Australia Market extends gain

The Australian share market has continued its positive start to 2020 with a second successive day of gains on Friday, 03 January 2020, on following a rally on the Wall Street to new all-time highs overnight, boosted by anticipation of a phase one trade deal being inked between Washington and Beijing and monetary policy easing by China's central bank aimed at stimulating the country's economy. Market gains were, however, capped on heightened tensions in the Middle East after news that a US airstrike in Baghdad killed a top Iranian military commander. At closing bell, the benchmark S&P/ASX200 index inclined by 42.92 points, or 0.64%, to 6,733.50, while the broader All Ordinaries rose 45.24 points, or 0.66%, to 6,855.20.

Sydney market got a boost on following a rally overseas after China's central bank said it will free up more money for lending. The People's Bank of China announced on Wednesday that it will lower the reserve requirement ratio for banks by 50 basis points with effect from Jan. 6, unleashing about 800 billion yuan ($115 billion) in funds. The move is expected to boost the country's slowing economy ahead of the Lunar New Year, which falls on Jan. 25.

 

Meanwhile, sign of initial Sino-U.S. trade deal progress also aided sentiment. Earlier this week, President Donald Trump tweeted that he will sign the initial trade deal with China at the White House this month. He also said he plans to travel to Beijing at a later date to open talks on other sticking points in the dispute that remain to be worked out, including Chinese practices the U.S. complains unfairly favor its own companies. That came following reports indicating Chinese Vice Premier Liu He, Beijing's top trade negotiator, could sign the agreement.

Investors continued to wait for Washington and Beijing to formalize an initial trade deal that has helped ease the market's jitters over the 18-month dispute between the world's two biggest economies. Washington and Beijing announced last month that they reached an agreement over a "Phase 1" trade pact that calls for the U.S. to reduce tariffs and China to buy larger quantities of U.S. farm products.

Market gains were, however, capped on heightened geopolitical tensions in the Middle East after news that a US airstrike in Baghdad killed a top Iranian military commander.

Energy stocks advanced on higher oil prices following a U.S. airstrike in Iraq. Oil and gas major Woodside Petroleum Ltd ended 0.9% higher, while Oil Search Ltd jumped 3.2%. on firm iron ore prices.

The heavily miners jumped on firm iron ore prices. Anglo-Australian miner BHP Group advanced 0.5%, while peer Rio Tinto rose 0.2%.

Heavyweight financial lso added to gains, with all components of the 'Big Four' banks closed in the black.

CURRENCY NEWS: The Australian dollar, sensitive to shifts in broader risk appetite, eased against the U.S. dollar on Friday. The local currency was quoted at $0.6977 after slipping from levels above $0.700 yesterday.

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