The Australian sharemarket is headed for a reprieve on Thursday morning following a late rally on Wall Street after President Donald Trump granted a one-month exemption on his stiff new tariffs on imports from Mexico and Canada for US carmakers.

ASX futures turned positive shortly after 6am AEDT and were up 17 points, or 0.2 per cent, at 8129 as of 6.47am AEDT. The likely market rebound comes after a sell-off over the past two sessions amid worries an escalating trade war will be hurting global growth and company earnings.

The Australian dollar was up 1.1 per cent at 63.40 US cents as of 6.37am AEDT. Oil and iron prices both declined overnight as Trump’s tariffs on America’s biggest trading partners weighed on the outlook for commodities demand.

The cautious optimism on the local exchange comes after Wall Street’s main indexes rose in choppy trading overnight, as investors hoped for a delay in US auto tariffs on its top trading partners. The tepid gains turned into a rally after a one-month exemption was confirmed late in the session, sending the S&P 500 up 1.1 per cent as of 6.38am AEDT. The Dow Industrial Average climbed 1.3 per cent, and the Nasdaq Composite jumped 1.5 per cent.

“We are on the tariff roller coaster,” Wasif Latif, chief investment officer at Sarmaya Partners in New Jersey. “The economic data, the Fed, and all that stuff seems to have been pushed to the background for now. It’s just a reminder how these policies have an impact in the long run and the markets are reacting to it.”

Trump is giving a one-month exemption on his stiff new tariffs on imports from Mexico and Canada for US automakers, amid fears that the trade war could harm US manufacturers.

The announcement came after Trump spoke with leaders of the “big 3” automakers, Ford, General Motors, and Stellantis. Trump also said he told the car bosses they should move production to the US from Canada and Mexico, said White House press secretary Karoline Leavitt.

The carmakers’ shares advanced, with Ford trading 5.3 per cent stronger, General Motors jumping 7.6 per cent, Stellantis up 4.5 per cent and Elon Musk’s Tesla rising 1.6 per cent.

Trump escalated a global trade war on Tuesday as he imposed 25 per cent tariffs on top trade partners, Canada and Mexico, and increased levies on China. The taxes almost immediately triggered retaliatory measures by Canada and China, with Mexico planning to announce its response on Sunday. The US stock market has given up all of its gains since Trump’s victory in last year’s presidential election and consumers are exhausted by inflation and worried the costs of the tariffs would lead to higher prices.

“Everybody’s hoping that the tariffs that have been implemented are just a negotiation tactic, but the longer they go on, the more they are going to pressure the overall economy and raise prices,” said Robert Pavlik, senior portfolio manager at Dakota Wealth.

The S&P 500 has fallen about 6 per cent from its record high, while the tech-heavy Nasdaq has dropped over 10 per cent from its December 16 peak.

Energy stocks led declines among the top 11 sectors of the S&P 500 overnight, as crude prices declined further. Oil plunged to the lowest in more than three years as the trade wars clouded the prospects for demand just as OPEC+ signals it’s ready to start opening the taps on supply.

Brent crude plummeted as much as 3.8 per cent to trade below $US69 and touch the lowest since December 2021. West Texas Intermediate dropped as much as 4.5 per cent to approach $US65 and touch the lowest since May 2023.

Chipmaker Intel dropped 3.9 per cent following Trump’s remarks that lawmakers should get rid of a law offering subsidies to the semiconductor industry. Ship builder Huntington Ingalls rose 11.3 per cent after Trump said his administration will create an office of shipbuilding in the White House and offer tax incentives.

Reuters, with staff writers

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