The ASX continued its move higher, following US markets which were further lifted overnight by the major tech stocks and a dipping US dollar.
In the US, news reports that President-elect Donald Trump may be looking to introduce tariffs on just critical imports rather than broad-based tariffs put pressure on the US dollar.
But Trump was quick to dispel the rumours published in a Washington Post (WaPo) article.
“This just goes to show the risks of trading in a new era of Trump headline risk, much like his tweeting behaviour roiled markets early in his first administration,” Saxo Bank Chief Macro Strategist John Hardy says.
“What might be going on here is that his advisers do want to do exactly what the article in WaPo says, but that Trump himself has yet to sign on for their approach or any approach and wants to maintain maximum leverage by appearing to be ready to administer enormous tariffs if that is what it will take to make his point.”
Hardy notes that even before the breaking news the US dollar surge had stumbled and entirely reversed.
He suggests this could be because market participants are reluctant to extend the already very long US dollar positioning before Trump even takes office two weeks from now, given the “many uncertainties and some of the self-conflicting components in his agenda”.
Hardy adds that a hold lower in the US dollar could suggest it is in rangebound mode for the next couple of weeks or more.
“Of course, key US labor market and other data is also up this week, and market participants will have to decide the degree to which it is worth reacting to, given that the arrival of Trump 2.0 will dominate the focus from here,” he says.
The S&P/ASX 200 rallied 30.20 points, or 0.37%, to 8,287.60 points as of 10.35am AEDT. Over the last five days, the index has gained 1.57% and is currently 2.66% off of its 52-week high.
Ten of the 11 sectors moved up, led by consumer discretionary which advanced 0.76% in early trade and has gained 1.62% over the past five days.
Although materials reversed its downward trend to add back 0.08%, miners Yancoal Australia (ASX:YAL), Fortescue (ASX:FMG) and Bellevue Gold (ASX:BGL) found themselves in the bottom five.
Yancoal dipped 1.29% to $6.11, Fortescue fell 1.28% to $17.82 and Bellevue slipped 1.27% to $0.97.
Lithium miner Liontown Resources (ASX:LTR) was up 4.46% at $0.59 and uranium producer Boss Energy (ASX:BOE) climbed 3.26% to $2.85 in early trade.
The S&P/ASX200 is Australia’s leading share market index and contains the top 200 ASX-listed companies in terms of market capitalisation, and accounts for about 80% of the country’s equity market. The index is designed to measure the performance of the 200 largest index-eligible stocks listed on the ASX by float-adjusted market capitalisation.
It is recognised as the institutional investable benchmark in the country.
Write to Angela East at Mining.com.au
Images: ASX & Stock
