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Soumyajit Saha

Australian shares end higher after China cuts tariffs on U.S. imports

FILE PHOTO: A pedestrian is reflected in a window where an investor sits looking at a board displaying stock prices at the Australian Securities Exchange (ASX) in Sydney, Australia February 9, 2018. REUTERS/David Gray

Australian shares ended more than 1% higher on Thursday after Beijing said it would halve tariffs on some goods imported from the United States, in a move that could improve Sino-U.S. ties ahead of talks on Phase 2 of the trade deal.

The S&P/ASX 200 index <.AXJO> closed 1.1% higher at 7,049.2, having gained 0.4% on Wednesday.

Asian shares also cheered Beijing's unexpected announcement, which could ease one of the biggest risks to global economic growth that has also been threatened by the coronavirus epidemic in China, Australia's biggest trade partner.

The decrease in tariffs was widely read as a positive step towards resolving the Sino-U.S. trade conflict following the signing of a Phase 1 trade deal in January, CommSec market analyst James Tao said.

The financials subindex <.AXFJ> ended 1.4% higher, underpinned by gains in the "Big Four" banks.

The country's two biggest lenders Commonwealth Bank of Australia <CBA.AX> and Westpac Banking Corp <WBC.AX> advanced 1% and 1.7%, respectively.

Sentiment was also supported by a firmer finish on Wall Street on Wednesday after encouraging U.S. economic data.

Traders cited unconfirmed reports of possible medical advances for the coronavirus as a trigger for Wednesday's rally, although they also said such a catalyst was likely to be an excuse for short-covering.

The World Health Organization, however, played down media reports of "breakthrough" drugs being discovered to treat people infected with the new virus.

Strength in copper prices helped mining stocks <.AXMM> extend gains into a third consecutive session.

Heavyweights BHP Group <BHP.AX> and Rio Tinto Ltd <RIO.AX>, which together own the majority of the world's biggest copper mine in Chile, added 1.7% and 0.7%, respectively.

The healthcare subindex <.AXHJ> rose 1.2% to close at a record high, as heavyweight CSL Ltd <CSL.AX> surged 1.6% after Morgan Stanley upgraded the company's rating and price target.

Meanwhile gold stocks <.AXGD> suffered a second straight session of losses as investors moved away from the safe-haven asset.

New Zealand's financial markets were closed for a holiday.

(Reporting by Soumyajit Saha in Bengaluru; Editing by Aditya Soni)

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