ASX 200 charges higher again as relief rally gathers pace

The S&P/ASX 200 Index (ASX: XJO) is building on yesterday’s gain and moving higher again on Wednesday.

At the time of writing, the benchmark index is up 1.64% to 8,624 points, adding to Tuesday’s 0.25% rise and putting it at its highest level in about two weeks.

The move extends the rebound from last week’s 10-month low after a difficult March for our Aussie share market.

Gains are broad across the ASX, with 146 stocks rising against 49 falling, showing solid buying support across the top 200 names.

Here’s what is driving the rebound.

Relief from offshore markets keeps momentum alive

The main reason for today’s gains is another strong lead from Wall Street and growing optimism that tensions in the Middle East may ease.

Local shares are moving higher after US markets rallied overnight on hopes Washington could wind back its involvement in Iran within weeks.

Wall Street had a strong overnight session, with the S&P 500 Index (SP: .INX) rising 2.9%, the Dow Jones Industrial Average Index (DJX: .DJI) gaining 2.5%, and the Nasdaq climbing 3.8%.

The bigger flow-through now is oil prices and what that means for inflation expectations.

Any sign of easing tensions may limit further energy price rises, a major reason the ASX 200 remained under pressure through March.

Miners and big banks are doing the heavy lifting

Much of today’s move is coming from the ASX’s biggest index names.

Among the top miners, BHP Group Ltd (ASX: BHP) is up 4.49%, Rio Tinto Ltd (ASX: RIO) has climbed 4.25%, and Fortescue Ltd (ASX: FMG) is up 3.15%.

The banks are also adding support, with Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), and National Australia Bank Ltd (ASX: NAB) all trading in positive territory.

With miners and banks both higher, the index is getting strong support from its largest sectors.

This combination is helping keep the benchmark near session highs heading into afternoon trade.

Foolish Takeaway

Today’s move suggests confidence is returning to the ASX after a difficult March, but it may still be an attractive time for long-term investors to start picking up quality shares at lower prices.

Many leading ASX names remain well below where they were trading before last month’s sell-off, which could leave value on offer if conditions continue to improve.

At the same time, it still makes sense to keep some cash on the sidelines in case global tensions flare up again and drag the market lower.

That way, investors can take advantage of current weakness while still leaving room to buy more if another downturn creates even better opportunities.

The post ASX 200 charges higher again as relief rally gathers pace appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.