ASX 200 Bounces on Monday

• Relief rally driven by easing tariff concerns.
• China tensions possibly easing.
• Materials sector is gaining attention.

The trading session on Monday witnessed a notable relief rally following news that U.S. President Donald Trump has announced an exemption for Chinese electronics from the latest round of tariffs.

This development has sparked renewed optimism for a potential trade agreement between the US and China. In response, both Australian and US equity markets rallied, with the ASX poised to benefit significantly given Australia’s strong trade ties with China. The positive sentiment could carry over into the next session, provided the momentum holds.

That said, the global trade landscape remains highly fluid, and investors should approach the markets with caution. In such a volatile environment, capital preservation and risk management remain critical considerations.

Woolworths Group Limited (WOW)

Woolworths declined 51 cents during Monday’s trading session, as volatility in the consumer staples sector persists. Despite the pullback, the stock has posted a strong 12.56% gain over the past month, though it remains down 2.39% year-on-year. Monday’s decline may reflect some profit-taking activity, as investors rotated into higher-momentum stocks. The AU$32.50 level remains a key resistance zone that market participants continue to monitor closely.

Fortesque Limited (FMG)

Fortescue gained 0.86% in Monday’s trading session, attempting to recover from prolonged downtrend. The stock has declined 40.97% over the past year and 4.10% in the last month, reflecting ongoing headwinds. It closed at AU$15.20, rebounding from the key AU$14.00 support level, an area of notable trading volume.

This uptick could signal early signs of a potential recovery, with the next key resistance around the 50-day EMA near AU$16.50. However, following a recent earnings miss, any sustained bullish momentum may remain limited in the near term as investor sentiment remains cautious.

RIO Tinto (RIO)

RIO Tinto gained 1.43% during Monday’s session, positioning itself as a potential beneficiary should tensions between China and the US ease. Despite this short-term rally, the stock remains down 13.33% over the past year, weighed by weaker-than-expected earnings and ongoing global trade uncertainty. The AU$114 level, once a key support, may now act as resistance should the stock continue its recovery attempt. Given its central role in Australia’s resources sector, RIO Tinto remains closely tied to the evolving tariff landscape and broader sentiment around China’s economic stability.

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