Market Recap: ASX Soars 4.54% After U.S. Tariff Pause Boosts Markets

Good Evening,

Welcome to Equity Espresso’s Daily Market Recap. Markets celebrated their release from reciprocal tariff prison today, but China remains on the outer. We take you through all the overnight tariff developments (again), plus all the ASX company updates. Let’s jump in.

Local Market

The Aussie market surged higher at the opening bell, climbing as high as 6% in early trading after overnight news that U.S. President Trump had suspended reciprocal tariffs for 90 days (with China the sole exception). This unexpected but welcome move triggered a rally on Wall Street, sparking a cascading effect across global financial markets.

Our market did fall away as the day wore on, with the S&P/ASX 200 index closing 334.6 pts (+4.54%) higher to finish at 7,709.60. Today’s 4.54% gain was the 11th highest since 1992, and the biggest one-day gain since March 2020

There were winners everywhere on the ASX200, with only one company, Contact Energy (-1.58%), finishing the day lower. Technology (+7.57%) was unsurprisingly the best performer, while commodities and oil saw a lift, sending Energy (+5.16%) and Materials (+6.33%) higher.

Commodities came roaring back - Gold rose over $3,100/oz on Thursday, extending its 3% gain from Wednesday. Copper futures in the U.S. surged 8.5% to $4.4/lbs after testing three-month lows earlier in the session. U.S. Crude oil futures jumped more than 4% to close at $62.35/bbl, while Brent crude gained 4.2% before retreating toward $64.00/bbl today, giving back some of its substantial rebound.

RBA Rate cut predictions were coming in thick and fast today - check out our Broker Forecast section of the newsletter for a complete rundown on what economists think the RBA will do in May. Brokers were also busy, with another seven company rating changes included in our Broker Rating section of the newsletter, including JB Hi-Fi and Goodman Group.

Overnight Tariff Recap

President Donald Trump announced a temporary suspension of the recently implemented reciprocal tariffs on more than 75 countries for 90 days. This decision came less than 24 hours after the tariffs were implemented. However, China was notably excluded from this suspension and instead saw its tariff rate increase to 125%, up from the 104% set just a day earlier. In a Truth Social post, Trump justified this escalation by citing China's "lack of respect." The move followed China's own retaliatory action, in which Beijing had raised tariff rates on U.S. exports from 34% to 84%.

While today’s rally was great, we’re not out of the woods yet. It’s worth bearing in mind the current state of play:

• U.S. & China are still in a trade war, at least for now. The United States has a 125% tariff on China, and China has an 84% tariff on the United States.

• The 90-day pause of reciprocal tariffs is just that, a pause. Markets are baking in a significant reduction or complete abandonment as countries start to negotiate terms. While this path seems the most likely right now, a reinstatement of the tariffs before the 90-day window shouldn’t be counted out.

• 10% Global tariffs are still in place - The baseline 10% tariffs for most countries are still in place, which, if we’re led to believe, will increase costs for U.S. consumers, putting pressure on the world’s largest economy.

• The biggest gains in the market often happen during bear markets:

Notice the years for the top 10: 2007/08 (GFC), 2020 (Covid), 2000 (dotcom crash), and 1997 (Asian financial crisis), all during market downturns. Will this time be different? No one knows the answer, but it is worth bearing in mind.

Over to the audience, who do you think blinks first and removes or reduces their tariffs?

DISCLAIMER: Please note that the information provided in this newsletter is for educational purposes only and should not be considered financial advice. It is not intended to encourage you to buy/sell assets or make economic decisions. We strongly recommend conducting your own research before making any investment.