Australia Market extends gain on trade optimism

The Australian share market closed higher for seventh straight session on Tuesday, 29 October 2019, as appetite for risk assets bolstered on tracking rallies on Wall Street, supported by hopes for an easing in Sino-U.S. trade tensions. Market gains were, however, capped ahead of Reserve Bank of Australia (RBA) Governor Philip Lowe's speech later on Tuesday and the US Federal Reserve policy meeting outcome on Wednesday. At closing bell, the benchmark S&P/ASX200 index was up 4.71 points, or 0.07%, to 6,745.42, while the broader All Ordinaries rose 5.91 points, or 0.09%, to 6,848.47.

Investors flocked to riskier assets on the back of improvement on the U.S.-China trade front after U.S. President Donald Trump said on Monday he expected to sign a significant part of the trade deal with China ahead of schedule but did not elaborate on the timing. That followed remarks late last week from both U.S. and Chinese officials saying they were "close to finalizing" a deal. Leaders of the world's two biggest economies are working to agree on the text for a Phase 1 trade agreement announced by Trump on Oct. 11. Trump has said he hopes to sign the deal with China's President Xi Jinping next month at a summit in Chile.

 

Investors were looking ahead to a likely rate cut by the Federal Reserve when policy makers conclude a two-day meeting on Wednesday, although the US central bank could signal caution about further easing.

Some investors were also looking at Reserve Bank of Australia (RBA) Governor Philip Lowe's speech later on Tuesday. It comes ahead of third-quarter inflation data on Wednesday that will be closely watched, as a higher-than-expected figure could extinguish chances of a fourth interest rate cut this year.

Shares of tech sector were biggest winner among ASX200 index, with financial data provider, Iress Ltd (IRE) gaining 4.6%, Xero (XRO) rising 2.7% and Bravura Solutions (BVS) rallying 4.7% with the software solutions provider announcing the acquisition of another software firm, FinoComp, for $25 million.

Shares of big four banks were lower, with Westpac (WBC) was the major laggard as it slipped 0.9% while Commonwealth Bank (CBA) stood out with a small 0.02% decline.

Energy stocks were also weaker with global oil prices falling on oversupply concerns. Beach Energy (BPT) was the one of the worst performers falling 2.9%.

CURRENCY NEWS: The Australian dollar was little changed against greenback ahead of key releases for local inflation and the US Fed interest rate decision. The Australian dollar, sensitive to shifts in broader risk appetite, changed hands at $0.6845 after touching highs above $0.684 yesterday.

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