Aussie dollar hits six-month high as shares trade flat

Australian shares are on shaky ground, finishing flat as fresh US trade threats weigh on investor confidence.

The S&P/ASX200 closed 0.1 point higher, effectively flat, to 8,361, as the broader All Ordinaries gained 2.1 points, or 0.02 per cent, to 8,588.8.

The timid trading day came after US president Donald Trump threatened 50 per cent tariffs on European Union goods before extending their launch to July 9, when deferred reciprocal tariffs are set to kick in.

Markets had begun to expect the president's policy backflips as a negotiation tactic, in what traders have dubbed the TACO trade (Trump Always Chickens Out).

"It may prove to be complacency and contribute to a big correction if the assumption proves false," Capital.com market analyst Kyle Rodda said.

"The attitude that Trump's threats are either bluster or too big to follow through with is the psychological floor holding up the market."

The trade turmoil helped the Australian dollar to a six-month high of 65.37 US cents, as the US Dollar strength index crumbled to three-year lows for the second time in a month.

Five of 11 sectors finished higher, with IT stocks the only clear winner with a 1.1 per cent gain, while utilities underperformed to drop 2.4 per cent.

WiseTech Global pushed the tech sector higher, rallying 4.7 per cent after it flagged a $3.2 billion takeover of US-based cloud logistics provider E2open.

Financials grinded 0.2 per cent lower, as ANZ lost 1.4 per cent and CBA was the big four's best performer, eking a paltry 0.02 per cent gain to $173.88.

Miners fared batter, with the materials sector up 0.4 per cent as uranium miners Paladin and Boss Energy led the top 200 with gains of more than eight per cent.

Uranium plays have been rallying since the White House last week flagged plans to boost US nuclear plant development and supply chains.

Gold miners and explorers were mixed, after the precious metal prices rolled over after rallying on the back of tariff-induced investor appetite for the safe haven.

Gold is trading roughly five per cent below all-time highs, at $US3,340 ($A5,121) an ounce.

Utilities was the worst-performing sector, down 2.4 per cent, after Origin Energy flagged a $50 million hit to future earnings as unseasonable warmth in the UK spoiled income for its Octopus Energy stake.

Origin shares closed 4.9 per cent lower, to $10.51.

The Aussie also carved out some gains against most major currencies, helped by a slight lift in risk sentiment since Friday.

Looking ahead, the Australian Bureau of Statistics will release its monthly consumer price index indicator on Wednesday, with markets tipping the annual figure to ease from 3.4 per cent to 3.3 per cent.

Bank holidays in the US and the UK could limit the impacts of overnight markets on local trade on Tuesday, but so far S&P500 futures are pointing one per cent higher after Friday's tariff-induced sell off.

ON THE ASX:

* The benchmark S&P/ASX200 index finished Monday 0.1 point higher, up zero per cent, to 8,361

* The broader All Ordinaries rose 2.1 points, or 0.02 per cent, to 8,588.8

CURRENCY SNAPSHOT:

One Australian dollar buys:

* 65.23 US cents, from 64.32 US cents on Friday at 5pm

* 93.13 Japanese yen, from 92.25 Japanese yen

* 57.18 Euro cents, from 56.86 Euro cents

* 48.06 British pence, from 47.83 pence

* 1.083 NZ cents, from 108.67 NZ cents