Australia: Shares hit record highs ahead of Sino-US trade deal; New Zealand rises

[BENGALURU] Australian shares hit record highs on Tuesday, powered by gains in financial and mining sectors, as optimism over a planned signing of a preliminary Sino-US trade deal lifted investor spirits.

As of 0055 GMT, the S&P/ASX 200 index rose 0.8 per cent to 6,957.1. Earlier in the session, the index touched an all-time peak of 6,961.20. The benchmark ended 0.4 per cent weaker on Monday.

Adding to the positive mood was news that the United States had dropped its designation of China as a currency manipulator.

The widely expected decision came as a high-level Chinese delegation arrived in Washington ahead of Wednesday's signing of a Phase 1 trade pact aimed at easing an 18-month-old tariff war between the world's top two economies that has roiled financial markets.

"It is more of a symbolic move showing that both sides will be willing to work with each other when it comes to trade ... It does seem that trade relations are certainly warming up between the US and China," James Tao, a market analyst at CommSec said.

Mining stocks climbed 1 per cent, with iron ore miners dominating gains in the sector. Australian iron ore miners count China as a key destination for the export of the steelmaking commodity.

BHP Group and Fortescue Metals Group, the world's fourth-largest iron ore miner, advanced over 1 per cent each.

Markets will also focus on trade figures for the Chinese economy due later in the day, which is expected to show an uptick in export and import growth.

Australia's financial stocks climbed 0.7 per cent to their highest since Dec 17, 2019. The 'Big Four' banks gained between 0.1 per cent and 1.1 per cent.

S&P Global Ratings on Monday said it expects a modest increase in credit losses for larger Australian banks after damaging bushfires in the country, which have led analysts to downgrade growth forecasts for the year.

"The fires have not directly affected the major Australian cities, where the larger Australian banks generally have most of their home loan exposures," S&P said in a note, adding that the full extent of the effect of bushfires on banks will not be known until to mid to late this year.

A stronger US dollar lent support to export-reliant healthcare stocks, which jumped 1.4 per cent to a record high. Sector heavyweight CSL added 1.8 per cent, while domestic shares of San Diego-based Resmed Inc climbed 1 per cent.

Bucking the trend, gold stocks hit their lowest in more than a week as a broader risk-on sentiment sapped demand for the safe-haven bullion.

New Zealand's benchmark S&P/NZX 50 index rose 0.5 per cent to 11,596.85.

Drug retailer EBOS Group and market operator NZX were among the top boosts to the benchmark, rising between 0.8 per cent and 2.2 per cent, each.

REUTERS