Investors surged back into Australian shares on Tuesday, brushing aside escalating tensions between the US and China over a tariff dispute that threatens to disrupt global trade.

The benchmark S&P/ASX 200 index closed up more than 2%, marking its biggest one-day gain in over two years. This rebound helped recover some of the sharp losses from Monday, when the market suffered its worst session in five years, plunging more than 4%.

This recovery comes at a critical juncture. US President Donald Trump has threatened to hike tariffs on Chinese goods by an additional 50% starting April 9 unless Beijing retracts its retaliatory measures. In turn, China’s commerce ministry has vowed to resist the US tariffs “to the end.”

Although Trump’s so-called “liberation day” initially unnerved investors, it was the broad retaliatory measures from China and the EU that intensified market volatility. Traders remain uncertain whether Trump’s threats are a negotiating tactic or a firm policy shift poised to reshape global trade.

Amid this uncertainty, global forces continue to sway the Australian market. Tuesday’s rally was driven in part by a strong lead from US futures. The ASX ended the day at 7,510 points, up 2.3%, reflecting a sharp reversal in sentiment after Monday’s rout.

Rick Maggi CFP, Financial Advisor (Perth)