ASX gains as investors latch on to tariff relief

Uranium producer Paladin Energy soared 24.6 per cent after it told the market that it had achieved record quarterly production at its Langer Heinrich mine in Namibia. Iron ore heavyweights BHP (up 3.3 per cent) and Fortescue (up 2.7 per cent) also posted solid sessions.

The laggards

Commonwealth Bank shares dropped 2.5 per cent after notching up a record price on Tuesday, as investors cashed in. Gold miners also slipped on the back of profit taking, with Ramelius Resources falling 14.6 per cent and Evolution Mining plummeting 11 per cent.

Fellow gold miners Northern Star Resources (down 10 per cent) and Newmont (down 7 per cent) also lost significant ground as gold prices retreated overnight.

Luxury retailer Cettire booked a horror session, diving 24.43 per cent, after it posted a $4.7 million loss in the March quarter, highlighting weaker demand in the US, which is its largest market.

The lowdown

The ASX’s strong performance came as a degree of optimism emerged for a de-escalation in Trump’s trade war. The US president said late on Tuesday [Wednesday morning AEST] he will substantially lower his unprecedented 145 per cent tariffs on Chinese goods in recognition the bitter trade war between the world’s two largest economies cannot last.

His comments came after US Treasury Secretary Scott Bessent told a closed-door meeting with investment bankers the negotiations with China would be a “slog” but neither side considered the status quo sustainable and that he expects the situation to de-escalate.

Asked about Bessent’s comments after the close of US trading, Trump said America was “doing fine” with Beijing, and pledged to “be very good to China.” The final tariff on China, Trump predicted, would not be “anywhere near” the 145 per cent level he has set.

Tony Sycamore, market analyst at IG, said in a note to traders that US stocks were resilient overnight as investors grew increasingly hopeful of de-escalation in the US-China trade war.

“Looking ahead, there will be keen interest in tonight’s S&P Flash PMI to ascertain the level of damage inflicted on the economy and sentiment by tariff uncertainty,” he said.

In the Australian market, Sycamore said that “trade tensions, the rapid back-and-forth in policy decisions, and President Trump’s public discussion over the weekend of firing Fed Chair Jerome Powell” have all made investors lose confidence in US assets.

“These factors are hastening the exodus of offshore investors from US equity markets, into more defensive stock indices, including our ASX200, which includes banks, consumer staples, telcos, and gold miners,” he said.

On Wall Street overnight, the benchmark S&P 500 index jumped 2.5 per cent – its best day in two weeks – while the Dow Jones Industrial Average and the Nasdaq both climbed 2.7 per cent.

A volley of tariff-related headlines continued to fuel outsized market moves on Wall Street as fast-twitch investors pour over news reports for clues on how to trade the crisis.

“We are in a period of extreme uncertainty, where one should not react too much to daily moves,” said Anwiti Bahuguna, Northern Trust Asset Management’s CIO of global asset allocation.

Market attention after the bell shifted to Tesla, which reported its worst quarterly result in five years. Profits plummeted by 71 per cent in the March quarter as the electric car company counts the cost of Elon Musk’s alliance with Trump and his trade war. In a conference call with analysts, Musk signalled he would start to pull back “significantly” his work with the Trump administration from May, which pushed the stock up 5.4 per cent in after-hours trading.

In the bond market, US Treasuries still posted smaller moves overnight, showing greater stability after Monday, when investors were worried about the implications of any effort to replace the Federal Reserve chair by Trump, who has berated Jerome Powell for being slow to cut interest rates. While the 10-year Treasury yield barely budged on Tuesday, two-year yields briefly rose to 3.82 per cent after lacklustre demand for an auction.

After the close of trading on Wall Street, Trump also said he had “no intention” to fire the Fed chief. He kept up the pressure though, maintaining that energy and grocery prices were falling, so the Fed should cut its benchmark rates because inflation was no longer a threat to the US economy.

Trump’s policies and his broadsides against the Fed have forced a reappraisal of the US currency and Treasuries as havens in times of stress. The IMF said the latest escalation in the trade war risks saddling China and the US with losses – and that it could only get worse after this year.

The US said it’s made “significant progress” toward a bilateral trade deal following talks between Vice President J.D. Vance and Indian Prime Minister Narendra Modi. Vance on Tuesday called on India to buy more American goods, particularly energy and military equipment. Trump has repeatedly criticised the country for high tariffs.

Tweet of the day

Quote of the day

“It wasn’t a great day for the MAGA crew.”

Stephen Bartholomeusz

But Tuesday was a good day for financial markets, writes senior business columnist Stephen Bartholomeusz. You can read more of his opinion piece here.

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