Local shares fell in early trade on reigniting tensions between the world's top two economies after U.S. officials tried to pin blame for the coronavirus pandemic on China.
The tensions between world's top two economies reignited after U.S. President Donald Trump said on Sunday that he believed that a mistake in China was the cause of the spreading coronavirus pandemic, though he did not present any evidence for the claim.
U.S. Secretary of State Mike Pompeo said on Sunday there was "a significant amount of evidence" that the new coronavirus emerged from a Chinese laboratory, doubling down on Washington's pressure on China over the virus' origin as U.S. deaths and economic damage mount. The accusation came after Donald Trump's threat late last week of retaliatory measures against China as punishment for the outbreak, once again sparking tariff fears that rattled markets through much of the last two years.
The US top spy agency said on Thursday that it had determined that the virus was not manmade but was still investigating whether it was caused by an accident at a laboratory in Wuhan. The separate reports stated that U.S. intelligence documents accused China of concealing the severity of the coronavirus outbreak to hoard medical supplies.
Nearly early every sector rose on the Aussie market with only the energy sector slightly weaker as oil prices remain under pressure from excess supply and weak international demand. The IT sector saw the largest percentage gain while improvements for financials, health and consumer staples added most to broader market gains.
Shares of buy-now-pay-later firm Afterpay (APT) rallied 24% on news released late Friday that Chinese tech giant, Tencent, bought a 5% stake in the company. This could open up the Chinese market to APT.
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Financials also performed well as the big four banks turned around early declines. The most improved was Westpac (WBC) which lifted 2.8%.
Insurance Australia Group (IAG), which owns NRMA, fell 2% as it announced it was unlikely to pay a final dividend later this year. Flight Centre (FLT) was also weaker by 6% as the travel agent's sales in April have been heavily impacted y COvid-19. FLT's Total Transaction Value (TTV) is only between 5-10% of normal activity
The materials sector struggled with Fortescue closing 1.7% lower, Rio Tinto down 1.6%, and South23 down 2.9%.
Qube Holdings gained 17.7% higher when it resume trading after a $500 million capital raising.
CURRENCY NEWS: The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 99.32 after declining from levels above 100 last week. The Australian dollar changed hands at $0.6397 after declining from levels above $0.648 last week.
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