Australia 200 afternoon report: 10 April 2025

The Australia 200 trades 343 points (4.66%) higher at 7718 as of 2.30pm (AEST).

Relief rally driven by Trump's tariff pause boosts Australia 200

The Australia 200 skyrocketed 467 points (6.3%) in early trading today before retracing 125 points from its intraday 7842.9 high as profit takers took advantage of its 673-point rebound from Monday's 7169.2 low.

The Australia 200's turbo-charged rally came after President Trump ignited a relief rally on Wall Street by announcing a 90-day pause on several new tariffs while raising tariffs on China to 125%. Despite the intensification of the trade wars' focus on China, which has since increased tariffs on the United States (US) to 84%, US equity markets closed near the levels they were at pre-last week's Demolition Day tariff announcements.

Bond market stress triggers policy shift

The catalyst behind Trump's backflip overnight was likely evidence of worrying dislocation within the fixed-income market yesterday. This included surging bond yields when they should have been falling, possibly due to hedge funds being forced to liquidate positions due to margin calls. The other telltale signs included stress in the repo market and tightening swap spreads.

While Trump seemed willing to tolerate deep equity market losses, his about-face provides another reminder that the bond market remains the ultimate master of markets and politicians alike, given its role as the 'plumbing' of the financial system.

This is a lesson we have seen several times over the past three decades:

• In the United Kingdom (UK) in 2022 when then-Prime Minister Liz Truss tried to push through $86 billion in unfunded tax cuts, causing gilt's yields to surge
• During the Covid-19 Crash
• The 2007 Global Financial Crisis (GFC)
• All the way back to 1998, when the Federal Reserve (Fed) rode to the rescue after the failure of a large and highly leveraged fixed-income hedge fund called Long Term Capital Management

Economic impact on China

Returning to the now. Goldman Sachs's latest forecast is that the cumulative effect of China's (yesterday) 104% tariff rate will see China's gross domestic product (GDP) fall by 2.4% this year. This leaves China's GDP at half of the official 'about 5%' target and increases the pressure on authorities to accelerate their plans to support their economy.

This will mostly likely be via stimulus measures to boost consumption and perhaps the property market.

Australia 200 stocks

Materials sector

The materials sector surged amid hopes for Chinese stimulus.

• Mineral Resources skyrocketed 16.3% to $16.75
• Mineral Resources Tinto surged 6.33% to $110.58
• BHP added 6.12% to $36.26
• Fortescue rose 6% to $115.07

Technology sector

Local information technology (IT) stocks made impressive gains following a 12.1% rise in the tech-heavy US Tech 100 (Nasdaq) overnight.

• Zip jumped 23.55% to $1.50
• Block (owner of Afterpay) ripped 13.5% higher to $89.73
• Megaport rose 11% to $9.95
• Life360 added 10.15% to $18.97

Banking sector

The big banks are generally always in the thick of the action on a big up day in the index charged higher.

• Macquarie led the way, surging by 6.8% to $182.53
• Westpac added 5% to $30.63
• NAB rose 5% to $33.84
• ANZ gained 3.21% to $27.36
• CBA climbed 3.35% to $154.14

Australia 200 technical analysis

From its mid-February high of 8615, the Australia 200 fell 882 points (10.23%) to a low of 7733 (Wave i or A from Elliott Wave Analysis) in mid-March, before rebounding to a high of 8014 (Wave ii or B). From the late March 8014 high, the Australia 200 fell 844 points to Monday's 7169 low, before commencing a rebound.

Put together, this suggests that the fall from the 8014 high is the third leg of (Wave C) of a three-wave ABC correction from the February 8615 high, rather than a new bear market.

A sustained rebound above the 7330 – 7350 resistance zone is needed to increase confidence in this view.

Australia 200 daily chart

• _{Source: TradingView. The figures stated are as of 10 April 2025. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.}