The Business Times

Australia: Shares edge up, but trade tensions hold back gains

Published Wed, May 22, 2019 · 07:44 AM

[SYDNEY] Australian shares eked out slight gains on Wednesday, as the country's post-election optimism was dampened by worries over the risk of a protracted US-China trade war.

The S&P/ASX 200 index recovered from earlier losses to tick up 10.6 points or 0.2 per cent to 6,510.70. The benchmark hovered around the more than 11-year highs it scaled on Monday.

Since Australia's elections results were announced on the weekend, the index has risen around 2.3 per cent.

The United States allowed a temporary relaxation of curbs against Chinese telecom giant Huawei. The move failed to convince investors who were rattled by the sudden blacklisting of the company last week, amid already strained trade talks.

"Traders don't know where to turn, but we do know the Chinese are not going to come back to the table when the US is going after Chinese tech," Chris Weston, head of research at Pepperstone brokerage, said in a note.

However, analysts believe that Australian markets continue to find some support from the surprise election win by the Liberal National coalition, which has promised immediate tax cuts for 10 million middle-and low-income earners.

Despite trade tensions, "the feel-good factor from the surprise Liberal victory and proposed tax cuts should keep the markets up quite nicely over the next month or so," said Damian Rooney, director of equity sales at Argonaut.

Financials pared losses to end flat, after a near 8 per cent rally over the previous two sessions.

Australia's financial regulator's move to impose additional capital requirements on some financial institutions after it found weakness in their ability to self-assess non-financial risk held back lenders.

New Zealand's benchmark S&P/NZX 50 index rose 0.2 per cent or 21.39 points to 10,237.48.

Utilities provider Infratil rose 7.1 per cent and was the top gainer, while dairy giant a2 Milk Company edged lower.

REUTERS

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