ASX 200 Dips Amid Mixed Signals from US-China Trade Agreement

Image Source : Krish Capital Pty Ltd

Index Update: The Australian equities market closed lower on Thursday, as declines in the materials, financial, and consumer sectors weighed on performance. The S&P/ASX 200 shed 27.00 points, or 0.31%, to close at 8,565.10, retreating slightly after reaching a new 52-week high earlier in the session. Despite the day’s decline, the index has gained 0.31% over the past five trading days and remains just 0.86% below its recent peak. Notably, seven of the 11 sectors closed higher, with information technology emerging as the top performer, rising 0.66% on the day and up 0.09% for the week.

Macro Update: High-stakes talks between the United States and China have concluded with what President Donald Trump described as a "deal" aimed at de-escalating mounting tensions. Under the agreement, China will begin supplying U.S. companies with rare earth metals and industrial magnets, while the U.S. has agreed to withdraw its threat to revoke visas for Chinese students. Meanwhile, US Treasury Secretary Scott Bessent announced that the U.S. is likely to extend its pause on certain aggressive tariffs to facilitate broader international trade negotiations with other countries. Despite this diplomatic progress, the agreement’s lack of detail has left markets on edge, with analysts calling the outcome a fragile truce rather than a full resolution.

Top Market Movers: The ASX saw notable movements today, with Genesis Minerals (ASX: GMD) leading the gainers, climbing AUD 0.270 or 6.03% to close at AUD 4.750. Clarity Pharmaceuticals (ASX: CU6) followed, rising 4.93% to AUD 2.340, while Capricorn Metals (ASX: CMM) gained 4.71%, finishing at AUD 9.550. Among the top decliners, Mineral Resources (ASX: MIN) dropped by AUD 2.010 or 7.82% to AUD 23.700. Champion Iron (ASX: CIA) lost 6.24% to close at AUD 4.210 and Pilbara Minerals (ASX: PLS) fell 5.97% to end the day at AUD 1.340.

Commodity Update: The dollar slipped on Thursday as expectations of Fed rate cuts grew and President Trump signalled a softer stance on tariffs, suggesting a possible extension of the July 8 trade deadline. Gold rose 1.57% to USD 3,396.00, silver gained 0.49% to USD 36.43, and copper advanced 0.44% to USD 9,693.10. Brent crude edged up 0.20% to USD 69.92 on fears of supply disruption amid rising tensions with Iran.

Our Stance: The Australian equities market closed lower on Thursday, reflecting investor caution amid sectoral declines in materials, financials, and consumer stocks. While the S&P/ASX 200 pulled back 0.31%, its recent momentum remains largely intact. However, the vague outcome of US-China trade talks, despite being labelled a “deal,” is adding to market uncertainty. The lack of detail raises doubts about the durability of the truce and may dampen market sentiment. Additionally, growing expectations of Fed rate cuts and global geopolitical tensions, particularly with Iran, could fuel volatility. Commodity gains, especially in gold and copper, may offer some support to resource-linked Australian stocks. 

The S&P/ASX 200 Index closed lower by 27.00 points in its latest session, forming a small bearish candlestick pattern on the daily chart amid increased trading volume, an indication of cautious sentiment among market participants. Despite the pullback, the index remains above its 21-period Simple Moving Average (SMA), which now acts as a critical dynamic support level. Key support is clearly defined at around 8,423.20, making this a pivotal zone to watch. Holding above this level could help preserve recent gains and strengthen investor confidence in the index’s upward trajectory. Importantly, the index also continues to trade above its 21-period SMA on the weekly chart, reinforcing a longer-term bullish bias. This alignment of support across multiple timeframes suggests underlying strength and signals the potential for continued resilience despite short-term volatility.