Australia Market gains as US-Sino trade worries ease

Headline indices of the Australian equity market advanced on Monday, 1 July 2019, as risk sentiments underpinned after Donald Trump and Xi Jinping agreed to restart trade talks, reviving hopes of an end to their tariffs war. Market gains were, however, capped after private survey data showed that Chinese factory activity in June shrank unexpectedly. At closing bell, the benchmark S&P/ASX200 index added 29.33 points, or 0.44%, at 6,648.10 points, while the broader All Ordinaries rose 32.23 points, or 0.48%, at 6,731.40.

U.S. President Donald Trump and Chinese President Xi Jinping emerged from a meeting on the sidelines of the Group of 20 summit in Osaka, Japan, where both sides confirmed that they did not plan to levy any new tariffs against each other's products at the present time.

 

After a highly anticipated meeting on the sidelines of the G20 summit Saturday, the US president said negotiations to resolve the standoff between the world's two biggest economies were "back on track" and threatened new levies on Chinese goods would be held off. Trump also signalled a softer position on Chinese telecom giant Huawei, a major bone of contention in the row, by saying US companies could sell equipment "where there's no great national security problem".

Data released Monday from a private survey showed that Chinese factory activity in June shrank unexpectedly. The Caixin/Markit factory Purchasing Managers' Index (PMI) for June was 49.4. A PMI reading above 50 indicates expansion while those below that figure signal contraction. That followed a Sunday official data release that showed Chinese manufacturing activity shrinking more than expected in June. The Purchasing Managers' Index stood at 49.4 in June, according to China's National Bureau of Statistics on Sunday.

ECONOMIC NEWS:- Australia manufacturing PMI stumbles in June, AiG -- Australia's Performance of Manufacturing Index (PMI) compiled by the Australian industry Group (AiG) fell 3.3 points to 49.4, signaling its first contraction in manufacturing conditions and the lowest result since August 2016.The combination of the housing construction downturn, a slowing in engineering construction, continuing drought conditions and slow income growth across the broader economy caught up with the manufacturing sector and dragged it into negative territory as the financial year drew to a close, said Innes Willox, Ai Group Chief Executive.

CURRENCY NEWS: The Australian dollar was little changed against the U.S. dollar on Monday. The Australian dollar changed hands at $0.7003 following its rise from below $0.696 in the previous trading week.

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