ASX lifts on trade de-escalation hopes
Australian equities rose as US–China trade tension eased, trimming risk premia and lifting banks and energy stocks. The ASX 200 gained ~0.4%, with sentiment stabilising on softer global rates and reduced volatility into early 2026.
Australian equities advanced modestly, mirroring a global risk-on tone as US–China rhetoric softened. The ASX 200 (^AXJO) rose about 0.4% intraday, led by banks and energy stocks, while rare-earth miners slipped on profit-taking. The lift stems not from a new trade deal but from reduced tail-risk premia—when geopolitical noise fades, discount rates compress and cyclical earnings extend duration. An ACCC case against Microsoft added a local regulatory note without disturbing overall sentiment.
The macro spillover is modest but positive. Calmer trade conditions reinforce Australia’s terms-of-trade story through iron ore and LNG, though market moves remain tethered to global rates and growth signals. A softer DXY and easing US term premia typically stabilise AUDUSD, helping contain import-price volatility. Sector dynamics are straightforward: banks gain from predictable funding and benign credit losses, energy tracks crude prices, and critical-mineral names lag amid crowding and policy sensitivity. The pattern signals portfolio rebalancing, not a structural turn.
Through the first half of 2026, focus will fall on market breadth, earnings revisions for China-linked miners, and the central-bank tone. Absent new inflation shocks or trade setbacks, equities appear set for a gentle upward drift under calmer volatility conditions.
