Australia shares rally, NZ at record-high on China-US trade deal optimism

[BENGALURU] Australian shares rose to a more than five-month high on Monday, buoyed by reports that China and the United States were close to striking a deal to end their bitter year-long trade war that had unsettled financial markets and dented global growth.

The S&P/ASX 200 index advanced 0.7 per cent or 42.3 points to 6,235.0 by 0036 GMT and was poised for its fourth straight session of gains. The benchmark tacked on 0.4 per cent on Friday.

The early impetus came from strong US stock futures after the Wall Street Journal reported that the United States could lift most or all of its tariffs on Beijing, while a summit between US President Donald Trump and his Chinese counterpart Xi Jinping to sign a final trade deal could happen later this month. US stocks had also firmed on Friday.

"We are likely to at least see a positive start for stocks and risk assets as Monday trade kicks off," Greg Mckenna Strategist, Trader, and Founder at McKenna Macro said in a note, referring to the strength in US equities.

The Australian financial subindex rose about 0.6 per cent as the country's big four banks advanced on solid demand. Australia and New Zealand Banking Group outpaced its peers with a near 0.5 per cent gain.

Global miners BHP Group, Rio Tinto and Fortescue Metals Group strengthened in line with an uptick in Chinese iron ore futures.

The Australian metals and mining index was 0.5 per cent higher, although gains were somewhat offset by a decline in gold stocks.

In corporate activity, agribusiness company Graincorp added 0.5 per cent after it said it intended to sell its Australian bulk liquid terminals business to ANZ Terminals for an enterprise value of A$350 million (S$336 million).

The country's largest casino operator, Crown Resorts jumped more than 2 per cent despite having its bid to delay the construction of a Melbourne skyscraper project rejected.

Pesticides maker Nufarm was the best performer on the ASX 200, gaining as much as 10.6 per cent as it recovered from a more than four-year low. Local drought conditions have dented demand for its products and battered the company's margins.

New Zealand shares touched a record high on broad-based gains, led by financials and utilities. The benchmark S&P/NZX 50 index rose 0.7 per cent or 67.2 points to 9,418.88.

The New Zealand-listed shares of Westpac Banking were among the biggest boosts to the index, gaining more than 1 per cent.

Milk producer Fonterra extended its recovery into a second session after having touched a record low last week. The company had on Thursday cut its annual earnings outlook amid challenging weather conditions.

REUTERS