Australian shares have started the week with a rally after the US softened limited tariffs on China and the world's largest central bank offered markets reassurance.
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The benchmark S&P/ASX200 gained 102.1 points, or 1.34 per cent, to 7748.6, as the broader All Ordinaries lifted 106 points, or 1.35 per cent, to 7959.7.
The positive start to the week came after the US announced a temporary exemption for electronics imported from China and on the back of commentary from the US Federal Reserve it would stabilise markets if conditions deteriorated or liquidity issues became a threat.
"It was significant the Fed came out and said they were ready to stabilise the markets if needed, so there's still some relief permeating through," IG Markets analyst Tony Sycamore told AAP.
However, despite a temporary exemption to tariffs on selected Chinese electronics imports to the US, Beijing halted rare earths exports to the US, which could impact US tech and defence stocks.
China produces about 90 per cent of the world's rare earths, materials crucial to modern technology including batteries, magnets for wind turbines and defence systems such as radar, guidance systems and lasers.
Ten of 11 local sectors closed in the green, led by a 2.6 per cent rally in IT stocks, with tech stocks more broadly expected to surge after the White House flagged flexibility when it came to taxing electronics imports.
However, US commerce secretary Howard Lutnick has warned new semiconductor tariffs are on the way.
Materials lifted 2.1 per cent, as iron ore giant BHP posted a 2.7 per cent gain after a rocky time last week, but analysts are split on the likelihood of China boosting domestic demand with a fresh round of stimulus.
Financials rose 1.2 per cent as all four big banks traded higher, with CBA and ANZ enjoying 1.7 per cent gains, followed by Westpac, up 1.6 per cent, and NAB lifting 0.9 per cent.
Energy stocks rallied 1.4 per cent after oil futures grinded higher over the weekend as crude demand expectations responded to the latest tariff twists.
Brent crude futures are about 1.5 per cent higher than Friday, to trade at $64.87 a barrel.
Despite the improved risk sentiment on Monday, gold is showing little sign of retreating, as it hovers below its latest high of $US3,245.42 ($A5,126) an ounce.
Only consumer staples closed lower, the defensive sector sinking 0.5 per cent on Monday.
Bitcoin is trading about 12 per cent higher than a week ago to above $US84,500 ($A133,480).
The cryptocurrency's resilience during the tariff-induced market chaos indicated its growing popularity as a hedge, said Kate Cooper, chief executive at trading platform OKX.
"While Bitcoin isn't fully decoupled from traditional markets yet, its long-term resilience points to a maturing, distinct asset class," she said.
The Australian dollar has reclaimed ground from the greenback to buy 63.01 US cents, up from 62.02 US cents on Friday at 5pm.
A lower Aussie dollar and a resilient economy were two of many reasons AMP chief economist Shane Oliver expects Australia to avoid a recession, despite trade and economic headwinds.
"The risk is high, and Australia may not see the pick up in growth to around 2-2.5 per cent or so this year that many, including ourselves, had been forecasting," Mr Oliver said.
"But Australia should be able to avoid a recession in the face of Trump's trade shock."
ON THE ASX:
* The benchmark S&P/ASX200 index rose 102.1 points, or 1.34 per cent, to 7748.6 on Monday
* The broader All Ordinaries gained 106 points, or 1.35 per cent, to 7959.7
CURRENCY SNAPSHOT:
One Australian dollar buys:
* 63.31 US cents, from 62.02 US cents on Friday
* 90.13 Japanese yen, from 82.22 Japanese yen
* 55.43 euro cents, from 54.93 euro cents
* 48.08 British pence, from 47.61 British pence
* 107.53 NZ cents, from 107.60 NZ cents
Australian Associated Press
