Australian shares are poised for a robust start today, buoyed by a significant Wall Street rebound following a major de-escalation in US-China trade tensions. ASX futures were up 97 points (+1.17%) at 8:30 am AEST, indicating a strong open for the local market.
The sharp improvement in global risk sentiment is expected to lift most sectors, with tech, consumer discretionary and resources likely to lead gains. A weaker Australian dollar and firmer commodity prices could provide a further boost for exporters.
Global markets rally on tariff reductions
Overnight, US markets experienced a substantial rally after the US and China agreed to big tariff reductions for the next 90 days. The US will lower its 145% tariff on Chinese goods to 30%, while China will reduce tariffs on US imports from 125% to 10%.
The move propelled the major US indices:
- The S&P 500 jumped 3.26% to 5,844
- The Dow Jones rose 2.81% to 42,410
- The NASDAQ Composite surged 4.35% to 18,708
The S&P 500 is now nearly breakeven for the year and just 5% below its record February close, recovering from the initial shock after US President Trump’s initial “Liberation Day” announcement in April.
The NASDAQ100 lifted above its 200-day moving average for the first time in two months, signalling renewed investor confidence.
Meanwhile, the CBOE Volatility Index, known as Wall Street’s ‘fear gauge’, was at 18.39, the lowest level since March 26 and down from an April 7 peak of 60.13.
Sector highlights: Tech and consumer lead discretionary gains
The US rally was broad-based, with all 11 S&P 500 sectors closing higher, led by consumer discretionary (+5.66%), information technology (+4.66%) and communication services (+3.35%).
Defensive sectors including staples, real estate and utilities closed around breakeven. Only utilities flagged, falling 0.68%.
Tech giants and retailers with significant exposure to Chinese markets saw substantial gains:
- Tesla: +6.7%
- Apple: +6.3%
- Amazon: +8%
- Meta: +8%
- Nvidia: +5.3%
- Lululemon: +8.7%
- Nike: +7.3%
ASX and small caps
The positive momentum from global markets and easing trade tensions positioned the ASX 200 to open strongly, with materials, technology and consumer discretionary stocks likely to see heightened activity.
Meridian Energy Ltd announced it has reached a NZ$70 million agreement with Ampol’s Z Energy to acquire customer contracts and a related hedge book.
In small cap news the S&P/ASX Small Ordinaries gained 0.23% yesterday to finish at 3,183.90. Over the past five days it is 3.02% higher.
- Orthocell Ltd received regulatory approval to begin sales of Remplir, its flagship nerve repair product, in the strategically important Hong Kong market. The move builds on momentum from recent regulatory green lights for Remplir in the US, Thailand and Canada.
- In addition, Kairos Minerals Ltd announced the appointment of former De Grey Mining chair Simon Lill as non-executive chairman, adding support as it pursues its largest-ever drill campaign.
- Resource Mining Corporation Ltd started laboratory analysis workstream for soil and auger samples collected from the Stalike and Kabungu prospects as part of the current exploration program at the highly prospective 1,056 km2 Mpanda Copper-Gold Project in Tanzania.
- Livium Ltd has signed an expanded recycling agreement with BYD Australia, a subsidiary of global new energy vehicle leader BYD Company Ltd, which broadens the scope of previously agreed services to now include commercial vehicle batteries and battery energy storage systems (BESS), in addition to New Energy vehicle batteries.
Commodities and currency movements
Meanwhile, gold prices fell as investors shifted toward riskier assets, while oil prices rose on improved economic outlooks. Gold futures were down 3.5% to US$3,2228 an ounce, driving the Gold Miners Industry ETF down more than 7% overnight, and spot gold was trading near US$3,235 at the US close.
Iron ore futures were up 1.2% to US$99.75 a tonne as news of the US-China trade deal progress lifted investor sentiment. Aluminium futures rose 3.2% to US$2,383 a tonne, while copper futures were down 0.7%.
Oil prices hit a two-week high on Monday, with the Brent crude price rising 1.6% to US$64.96 a barrel and US Nymex crude increasing 1.5% to US$61.95 a barrel.
Currencies were weaker against the US dollar, with the Australian dollar down from US64.51 cents to near US63.70 cents at the US close. The euro and yen also fell slightly.
Looking ahead
In Australia, investors will be watching for economic data releases, including business and consumer confidence surveys, and corporate earnings reports that could influence market movements.
Life360 is set to release an earnings report showing a 32% increase in first-quarter revenue, and Humm Group will issue a third-quarter update showing assets under management up 10%. ANZ Group shares are trading ex-dividend.
Investors will also be watching the upcoming US inflation report, expected to show April’s annual core CPI holding at 2.8%, the lowest since March 2021. This data will be crucial in assessing the Federal Reserve’s future interest rate decisions, with traders now forecasting just two Fed rate cuts this year on news of the US-China trade deal.