ASX rises after gains on Wall Street; Energy stocks gain, IDP tanks

Tech stocks followed their peers in the US higher, where big tech names such as AI chip giant Nvidia and Instagram parent Meta helped lift the market overnight. WiseTech Global, Australia’s biggest tech stock, was up 0.7 per cent, and data centre operator NextDC climbed 2 per cent.

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Meanwhile, data centre owner Goodman Group rose 1.1 per cent, boosting property stocks.

BlueScope Steel rose another 1.9 per cent, extending Monday’s 4.4 per cent gain on the back of US President Donald Trump’s threat late on Friday to double tariffs on imported steel and aluminium to 50 per cent. BlueScope has extensive operations in the United States.

Gold miners rallied amid continuing demand for haven investments such as bullion as a hedge in the global trade uncertainty, with Northern Star rising 1.8 per cent, Evolution Mining gaining 4 per cent and Newmont up 4.3 per cent.

The laggards

Iron ore giants BHP (down 0.6 per cent) and Rio Tinto (down 0.7 per cent) weighed on the materials sector as iron ore prices dropped on concerns about China’s economic outlook as a gauge of the country’s manufacturing activity fell to its lowest level in more than two years. China is Australia’s biggest buyer of the metal.

Futures for the steelmaking raw material declined to $US93.85 a tonne after Caixin’s private manufacturing purchasing managers’ index for May dropped to a reading of 48.3 from 50.4 in April —well below the 50-point mark separating expansion from contraction, in a sign Chinese factories are creaking under the trade tensions with the US.

But the day’s biggest loser on the ASX was IDP Education. Its shares plunged 48 per cent, erasing close to half its market value, after the company said more restrictive immigration policies and uncertainty in markets including Australia and the US were pushing down its international student placement numbers by as much as 30 per cent this year, hitting its profits.

The policy volatility is going to continue into the next financial year, IDP warned, and said it’s reviewing its long-term costs and other levers to bolster profitability.

The lowdown

Investors are keeping a close eye on the latest twists in the trade war after a slew of headlines over the past days. The US extended its tariff pause on some Chinese goods until August 31. The Trump administration wants countries to provide their “best offer” on trade by Wednesday, Reuters reported. Meanwhile, the White House is pushing for a call between Trump and China’s Xi Jinping after the two countries accused each other of violating a trade agreement reached last month.

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Trump has long said that direct talks with Xi were the only way to resolve differences between the nations, but the Chinese leader has been reluctant to get on the phone with his American counterpart – preferring that advisers negotiate key issues. The last known conversation between Trump and Xi took place in January before the US president’s inauguration.

Trump economic adviser Kevin Hassett has signalled the White House was anticipating a call this week with the Chinese leader, sparking investor hopes for a rapprochement.

On Wall Street overnight, the S&P 500 rose 0.4 per cent after erasing an early loss, boosted by a rebound in big tech companies. The Dow Jones Industrial Average added 0.1 per cent, and the Nasdaq composite climbed 0.7 per cent.

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The US market indexes had been down close to 1 per cent early in their session following some discouraging updates on US manufacturing. But stocks rallied back as the day progressed, and gains for a few influential stocks helped lift the S&P 500 even though more stocks within it fell than rose. AI giant Nvidia climbed 1.7 per cent, and Meta Platforms rose 3.6 per cent, for example.

“The markets keep shrugging off simmering trade war risks,” Kyle Rodda, a senior market analyst at Capital.com. “While it has slipped down the list of priorities for market participants, below trade policy, fiscal policy and macroeconomic data, a very solid set of quarterly results from mega cap tech is enticing investors into the market.”

Hopes for lower tariffs because of potential trade deals between Trump and other countries were the main reasons for Wall Street’s big rally last month, which brought the S&P 500 back within 3.8 per cent of its all-time high. The index had dropped roughly 20 per cent below the mark in April.

In the bond market, Treasury yields rose as worries continue about how much debt the US government will pile on due to plans to cut taxes and increase the deficit. The yield on the 10-year Treasury climbed to 4.44 per cent from 4.41 per cent late Friday and from just 4.01 per cent roughly two months ago. That’s a notable move for the bond market.

Besides making it more expensive for US households and businesses to borrow money, such increases in Treasury yields can deter investors from paying high prices for stocks and other investments.

With AP, Bloomberg

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