News

By Rajasik Mukherjee

(Reuters) - Shares of Australia's consumer staple companies rose on Thursday, driven by grocers Coles and Woolworths, as investors moved to safer bets after U.S. President Donald Trump's reciprocal tariffs sparked global market turmoil.

Shares of the sector ended 1.3% higher while the broader Australian market fell 0.9% to its lowest since March 14.

Coles rose 2.1% to A$20.29 and Woolworths advanced 1.6% to A$30.02. Both shares hit their highest levels since March 4.

President Trump's decision to impose a 10% tariff on most goods imported to the United States sent shockwaves globally, sparking fears of an escalating trade war and a hit to global economic growth.

Australian Prime Minister Anthony Albanese called Trump's decision to impose tariff on its ally as "not the act of a friend" while also ruling out any reciprocal tariffs against the United States.

"Consumer staples is generally an outperformer in nervous markets as investors gravitate towards businesses that have consistent demand due to needs from the consumer," said Mark Gardner, CEO and Head of Equities Advisory at MPC Markets.

Australia's consumer staples sector makes up 3.8% of the benchmark index. Sectors like consumer staples tend to hold steady during market volatility, driven by demand for everyday essentials.

The country's top supermarket chain Woolworths and its peer Coles dominate the supermarket industry and generate most of their earnings domestically.

"Investors who have to or would like to invest in Australian equities, focusing on companies that generate 100% of the earnings onshore can be a relatively safer investment in this environment," Philip Pepe, a senior equities analyst with Shaw and Partners, said.

Companies with "high foot traffic, high recurring revenue and who also offer alternatives to imported goods" are well-positioned to weather the tariff storm, Pepe said, referring to Coles, Woolworths and Metcash.

Shares of Metcash gained nearly 1% while those of pub operator Endeavour rose 0.5%.