Trump tariff backdown boosts ASX
The Australian sharemarket has burst out of the gates Thursday, as US President Donald Trump pauses the bulk of his sweeping tariffs.
The futures markets project the ASX 200 jumped 1.38 per cent to 7477.10 at the open on Thursday.
The futures markets is predicting it will rise leap 6 per cent during the day for the biggest daily gain since March 2020. Overnight the Australian dollar also spiked back above 61 US cents.
On Wednesday US time, Mr Trump announced he would lower his “reciprocal” tariffs on every country except China, Canada and Mexico to 10 per cent for 90 days.
Tariffs on Chinese products would be raised to 125 per cent immediately, he said.
Amid an escalating trade war caused by the White House’s rush of tariff announcements, President Donald Trump has urged Americans to “be cool”.
This was sparked by China’s “lack of respect” in slapping US products with a tariff increase from 34 to 84 per cent, Mr Trump said.
“Based on the lack of respect that China has shown to the World’s Markets, I am hereby raising the Tariff charged to China by the United States of America to 125%, effective immediately. At some point, hopefully in the near future, China will realise that the days of ripping off the U.S.A., and other Countries, is no longer sustainable or acceptable,” he wrote on social media.
Most products from Canada and Mexico into the US are covered by trade agreements and not subject to Trump’s tariffs.
The sudden change down to 10 per cent otherwise sparked a rally on Wall Street, as companies that manufacture in Southeast Asia in particular were buoyed. The ASX is tipped to follow the lead on Thursday.
The National Australia Bank is also calling on the Reserve Bank to slash the cash rate by 50 basis points next month, with 25 point cuts in July, August, November and February.
“Headwinds from the global environment have intensified, but error bounds around our forecast are large given uncertainty remains exceptionally elevated,” NAB chief economist Sally Auld said in a note.