An unexpected revival in iron ore prices is helping cushion the Australian sharemarket from US President Donald Trump’s latest tariff shocks, propelling a rotation away from Commonwealth Bank and into the major miners.
Iron ore futures in Singapore rallied around 4 per cent last week to $US99.50 a tonne, sealing a third straight weekly gain – its best run since January.
BHP shares have surged 10.4 per cent over the past three weeks, while Rio Tinto has jumped 9.1 per cent and Fortescue 16.8 per cent. That has come at the expense of Commonwealth Bank, which is down 2.6 per cent over the same period despite the other major banks all posting gains.
The latest rally has been fuelled by social media reports of a high-level meeting in China this week, which has drawn comparisons to the Central Urban Work Conference in 2015. That meeting, which took place 37 years after the body last met, aimed to propel urban planning and infrastructure.
The resurgence in the ASX’s heavyweight mining sector has helped absorb the shock from Trump’s latest spree of tariff announcements, which dragged Wall Street back from record levels on Friday.
The US president threatened a 35 per cent levy on Canadian goods and also said he was eyeing blanket tariffs of 15 per cent to 20 per cent on most trading partners, up from the current global baseline minimum level of 10 per cent. Trump also announced over the weekend he would place a 30 per cent levy on goods from the European Union and Mexico.
ASX futures indicate the benchmark index will open 13 points lower on Monday. Still, Australian shares sit about 1 per cent below the record of 8639.1 reached in June.
Brent crude oil is near $US70 per barrel and the West Texas Intermediate is about $US68.50 per barrel. Gold futures rose to $US3364 an ounce, while iron ore on the Singapore exchange rose to $US99.50 per tonne.
Cryptocurrency giant bitcoin is near $US118,900 after rising more than 25 per cent this year. The Australian dollar is trading around US65.60¢.
Wall Street closed its Friday session in the red, with the S&P 500 and Dow Jones indexes down 0.3 per cent and 0.6 per cent, respectively. The technology-focused Nasdaq slipped 0.2 per cent. US 10-year bond yields settled near 4.42 per cent.