Australian shares hit second consecutive record high as investors hope for trade truce

The Australian share market has a hit a second consecutive record high as hopes build of a trade truce between the United States and China.

The S&P-ASX200 index leapt to a new peak of 8639.1 points in early trading on Wednesday before paring back its gains to finish just 4.9 points better at 8592.1, extending the year’s growth to 5.3 per cent.

It is up 9.5 per cent for the quarter, on track for its biggest advance since the 2020 fourth quarter, after recovering from the April lows plumbed in the wake of US President Donald Trump’s announcement of wide-ranging tariffs against China and most of his country’s other trading partners.

Since its low on April 7, the S&P-ASX200 incredibly has clawed back 19.8 per cent, helped by Mr Trump’s deferment of the levies until next month.

In recent days, investors have drawn hope from promising signs of a thawing of trade tensions between the US and China off the back of trade talks in London.

In particular, US negotiators said they “absolutely expect” that issues around shipments of rare earths would be resolved as part of a trade accord.

Seven of the ASX200’s 11 sectors finished in the green on Wednesday, led by real estate (up 0.9 per cent) and energy (up 0.8 per cent).

Banking stocks, notably Commonwealth Bank of Australia, also lifted the market early but fell away in later trading.

CBA, which has been on a flyer, hit a record high of $183.19 before closing down 0.3 per cent at $181.40.

Woodside Energy was the best of the energy stocks, adding 1.8 per cent, while Fortescue and BHP climbed 3.5 per cent and 1.5 per cent respectively as iron ore prices gained.

Buy now, pay later group Zip Co was jumped 15.5 per cent after upgrading its annual earnings guidance, citing strong growth momentum in the US.

Johns Lyng Group surged 17.7 per cent after confirming a media report that Pacific Equity Partners had lobbed a buyout offer for the construction company.

Monash IVF recovered 11 per cent after giving up 28 per cent on Tuesday on disclosure of a second embryo mix-up at its Melbourne laboratory.

Pepperstone head of research Chris Weston attributed the market’s “impressive snapback” since April to a combination of the tariff pauses, “resilient and even improving US and global economic data”, along with US company upgrades and a sharp reduction in investment volatility.

“We continue to be reminded that the share market is not reflective of the economy,” Mr Weston said.

“As we know, the Aussie economy is hardly blowing the lights out … in fact, the idea that growth remains sluggish reinforces the notion that the RBA will cut interest rates” next month.

The market recovery over the past two months has been led by tech stocks, which have gained 42 per cent. They have easily outperformed the energy sector (up 25 per cent) and the financial index (up 21 per cent).

The Australian dollar remained around the US65¢ mark.