ASX soars on easing trade tensions

Xero was among the best performers after broker RBC Capital Markets initiated coverage on the company with a $45 price target and an "outperform" recommendation. It was up 3.4 per cent to $35.01.

WiseTech rose 4.9 per cent to $9.95 after Citi said the stock's medium-term outlook was positive and upgraded its recommendation to neutral upon share price depreciation since its last profit result.

CSL was one of the biggest drags on the index, dropping 0.9 per cent to finish the day at $158.29.

Outside of the major index, retailer Godfreys surged 40.5 per cent following news that one of its major shareholders was looking to takeover the company.

In currencies, the Australian dollar rose following Mr Xi's appearance, topping US77.35¢, an increase of 0.5 per cent for the session.

Asian stocks responded favourably to the developments at the Boao Forum. The Shanghai Composite index rose 0.5 per cent, Hong Kong's Hang Seng added 1.1 per cent and Japan's Nikkei 225 was up 0.8 per cent.

Tuesday's NAB Business Survey finds Australian business conditions declined by 6 points to a level of 14 points in March, still well above its historical average. The business confidence index fell by 2 points to 7 points, just above its historical average of 6 points.

Elsewhere, the ANZ Roy Morgan consumer confidence index eased for the third successive week, falling 0.3 per cent to 115.1 points.

Stock Watch

Appen

Software company Appen has had its rating upgraded from "hold" to "buy" by Bell Potter, which forecast strong double or even triple digit EPS growth. The leading global provider of machine learning softwarehas a long track record of revenue growth and strong margins. A strong growth to sales revenue and gross profit is predicted for 2018 as competitors such as Adacel Technologies underperform in the eyes of the broker. Appen's share price has risen almost 200 per cent in the past year and Bell Potter is forecasting a 29 per cent total expected return for investors over the next 12 months. Among the potential risks to its valuation were that its largest five clients represented more than 75 per cent of its revenue and that the loss of one of these clients would impact the forecast revenues.

What moved the market

Trade war fears

Trade war fears have reached their peak, according to UBS, despite the broker saying that fears would linger. At its peak, more than 1000 news stories were being written about "trade wars", the most that have been written in at least 18 years. The fear of a US and China trade war has unnerved the market in recent weeks, even with the market attempting to signal its unlikelihood on a number of occasions. UBS believes that an all-out trade war is still unlikely, saying that their view was that some form of negotiation process was likely to emerge. They do however predict that fears will take time to recede and that tensions will continue to be a source of volatility and uncertainty in the market for some time.

Nickel

Nickel prices have risen overnight over concerns that the US Treasury sanction list could impact the world's nickel supply. Nickel prices jumped 1.3 per cent on Tuesday to $US13,390 a tonne on the back of US imposed sanctions against associates of the Russian government over its interference in the 2016 presidential election. While not directly named in the list, Russian nickel and palladium mining company Norilsk could be affected due to its close connections with oligarch Oleg Deripaska and aluminium miners Rusal. Norilsk is currently the world's largest nickel producer and accounts for 10 per cent of global nickel production. Norilsk is also the world's largest producer of palladium which jumped 2.9 per cent on Tuesday to $US931.35 an ounce.

Ruble fell

The Russian ruble dropped on Tuesday off the back of the US Treasury sanctions. The sanctions have not only affected those mentioned on the sanction list, other areas of the Russian economy too. The ruble fell 4 per cent against the US dollar on Tuesday, it's lowest point since August 2017. The price of Russian government bonds also fell. Russian stocks were down more than 8 per cent with the country's biggest banks the worst affected. Sberbank fell 17 per cent while VTB dropped 9 per cent. Investors had been returning to Russian stocks in the past year thanks to economic improvements and resilience to sanctions imposed following the annexation of Crimea.

China calms tensions

China has eased trade tensions with the US following a speech by President Xi Jinping on Tuesday, which announced measures to encourage better trade between the two nations. The measures are set to start this year and will lift foreign investment caps for banks, asset managers and other financial services firms in China. Mr Xi also said that China planned to ease restrictions on the automotive sector, abolishing foreign equity limits on the industry. Mr Xi's speech addressed some of the key concerns held by the Trump administration which helped to fuel trade war tensions in the beginning. Futures on the S&P 500 responded well to the speech, rising 1.1 per cent on Tuesday afternoon.