A broad rally in the Australian sharemarket gained momentum on Tuesday, tracking a rebound on Wall Street before US President Donald Trump’s broad sweep of reciprocal tariffs take effect.
The S&P/ASX 200 Index closed up 1 per cent, or 81.8 points higher at 7925.2, recovering most of the previous session’s loss which had wiped almost $42 billion in market value. The All Ordinaries advanced 0.9 per cent. All 11 sectors finished higher, led by property stocks.
It was a volatile session on Wall Street overnight before the S&P 500 closed up 0.6 per cent after bargain hunters stepped in. However, lower US futures suggest that rebound may prove short-lived as investors await for the details on Trump’s reciprocal tariffs that are due on Wednesday (Thursday AEDT).
There is growing concern the announcement could once again derail markets that pushed equities into correction territory last month.
Bad for markets
“Everything – from the scale to the timing to the variability across countries – still seems somewhat up in the air,” Janus Henderson portfolio manager Oliver Blackbourn said. “What does seem less uncertain is that tariffs are, without much exception, likely to be bad for economic growth, consumers, and markets.”
Equities were given a late boost on Tuesday after Reserve Bank governor Michele Bullock’s more cautious comments on the impact of global trade tensions. Traders are weighing the likelihood of more interest rate cuts should US reciprocal tariffs dent the outlook for global growth.
On the ASX, utilities stocks rallied amid the uncertainty. That sector – typically seen as defensive due to year-round demand for services – rose 1.5 per cent. Power company Origin Energy advanced 2.7 per cent to $10.81 and AGL Energy 1.8 per cent to $10.71.
Miners reversed the prior session’s heavy losses as iron ore steadied at around $US102 a tonne in Singapore. BHP added 1.8 per cent to $38.89 per cent and Fortescue 1.8 per cent to $15.65.
Stocks in focus
Real estate stocks – heavily sold off in the past week – rallied after US real estate giant Proprium Capital agreed to buy local home builder AVJennings for $365 million – a 98.5 per cent premium to Monday’s closing price.
The stock jumped 8.3 per cent to 65.5¢ on Tuesday. Goodman Group paced the gains, climbing 2.7 per cent to $29.19, GPT Group rose 2.1 per cent to $4.45 and Stockland 2.3 per cent to $5.01.
Elsewhere, insurer Tower sank 10.4 per cent to $1.21. That was after private equity giant Bain Capital sold about 68 million shares at a 12.5 per cent discount to their last trade price.
A majority stake in Southern Cross Electrical Engineering was sold by Anacacia Capital for $53.5 million – a price the buyout firm says represents a 20 per cent increase on its last valuation. The engineering stock leapt 9.6 per cent to $1.82 on the news.
And SSR Mining sank 8 per cent to $15.75 despite it forecasting a more than 10 per cent increase in year-on-year production.
