The Australian share market finished session higher on Friday, 13 December 2019, as appetite for riskier assets underpinned on reports that the world's two biggest economies reached an interim "Phase 1" trade agreement. At closing bell, the benchmark S&P/ASX200 index increased by 30.85 points, or 0.46%, to 6,739.68, while the broader All Ordinaries rose 33.75 points, or 0.5%, to 6,844.59.
Traders risk sentiments bolstered on hopes that the trade spat between the world's two largest economies may finally come to an end after President Donald Trump statement that the U. S. is getting close to a "big deal" with China. Traders were also encouraged by reports that US and Chinese negotiators have agreed in principle to the "phase one" trade deal. Washington has offered to slash existing tariffs and cancel new ones set to kick in on Sunday, December 15, in exchange for more agricultural purchases and intellectual property protection.
China's Ministry of commerce said on Thursday that its negotiators were in "close communication" with their American counterparts ahead of the new round of tariffs, but gave no indication whether the trade talks were making progress. But late Thursday, Myron Brilliant, head of international affairs for the U. S. Chamber of Commerce, confirmed that both sides were close to inking a modest trade deal that would suspend the new tariffs and reduce existing ones by an unspecified amount. In return, China would buy more U.
S. farm products, increase American companies' access to the Chinese market and tighten protection for intellectual property rights, said Brilliant, who has been briefed by both sides.
The big four banks all closed higher with three of the majors advancing by more than 1.4%. ANZ Bank (ANZ) was the best with near 2% boost while Commonwealth Bank (CBA) lagged its peers. Virgin Money UK (VUK) jumped 7.7% with a projected majority victory for Boris Johnson's conservative party at the UK general election, paving the way for a likely Brexit deal agreement by the deadline of 31 January 2020.
Miners were also higher. Although iron ore prices fell, major players such as BHP Group (BHP) and Fortescue (FMG) made gains of close to 2%. A fall in gold prices saw gold miners close in the red. Rare earths miner Lynas (LYC) climbed another 8.8% after a near 10% spike yesterday on reports the US Army is looking to fund a rare earths processing facility. LYC is likely to put in a tender application.
Energy and tech names were also mostly higher although Z Energy (ZEL), a NZ based fuel company, slid 11.6% as lower margins hit its FY20 earnings outlook. Earnings for the year are expected to fall as much as ~13% on previous guidance. Supermarkets Coles Group (COL) and Woolworths (WOW) were also weighing on the consumer staples sector.
CURRENCY NEWS: The Australian dollar, sensitive to shifts in broader risk appetite, inclined against greenback. The Australian dollar changed hands at $0.6922 after rising from levels below $0.688 in the previous session.
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