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Australia: Shares close higher on upbeat trade news, fading Brexit worries

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The S&P/ASX 200 index closed 0.5 per cent higher, or 30.9 points, at 6,739.7.

[BENGALURU] Australian shares closed higher on Friday as news of a potential "phase one" US-China trade deal and a resounding election win for Britain's Conservative Party spurred risk appetite.

While trade tensions eased, investor nerves were also calmed by UK Prime Minister Boris Johnson's victory as it was likely to help him take Britain out of the European Union.

The S&P/ASX 200 index closed 0.5 per cent higher, or 30.9 points, at 6,739.7.

Reuters reported the United States has agreed to reduce some tariffs on Chinese goods and delay a tranche of tariffs as part of a phase one deal. Neither Washington nor Beijing have released any official statements.

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Market voices on:

Damian Rooney, director of equity sales at Argonaut, said he "would love to see more detail" on the deal, though the "feel-good factor" of the news might be enough to buoy domestic equities into a Santa Claus rally.

Commodity stocks such as iron ore miners and energy producers dominated gains on the benchmark. Australia's resource-reliant economic fortunes have been closely tied to the growth prospects in China, its biggest trade partner.

Major iron ore miners BHP Group, Rio Tinto and Fortescue Metals Group tacked on between 1.6 per cent and 2 per cent, while oil and gas producers Woodside Petroleum and Santos Ltd advanced 1.1 per cent and 0.6 per cent, respectively.

UK-exposed stocks on the Australian benchmark jumped sharply on news that Mr Johnson's Conservative Party in the UK was set for landslide majority, with investment managers such as Pendal Group and Platinum Asset Management adding 7.6 per cent and 8.1 per cent, respectively.

Heavyweight financial stocks also added to strength, though Commonwealth Bank of Australia (CBA) ended only 0.4 per cent higher, compared with gains between 1.4 per cent and 2 per cent for the other three of the "Big Four" banks.

CBA said it would pay an additional A$25 million (S$23.4 million) to current and former employees who were found in a review to have been underpaid.

Tempering gains for the day, safe-haven gold stocks and defensive plays such as healthcare and property units ended weaker.

Gold miner Evolution Mining dove 7.8 per cent to end at its weakest since May. Property companies Mirvac Group fell 4.3 per cent and Goodman Group 2.9 per cent.

Real estate stocks, which boast of stable dividend yields, had enjoyed the low-rate environment for the better part of 2019, but have started to soften of late on signs of improvement in the economy that blunt the need for more rate cuts.

New Zealand's benchmark S&P/NZX 50 index fell 0.6 per cent, or 6.39 points, to 11,241.59. Fuel retailer Z Energy weighed on the benchmark, after plunging 12.8 per cent on cutting annual earnings outlook.

REUTERS