Australian stocks rebound after two-day rout

The sharemarket finished firmly higher, regaining ground after losing $86bn in two days over trade tensions.

The ASX recovered ground after two days of heavy falls fuelled by US-China trade tensions. Picture: Bloomberg

The Australian sharemarket bounced back to finish firmly higher, regaining some ground after plunging 4.34 per cent on the first two days of trading this week.

At the close of trade on Wednesday, the ASX benchmark S&P/ASX200 had added 41.41 points, or 0.64 per cent to 6519.5 points. The broader All Ordinaries index had lifted 42.048 points, or 0.64 per cent to 6588.5 points.

The gains snapped a five-day losing streak and followed a recovery rally on Wall Street overnight. They came after investors wiped $86 billion off the local bourse on Monday and Tuesday as markets globally plummeted on intensifying trade tensions between China and the US.

“It was a much more stable day across the Asia-Pacific region and here in Australia,” said CMC Markets chief market strategist Michael McCarthy.

“Given Australia was one of the hardest hit over the last two sessions, it was good to see a strong bounce back, the ASX outperforming most of the other markets.”

Mr McCarthy said investors were favouring sectors less exposed to any trade tensions with domestic businesses, including property trusts and telcos, among the best performing sectors.

The major miners backtracked after the price of iron ore weakened 3 per cent overnight.

BHP fell 0.9 per cent to $36.75 while Rio Tinto slid 2.1 per cent to $89.50. Fortescue lost 3.3 per cent to $7.05.

In financials, NAB made 0.7 per cent to $27.69 while ANZ put on 0.8 per cent to $26.93. Westpac added 1.1 per cent to $28.03.

Commonwealth Bank dropped 1.4 per cent to $78.70 after its full-year profit missed expectations, as it unveiled a push into the “buy-now, pay-later” industry with a stake in Swedish group Klarna.

Major “buy-now, pay-later” player Afterpay lifted 0.6 per cent to $22.48 on the news.

Suncorp gained 4.8 per cent to $13.32 after it announced it would pay a special dividend as it refocused its operations on its core banking and insurance businesses, and as it unveiled a drop in full-year profit partly due to a non-cash loss on the sale of its life insurance business.

AGL added 1.3 per cent to $20.04 despite news the energy regulator would be taking a number of wind farm operators to court over allegations of breaches of the National Electricity Law.

Energy was the worst performing sector after oil prices slumped on Tuesday night as US - China trade tensions fuelled concerns about weakening global demand.

Santos lost 0.8 per cent to $6.58 while Oil Search slid 0.7 per cent to $6.87. Woodside Petroleum dropped 0.4 per cent to $32.76 while Origin Energy edged 0.2 per cent lower to $7.07.

Gold miners were among the best performers following a lift in the gold price overnight.

Newcrest lifted 3.8 per cent to $37.34 while St Barbara grew 5.4 per cent to $3.89. Evolution Mining jumped 5.5 per cent to $5.38 while Northern Star rose 5.7 per cent to $13.34.

The Australian dollar was trading firmly lower at US67.14 cents in late trade.