Australian shares close higher; focus on Trump tariffs

By Roshan Thomas

April 2 (Reuters) - Australian shares inched higher on Wednesday, led by banks, although gains were limited as investors exercised caution ahead of U.S. President Donald Trump's sweeping tariff announcement later in the day.

The benchmark S&P/ASX 200 .AXJO ended 0.1% higher at 7,934.5 points and logged its second straight session of gains.

Investor focus is on fresh reciprocal tariffs that the White House is due to announce at 2000 GMT and their effect on Australia.

"In theory, the tariffs should have limited effects on ASX but in practice as a trading nation and with China our main market, fears of a global slowdown on commodity prices will weigh," said Henry Jennings, a senior market analyst at Marcus Today.

Investors are moving money into defensive stocks, such as banks, to reduce risk and avoid potential losses in case resources stocks drop due to trade tensions, he added.

Defensive stocks tend to perform relatively well during times of uncertainty, while resources-linked stocks are more cyclical - meaning they depend on global commodity prices and geopolitical factors.

Financials .AXFJ were up 0.7%, a day after the Reserve Bank of Australia kept interest rates unchanged at 4.10%.

National Australia Bank NAB.AX, Westpac WBC.AX and Commonwealth Bank of Australia CBA.AX ended 0.6%, 1.1% and 1% higher, respectively.

Miners .AXMM, in contrast, lost 1.7%.

"This appears to be due to worries about the impact of the tariffs on China," said Shane Oliver, chief economist and head of investment strategy at AMP.

Top miners BHP Group BHP.AX, Rio Tinto RIO.AX and Fortescue FMG.AX lost 1.5%, 1.7% and 1.6% each.

Energy stocks .AXEJ shed 1.3%. O/R

Shares of Woodside WDS.AX and Santos STO.AX were down 1.5% and 0.4%, respectively.

Gold stocks .AXGD also fell 1.7%, with shares of Northern Star Resources NST.AX, St Barbara SBM.AX each down 1.6% and 4%.

New Zealand's benchmark S&P/NZX 50 index .NZ50 gained 0.1% to 12,320.19 points on Wednesday.

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