Weekly wrap: trade talks help market rise for fourth week in a row
WEEKLY MARKET REPORT
The promise of resumed trade talks between the US and China helped the Australian share market to its fourth consecutive weekly rise.
With US President Donald Trump saying he would resume trade talks with Chinese President Xi Jinping “ASAP”, the Australian market arrested its fall and finally closed on Friday down 0.3% or 23 points to 8515.7 points with eight of the 11 market sectors weaker.
That still represents a 1% gain for the week with the King’s Birthday holiday on Monday leading to just a four-day trading week to come.
Trump has a good call with Xi, not so good with Musk
Mr Trump said he would recommence trade negotiations with China after he had what he described as a “very good” phone call with the Chinese president, in which the two leaders exclusively discussed critical minerals exports and wider trade.
Those discussions reduced fears of a global trade war that would hurt Chinese demand for commodities from Australia, boosting iron ore futures and oil prices.
It also acted as a welcome distraction from the war of words between the world’s richest man, Elon Musk, and Mr Trump as the pair traded insults online after the apparent end of the bromance between them.
Miners follow iron prices up
Positive news on the Chinese trade front generally helped the share prices of the big iron ore miners, with BHP (ASX: BHP) shares up 0.7%, Rio Tinto (ASX: RIO) down 0.4% and Fortescue (ASX: FMG) up by 1%.
Iron ore futures in Singapore were also up 0.8% to $95.65 a tonne.
It was also positive news for oil and gas giant Woodside (ASX: WDS) with its shares up 1% to $22.94.
Rare earths have another common fall
It wasn’t such a pretty picture for rare earth miners with investors marking down shares in Pilbara Minerals (ASX: PLS) by 5.2% and IGO (ASX: IGO) shares by 3.5% as they surmised that China would open up the supply of more critical minerals to the West as part of the rosier trade picture.
In the broader market, investors were generally taking money off the table due to the holiday weekend on speculation that the US Federal Reserve will move into rate cutting mode as the US economy weakens.
Even the all-conquering Commonwealth Bank (ASX: CBA) shares fell by 0.8% to $179.90, dragging the rest of the banks down as well with the notable exception of a 0.2% rise in National Australia Bank (ASX: NAB) to $38.58.
Ora Banda crunched, Qantas rallies
A few stocks moved sharply on the back of corporate news, with shares in Ora Banda Mining (ASX: OBM) being crunched by 14.1% to just $1.10 after warning investors that it expects full-year gold production to fall short of guidance due to extended downtime at its Davyhurst project.
It was a completely different story for Qantas (ASX: QAN) shareholders as the stock rose 3.5% to $10.76 after competitor Virgin Australia said commitments for its $685 million share market float had been well covered but said some investors would not get the full amount of shares requested.
Small cap stock action
The Small Ords Index rose 0.47% this week to close Friday trade at 3244.3 points.
ASX 200 vs Small Ords
The week ahead
Once again, the coming week looks set to toss markets around on the seas of continuing tariff negotiations between the US and China and whatever other trade negotiations might spring into view.
Here In Australia the main economic releases are the monthly consumer and business confidence surveys while in the US consumer and business inflation numbers will be pivotal.
China is also releasing inflation data which is expected to show that deflationary pressures are continuing to hold down prices as consumers react to the trade war with the US.