Australia Stocks surge near five-week high

Headline indices of the Australian financial market advanced on Monday, 07 January 2019, as appetite for riskier assets renewed on following European and US markets that roared last week on strong US data and dovish comments from the Federal Reserve. Most of ASX sectors inclined, with shares in materials and energy sectors led gains on higher oil and commodities prices. In late afternoon trade, the benchmark S&P/ASX200 index advanced 66.04 points, or 1.2%, to 5,685.40 points, while the broader All Ordinaries index rose 69.65 points, or 1.2%, to 5,746.60 points.

Risk appetite in Sydney market got a huge boost on the positive news from the US, where the Dow Jones finished up 3.3% on Friday after strong US jobs report and dovish statements from Fed Chairman Jerome Powell last week. Data on Friday showed US employers hired the most workers in 10 months in December. That, coupled with Fed Chairman Jerome Powell's pledge that the central bank would be "patient" with its monetary policy, soothed markets that had been roiled by concerns about a global slowdown.

 

Looking ahead, investors kept their eyes on trade ties between Washington and Beijing, with delegations from both sides set to hold negotiations Monday. U.S. and Chinese officials will begin trade negotiations on Monday in the hope of reaching a deal during a 90-day truce between President Donald Trump and his counterpart Xi Jinping. U.S. President Donald Trump said on Sunday that the talks were going very well and that weakness in the Chinese economy gave Beijing a reason to work toward a deal.

Shares of energy stocks were higher, boosted by surge in crude oil prices. Woodside Petroleum climbed 1.8% to a one-and-a-half month high, while Santos soared 4.2% to its highest since Dec 12.

Shares of material sector advanced on higher base metals and iron ore prices. BHP Group, Australia's biggest listed firm, gained 3.1%, while its rival Rio Tinto rose as much 2.7%. Bluescope Steel was up by 5.34% to $11.925, while Fortescue Metals, South32, and Alumina were each between 2.4% and 2.7% higher.

Shares of financials were up, with ANZ was the best of the big banks early on, gaining 1.4%. Meanwhile, NAB added 1.4%, Commonwealth Bank was 1.3% higher and Westpac gained 1.1%.

Among individual stocks, Healius slumped as much 3.6% after it rejected a A$1.7 billion buyout approach from Chinese construction company Jangho Group, saying it undervalued Australia's No. 2 medical centre operator.

ECONOMIC NEWS: Australia manufacturing sector slipped into contraction in December with a Performance of Manufacturing Index score of 49.5, the latest survey from the Australia Industry Group revealed on Monday. That's down from 51.3 in November, and it falls beneath the boom-or-bust line of 50 that separates expansion from contraction. It's also the first time in 26 months that the index has failed to expand.

CURRENCY: Australian Dollar was tad higher against greenback and against a basket of other peers on Monday. The Australian dollar was quoted at 71.15 US cents, up from 70.23 US cents on Friday.

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