S&P/ASX 200 Index (ASX: XJO) stocks ripped 0.97% higher to an intraday peak of 8,314 points on news of the US-China tariff deal.
The benchmark index has since retraced a little and is now sitting at 8,283.6 points, up 0.61%.
The US and China have agreed to slash their trading tariffs on each other by 115% each for 90 days.
The US will slash its 145% tariff on China to 30%.
China will cut its 125% retaliatory tariff on the US to 10%.
ASX 200 stocks are rising today because the US-China tariff deal reduces the economic threat to our biggest trading partner.
Weakness in the Chinese economy is no good for Australia given it is our most important customer, particularly for iron ore.
Broker Macquarie has just released a note that names several ASX 200 stocks set to benefit from the US-China tariff deal.
The broker said:
While temporary, the cut in US-China tariffs is more than expected and is likely to drive a near-term pick-up in industrial activity.
Cyclicals with high US exposure and Resources are likely to be the biggest near-term beneficiaries of the US-China tariff pause.
Let's take a look at those stocks.
Macquarie said the tariff de-escalation was a "near-term positive for the ASX" and likely to drive an investment rotation in the near term.
Macquarie said:
Cyclicals with high US exposure should benefit from the pick-up in US activity and a stronger US Dollar.
Relevant names include Block CDI (ASX: XYZ), James Hardie Industries plc (ASX: JHX), Reliance Worldwide Corporation Ltd (ASX: RWC), Light & Wonder, Inc. (ASX: LNW), Computershare Ltd (ASX: CPU), Reece Ltd (ASX: REH), Worley Ltd (ASX: WOR), Flight Centre Travel Group Ltd (ASX: FLT), Lovisa Holdings Ltd (ASX: LOV), and Breville Group Ltd (ASX: BRG).
Block and Breville stocks are among the 10 fastest risers of the ASX 200 on Tuesday.
The Block share price is up 7.9% to $86.52 while the Breville share price has lifted 8.8% to $33.10.
The broker also sees a temporary tailwind for ASX 200 mining shares from the US-China tariff deal.
Macquarie said:
Resources (ex-precious metals) should also benefit as investors are likely underweight and the US-China deal will drive near-term industrial activity.
A stronger USD is a headwind for commodity prices, but we think offset by positive China sentiment.
The broker has an outperform rating on ASX 200 mining stocks BHP Group Ltd (ASX: BHP), Santos Ltd (ASX: STO), South32 Ltd (ASX: S32), Capstone Copper Corp CDI Ltd (ASX: CSC), IGO Ltd (ASX: IGO), Mineral Resources Ltd (ASX: MIN), and Iluka Resources Ltd (ASX: ILU).
Mineral Resources is among the top 10 fastest risers today, up 9.5% to $24.98.
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