The Australian share market has posted a strong gain as investors speculate US President Donald Trump’s proposed tariffs on imported steel and aluminium may not be set in stone.
The benchmark S&P/ASX200 index gained 1.1 per cent to 5,962.4 points, with the big mining and energy stocks leading broad market gains.
Lucas Review market strategist Evan Lucas said the market followed the positive tone set by US markets.
“The market is thinking that Trump may be possibly backing down from his tariffs and that he is possibly using tariffs on steel and aluminium as a negotiating tool for NAFTA,” Mr Lucas said.
President Trump has said he won’t back away from his tariffs plan but may exempt Canada and Mexico if they agree to better terms for the North American Free Trade Agreement (NAFTA).
Mr Lucas said further developments are possible, which could again unsettle markets.
He also said Wednesday’s local economic growth figures, a raft of European economic data and US non-farm payroll figures also have the potential to move the market in the coming days.
Local mining stocks surged, with BHP Billiton up 2.1 per cent, Rio Tinto up 0.5 per cent, Fortescue Metals 1.3 per cent higher and South32 gaining 4.3 per cent.
All four major banks also rose, with Commonwealth Bank the best performer, adding 0.9 per cent.
Telstra gained 2.1 per cent and News Corp added 2.2 per cent after the pair said their jointly owned Foxtel will merge with News Corp’s Fox Sports by the end of June.
News Corp will own 65 per cent of the new company and Telstra 35 per cent.
Retail Food Group shares continued to plunge, dropping 12 per cent to a new 10 year low of $1.14, several days after the Gloria Jean’s and Donut King owner said it will make major changes to its franchise business model.
The Australian dollar gained some ground in overnight trade and was little moved after the Reserve Bank of Australia left the cash rate unchanged at 1.5 per cent, as was expected.
Weaker than expected growth in retail spending in January, and a wider than expected current account deficit for the December quarter, also had little impact.
ON THE ASX:
* The benchmark S&P/ASX200 was up 67.4 points, or 1.14 per cent, at 5,962.4 points
* The broader All Ordinaries index was up 65.1 points, or 1.09 per cent, at 6,061.5 points
* The SPI200 futures contract was up 70 points, or 1.19 per cent, at 5,954 points
* National turnover was 3.8 billion securities traded worth $6.3 billion
CURRENCY SNAPSHOT AT 1700 AEDT:
One Australian dollar buys:
* 77.74 US cents, from 77.51 US cents on Monday
* 82.57 Japanese yen, from 81.85 yen
* 62.95 euro cents, from 62.93 euro cents
* 56.15 British pence, from 56.22 pence
* 107.34 NZ cents, from 107.33 NZ cents
The spot price of gold in Sydney at 1700 AEDT was $US1,322.95 per fine ounce, from $US1,326.31 per fine ounce on Monday.
BOND SNAPSHOT AT 1630 AEDT:
* CGS 4.50 per cent April 2020, 2.0103pct, from 1.968pct on Monday
* CGS 4.75pct April 2027, 2.7624pct, from 2.688pct
Sydney Futures Exchange prices:
* March 2018 10-year bond futures contract at 97.195 (implying a yield of 2.805pct), from 97.27 (2.73pct) on Monday
* March 2018 3-year bond futures contract at 97.88 (2.12pct), from 97.925 (2.075pct).
(*Bond market closes taken at 1630 AEDT previous local session; currency closes taken from 1700 AEDT previous local session)