Australian shares rise on Sino-U.S. ‘phase one’ trade deal; NZ falls

13 Dec 2019 / 10:59 H.

Australian shares rose on Friday, with metals and mining stocks jumping to a four-month high, after sources said the United States and China reached a "phase one" trade deal in principle.

The S&P/ASX 200 index gained 0.4%, or 29.70 points, to 6,738 by 0058 GMT. The benchmark fell 0.7% in the previous session, but was on track to end higher for the week.

"Risk assets have predictably surged, and those investors who were holding on to trade deal premiums were hugely rewarded for their patience as Dec. 15 hedges unwound, and negative equity market bets are getting stopped into trades," said Stephen Innes, chief Asia market strategist at AxiTrader.

While the U.S. agreed to reduce some tariffs on Chinese goods and delay a tranche of Dec. 15 tariffs, China also has agreed to make $50 billion in agricultural purchases in 2020 as part of the deal, sources told Reuters.

The metals and mining stocks gained as a trade deal would help provide relief to top metals consumer China's slackening growth. The sub-index was on track for a 4% weekly gain, the highest since mid-June.

Global mining giants BHP Group Ltd and Rio Tinto jumped 2% and 1.6%, respectively. Iron ore miner Fortescue Metals Group gained as much as 2.8%, its highest since July 2008.

Financials added 1.3%, with three of the country's "Big Four" banks rising between 1.5% and 2.2%.

The country's biggest lender Commonwealth Bank of Australia , however, recorded limited gains of 0.3% after it flagged additional payments to underpaid employees.

The energy sub-index was buoyed by Woodside Petroleum Ltd and Santos Ltd, adding 0.7% and 0.9%, respectively.

Oil prices had risen overnight on hopes that the trade deal would ease concerns over the global crude demand.

Lynas Corp jumped as much as 6.8% after it said it would submit a compliant tender in response to the U.S. Department of Defense's call for proposals to build a heavy rare earths separation plant in the United States.

However, gold miners tumbled 2.4% as the safe haven metal lost its shine after risk sentiment improved.

Sector heavyweight Newcrest Mining Ltd lost 1.8% and Evolution Mining fell 3.9%.

New Zealand's benchmark S&P/NZX 50 index fell 0.5%, or 53.71 points, to 11,254.27.

Manufacturing activity in the country expanded at a slower pace in November, a survey showed on Friday.

Fuel retailer Z Energy Ltd plunged up to 17.3% and was the worst performer on the bourse after cutting annual earnings outlook citing low refining margins. - Reuters

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