ASX rises for the first time this week on easing trade tensions
The Australian market broke a two-day winning streak on Wednesday as markets saw through US-China trade tensions.
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Australia’s sharemarket rose on Wednesday after China’s retaliatory tariffs against the US were not as severe as first feared, leading to a rise in commodity prices.
The S&P/ASX 200 closed 0.51 per cent, or 42.9 points, higher at 8416, claiming back some losses from the prior two sessions. The broader All Ordinaries index gained 50.00 points or 0.58 per cent to close at 8683.40.
The Aussie dollar is trading around US62.53c.
On an overall positive day for the market, eight of the 11 sectors ended in the green, led by the materials sector which rose 1.7 per cent.
Australian miners led the Aussie market higher. Champion Iron posted the largest gains on the index up $5.44, up 3.03 per cent.
BHP lifted during afternoon trading up 1.5 per cent higher at $40.13, while Rio Tinto soared 2.07 per cent to $119.18 and Fortescue Metals jumped 1.99 per cent to $18.99.
A 0.5 per cent downturn in Brent crude oil failed to temper gains from ASX energy stocks. Oil producers Woodside and Santos jumped more than 1 per cent to $24.78 and $7.08 respectively.
Capital.com senior financial market analyst Kyle Rodda said oil producers rose on the back of potential sanctions.
“President Donald Trump said there could be harsher sanctions on Iran going forward so there was a little bit of a jump in US trade in crude prices which flowed through to the energy sector,” he said.
Commodity prices across the board generally rose as trade war fears were eased, including iron ore which is up over $US104 a tonne and copper passed $US9150.
Mr Rodda said the uptick in the strength of the Chinese economy could be a determining factor in commodity prices continuing to rally.
“If we see some data that shows continued momentum in China’s economy (could support commodity prices) although we have seen some disappointing figures which should cast doubt if this rally can continue,” he said.
“The other thing to point out is gold prices are at record high, which has provided a little bit of a boost to the broader materials sector.”
The price of gold hit a new record high topping $US2855 an ounce which could continue if the US job figures are sluggish on Friday night.
“At the moment the money markets are pricing in a rate cut in July that could be brought forward to June on weaker job figures. The drop in yield and the US dollar would put upward pressure on the gold price,” Mr Rodda said.
Insignia Financial closed up 6.94 per cent to $4.62 and was one of the biggest individual movers on the local market, after Brookfield lobbied in a $3.1bn offer for the company.
On the other side, buy now pay later shares Block and Zip fell on the back of new regulation. The Albanese government has released a further draft of regulations governing Australia’s BNPL sector for technical consultation.
Shares in Block were the worst performing stock on the ASX down 3.981 per cent to $139.42 and Zip fell 3.00 per cent to $2.26.
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