Australia Stocks surge as Asian peers rise, energy firms lead

Headline indices of the Australia share market closed sharp higher on Monday, 19 August 2019, as risk sentiments underpinned on following a positive lead from Wall Street on Friday. Meanwhile, sentiments were further boosted up after comments from Donald Trump's top economic adviser hailing "positive" trade talks with top Chinese negotiators and optimism that central banks will provide fresh support to head off a global economic recession. At closing bell, the benchmark S&P/ASX200 index inclined 61.87 points, or 0.97%, to 6,467.40. Meanwhile the broader All Ordinaries index, which tracks the nation's 500 biggest listed companies, advanced 64.57 points, or 1%, to 6,550.50.

Wall Street shares had rebounded on Friday after a report that Germany's coalition government was prepared to set aside its balanced budget rule in order to take on new debt and launch stimulus steps to counter a possible recession.

 

Investors were also encouraged by the potential for improvement in US-China trade relations after White House chief economic adviser Larry Kudlow said that if talks between deputies from Beijing and Washington went well and "we can have a substantive renewal of negotiations" then "we are planning to have China come to the USA and meet with our principals to continue the negotiations". He added that high-level phone talks last week were "a lot more positive than has been reported". Trump provided further cause for hope by tweeting: "We are doing very well with China, and talking." Kudlow also raised the prospect of using cash taken from higher tariffs on Chinese goods to pay for tax cuts.

Moreover, in a move viewed as a guided rate cut China's central bank on Saturday unveiled key interest rate reform to help steer borrowing costs lower for companies and support a slowing economy caught in the grip of a bruising trade war with the US.

Shares of the energy subindex were top performer in the benchmark ASX index, on higher oil prices. Beach Energy led the sector's gains after the oil and gas explorer reported a whopping 86% rise in its full year underlying net profit after tax.

Shares of the financials subindex were also performed strongly, with all the "Big Four" lenders gaining in the range between 1% and 1.5%. Westpac Banking Corp rose 1% after it reported a rise in the number of people missing mortgage payments amid a sluggish economy and a soft housing market.

Smartgroup Corp surged as much as 25% after Business administration provider reported a 5% rise in half year profit and brokerage Morgans raised its rating on the stock to "add" from "hold".

Shares of metals and mining companies retreated slightly after Chinese iron ore futures posted their fourth consecutive weekly loss on Friday.

CURRENCY NEWS: The Australian dollar, a liquid proxy for emerging market and China risk, was firmer against greenback on Monday. The Aussie dollar is buying 67.84 US cents, from 67.83 US cents on Friday.

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