ASX: Share market lifts on US-China peace talks but gold stocks sink

A ceasefire in America’s trade war with China has sparked an enthusiastic Tuesday morning for share markets.

The ASX200 lifted 0.75 per cent in the first few minutes of trade but the ebullience was soon pared back, and the bourse was up 0.38 per cent at 8,264.7 points an hour from the close.

Japan’s Nikkei Index was up 1.8 per cent while the Dow gained 2.8 per cent overnight.

It followed news of a peace deal between the world’s two largest economies on Monday, with tariffs slashed for 90-days while trade talks continue. But economists have cautioned that tariffs remain much higher than when the year started.

US-exposed Clarity Pharmaceuticals was the top performer, rising 15 per cent to $2.56 per share. Clarity won a fast-track designation from America’s Food and Drug Administration in February for a prostate cancer treatment.

That came despite overseas drug-makers sliding thanks to news President Donald Trump planned an executive order to slash pharmaceutical prices.

Life360 — a tech app hoping to grow in North America — was up 11.9 per cent to $26.69.

But WA’s darling gold industry copped a hit as investors downgraded their expectations of economic and financial risk. The Aussie dollar gold price dove $180 an ounce in the past week to be below $5100/oz.

The five worst performing stocks on Tuesday were all gold plays. Capricorn Metals, Ramelius Resources, Genesis Minerals, Spartan Resources and Regis Resources all posted falls of almost 10 per cent or more.

Commonwealth Bank economists declared they believe “peak tariff” is past — with the US to cut trade taxes on Chinese goods by 115 percentage points.

“The 90 day deal gives the US and Chinese governments time to rethink their positions,” head of international and sustainable economics Joseph Capurso said in a note.

“Their earlier positions were going to have a material negative impact on their economies.”

He said the deal reduced economic risk but tariffs could still lead to stagflation — when both unemployment and inflation remain elevated.

“We consider there is little chance the US and Chinese governments will agree to a comprehensive trade agreement in the next 90 days,” Mr Caruso said.

“The shortlived first trade agreement in President Trump’ first term took around one year to negotiate.

“At the end of the 90 days, we expect tariffs on imports from China and the US will still be material, probably not much lower than currently.”

ANZ reckoned the US Federal Reserve would resume interest rate cuts in the September quarter. But the big four bank still put the chances of an American recession at 30 per cent.

The ceasefire deal is the latest major backdown by Mr Trump’s administration, after sweeping and largely baseless tariffs announced on so-called “Liberation Day” in April.

The huge tax hike — among the largest in US history — sparked panic in financial markets and sent the cost of US government debt soaring.