ASX jumps following $115bn wipe-out

The ASX 200 soared during Tuesday’s trading, but investors are worried it is just a dead cat bounce.

The Australian sharemarket soared on Tuesday for its largest gain since 2022, but an expert has warned it has all the characteristics of a “dead cat bounce”.

The benchmark ASX 200 index jumped 166.70 points or 2.27 per cent to 7,510.00 points.

Meanwhile, the broader All Ordinaries surged 180.10 points, or 2.39 per cent, to close at 7,704.40 points.

The Australian dollar is also now buying 60.64 US cents.

Despite having its best day since November 2022, the ASX only managed to claw back a bit over half of the $112bn wipe-out on Monday.

Investors are still concerned about the impacts of US President Donald Trump’s tariff policies, with investment banks putting up to a 60 per cent chance the world’s largest economy goes into a recession.

The ASX had its best day in years. Picture Newswire/ Gaye Gerard.

Capital.com senior financial market analyst Kyle Rodda said markets are still in “in the eye of the storm”.

“Although there were some positive headlines last night hinting at negotiations between the Trump administration and world leaders, fundamental factors of the tariffs remain going forward.

“There’s still a risk of retaliation and we’re waiting for further news on that.

“So things could conceivably turn around if Trump backs away from the trade policy, but for now this is all the hallmark of dead cat bounce,” he said.

A dead cat bounce refers to a period where the market jumps, often followed by a period of decline.

On Tuesday all 11 sectors finished in the green, led by a surge in information technology, energy and consumer discretionary stocks.

Mr Rodda said there was a spike in trading volumes on the ASX today, due to how financialised the world has become.

“It wasn’t really anyone going oh great the world is in a better place, but you get so many people built up on the short side that you get a bit of positioning shifting off some pretty bulls*it news,” he said.

A short build up is a signal of a bearish market, as it happens when traders aggressively bet against the market.

In terms of the biggest contributors, the big four banks all rose.

CBA jumped 2.80 per cent to $148.46, Westpac grew 1.44 per cent to $29.67, ANZ leapt 0.89 per cent to $27.07 and NAB finished in the green up 0.93 per cent to $32.49.

All 11 sectors finished in the green. Picture Newswire/ Gaye Gerard.

Iron ore continued its slump on Tuesday, down a further 2.4 per cent to $US95.23 a tonne, as China vows to fight Mr Trump until the end on tariffs. Markets were hoping China would fire a “big bazooka” in terms of fiscal stimulus in response to escalating trade tensions.

BHP was up 2.34 per cent to $35.38, Rio Tinto grew 1.00 per cent to $109.48 and Fortescue Metals soared 3.49 per cent to $14.82.

The fall in iron ore prices comes as traders remain fearful the Chinese economy could stall on the back of US tariffs.

In company news, Mexican food chain Guzman y Gomez advanced 3.7 per cent to $31.10 after announcing strong sales growth over the third quarter. The company now says it is on track to pay its first ever dividend.

Buy now pay later provider Zip shares surged 6.72 per cent to $1.27 after announcing a $50m share buyback.

Originally published as ASX jumps following $115bn wipe-out