Australia’s benchmark S&P/ASX 200 index surged on Tuesday, climbing to its highest level in nearly two months as positive signals emerged regarding U.S. automotive tariffs and a major broker upgraded mining giant Fortescue Metals Group.
The market responded strongly to easing global trade tensions and specific company news, pushing the index decisively past the 8000-point mark.
The ASX 200 climbed nearly 1%, trading at 8074 points mid-afternoon, marking its first close above the psychological 8000 level in approximately eight weeks. This robust performance extended a significant rally from the lows seen earlier in April, fueled partly by end-of-month trading flows and investors reacting to the improving sentiment. Tuesday’s gains saw the index rise approximately 0.5% overall by the close of market.
A key catalyst for the uplift was news from Washington indicating that the Trump administration plans to lessen the impact of potential automotive tariffs. Reports suggest President Trump will ease duties on foreign-made parts used in cars manufactured within the United States, aiming to prevent detrimental tariff stacking effects.
This move comes after significant pressure from U.S. auto industry groups, representing major players like General Motors and Toyota, who warned that steep tariffs on parts could disrupt supply chains, inflate vehicle prices, and harm sales.
The apparent softening on auto tariffs follows other recent steps by the administration to de-escalate trade friction, contributing to a more positive outlook among investors sensitive to global trade dynamics.
Adding to the positive momentum was a significant broker upgrade for Fortescue Metals Group (FMG). Citi analysts lifted their rating on the iron ore miner to ‘Buy’, while maintaining a $21 price target.
This upgrade came despite Citi’s cautious outlook on iron ore prices, citing the “depth of the valuation discount” in Fortescue’s shares as the primary driver. Fortescue’s stock price had fallen sharply in recent months, down roughly 38% over the last six months, significantly underperforming peers like Rio Tinto and BHP.
Citi noted that consensus iron ore pricing forecasts around US$100 per tonne for 2025 appear reasonable. Fortescue shares reacted positively to the upgrade, climbing nearly 4% during Tuesday’s session.
Strength was broad-based across the market. The energy sector saw gains, with Beach Energy surging after a positive quarterly update, and Santos and Ampol also advancing.
The mining sector benefited broadly, with Mineral Resources soaring following confirmation that an equity raising wouldn’t be needed, alongside gains for Rio Tinto and BHP.
Real estate investment trusts (REITs) also extended recent gains, potentially attracting investors seeking yield in anticipation of potential interest rate cuts, with Australian inflation data due for release shortly.