from 4 per cent to 4.1 per cent in March, slightly better than market expectations for a rate of 4.2 per cent.

HSBC chief economist for Australia, Paul Bloxham, said the data showed the labour market was still “strong and tight”. Even so, as the trade war between the US and China escalated, he said HSBC expected Australia would see lower import prices, in part because China would send some of its goods that previously went to the US to Australia instead.

“This disinflationary effect should allow the RBA to cut its cash rate further, despite the economy operating at close to full employment and many domestic price pressures persisting. However, these domestic price pressures are why we expect the RBA to take a cautious approach to easing,” Bloxham said.

HSBC expects a 0.25 percentage point rate cut from the RBA next month, and a further 0.75 percentage points in cuts by early 2026.

CreditorWatch chief economist Ivan Calhoun also believes interest rate cuts are likely. “The RBA is expected to cut the official cash rate in May, with further cuts (3 to 4 in total) likely as unemployment forecasts are revised upward,” he said in a note.

The major banks were mixed. Commonwealth Bank rose 1.2 per cent; ANZ was up 0.4 per cent; National Australia Bank lost 0.4 per cent; and Westpac dipped 0.2 per cent.

In the US overnight, the S&P 500 sank 2.2 per cent, as US Federal Reserve chairman Jerome Powell underlined the uncertain environment in markets, while companies around the world said Trump’s trade war was clouding forecasts for how they and the economy would do this year.

The Dow Jones Industrial Average dropped 699 points, or 1.7 per cent, and the Nasdaq composite sank a market-leading 3.1 per cent. ASX futures are pointing to a decline of 0.3 per cent in the ASX 200 index. The ASX 200 fell by just 2.8 points or 0.04 per cent on Wednesday.

Losses accelerated after the head of the Federal Reserve said again that Trump’s tariffs appeared to be bigger than it expected, which could slow the economy and raise inflation more than it had earlier thought. But Powell also said again that the Fed would need more time before deciding whether to lower interest rates, which could help the economy but could make inflation worse, or to do the opposite.

“All of this is highly uncertain,” Powell said. “We’re thinking now, really before the tariffs have their effects, (about) how they might affect the economy. That’s why we’re waiting really to see what the policies ultimately are, and then we can make a better assessment of what the economic effects will be.”

Some companies are already seeing big effects because of changes from Washington. Nvidia dropped 6.9 per cent after it said the US government was restricting exports of its H20 chips to China, citing worries that they could be used to build a supercomputer.

Advanced Micro Devices sank 7.3 per cent after it said US limits on exports to China for its own chips might mean a hit of up to $US800 million for inventory and other charges.

The US government is restricting exports of Nvidia’s H20 chips to China.Credit: Getty Images

In Amsterdam, ASML’s stock sank 5.2 per cent. The Dutch company, whose machinery makes chips, said demand for artificial intelligence technology was continuing to drive growth.

The uncertainty around Trump’s trade war has been scrambling plans for companies across industries and around the world. It’s so dynamic that United Airlines gave two different financial forecasts for how it may perform this year, one if there’s a recession and one if not.

United’s share price finished roughly flat even though it reported a stronger profit for the latest quarter than analysts expected.

All told, the S&P 500 fell 120.9 points to 5275.7. The Dow Jones Industrial Average dropped 699.57 to 39,669.39 and the Nasdaq composite sank 516.01 to 16,307.16.

Tariffs could also drive up inflation, at least temporarily, by pushing US importers to pass along the higher costs to their customers.

Treasury yields eased in the bond market, taking a leg lower following the comments from the Fed’s chair. The yield on the 10-year Treasury fell to 4.28 per cent from 4.35 per cent late on Tuesday and from 4.48 per cent at the end of last week.

It’s another notable move for the bond market and something of a return to form after an unusual rise in yields last week rattled investors and Trump. Treasury yields typically fall when investors are worried about the economy, and last week’s climb raised concerns that the trade war might be causing investors to second-guess the reputation of US government bonds as one of the world’s safest possible investments.

In stock markets abroad, indexes fell across much of Asia and were mixed in Europe. Stocks dropped 1.9 per cent in Hong Kong, 1 per cent in Tokyo, 1.2 per cent in Seoul and 0.1 per cent in Paris.

The FTSE 100 rose 0.3 per cent in London after the government said inflation in Britain had fallen for the second month running in March, largely as a result of lower petrol prices.

Tweet of the day

Quote of the day

“What the f--- is Elon doing here?”

That’s Donald Trump, who personally intervened to stop Elon Musk from attending a top secret China briefing at the Pentagon in what appears to be further cracks in the bromance between the US president and the tech businessman and Tesla chief. Read columnist Elizabeth Knight’s assessment of the waning love affair.

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AP

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