ASX simmers after carving out the 7,000 mark as trade wars tensions cool

January 17, 2020 - 1 month ago
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It has been all uphill for the Australian share market after posting twelve consecutive sessions, the bulls weren’t holding back today after the index reached a fresh all-time high of 7,088.1.

However, the bullish enthusiasm faded this afternoon, as the benchmark S&P/ASX 200 index eased back from the all-time highs and finished Friday up +22.3 points, or +0.32%, to an all-time closing high of 7,064.1 points.

The broader All Ordinaries gained +21.7 points, or +0.3%, to finish at an all-time high of 7,180.3 points.

The ASX200 finished the week up +1.95%, and currently holds to a +5.69% gain, so far for 2020.

The ASX bulls were unleashed this week following the surge on Wall Street performance triggered by developments in the U.S. and China trade war.

From endless Tweets to rounds of renegotiations and escalating tariffs, the 18-month trade saga between the world’s two largest economies finally signed the so-called “Phase-One” trade deal on Wednesday.

“Today we take a momentous step, one that has never been taken before with China,” Trump said before inking the agreement with Chinese Vice Premier Liu He in the White House’s East Room.

The preliminary pact boosts Chinese purchases of U.S. agricultural, manufacturing and other goods, and includes enforcement mechanisms. China has pledged to increase its purchases of U.S. goods and services by $200 billion over two years.

Meanwhile, Treasury Secretary Steven Mnuchin told news sources that more U.S. tariffs on China would be rolled back if a phase-two trade deal were to be reached.

Though the deal cuts U.S. tariffs to 7.5% on around $120 billion in Chinese products, it keeps in place levies on some $360 billion of Chinese imports.

White House economic adviser Larry Kudlow said the U.S. would take “proportionate actions” if China doesn’t live up to its commitments, and defended Trump’s use of import duties to spur Beijing to negotiate.

President Trump said he would remove all US tariffs on Chinese imports as soon as the two countries completed the Phase 2 part of their trade agreement, adding that he does not expect there to be a Phase 3 pact.

“I’m leaving them on because otherwise, we have no cards to negotiate with,” Trump said at a White House event to sign the Phase 1 deal. “But they will all come off as soon as we finish Phase 2.”

For the week, the “Fab Four” (banks) led the advance on the local share market.

Commonwealth Bank advanced +1.9% to $84.04, NAB rose +2.1% to $25.46, while Westpac climbed +1.5% to $25.01 and ANZ advanced +1.3% to $25.44.

Firmer iron ore prices pushed the major miners higher this week, with reports that China imported a near-record amount of iron ore in December 2019, giving investors’ confidence demand for bulk metal was still strong.

For the week, Titans BHP Group added +1.8% to $40.61, with Rio Tinto advancing +2.7% to $105.15, while Fortescue Metals gained a hefty +6.6% to close at a new 11-year high share price of $11.41.

Goldminers also shined, with Northern Star chalking up a healthy rise of + 3.2%, Newcrest climbed +0.8%, and Evolution rose +1.3%.

Supermarket giants Woolworths was noticeably edging back towards its all-time-high share price from November last year after today’s gains posted a +0.93% rise and closed with shares worth $39.04 each. As for Coles, its share price was somewhat muted to a gain of +0.32%.

The Health care sector was displayed mixed signals after biotech giant CSL dropped -0.3%, but still finished above the historic $300 level at $300.10.

Cochlear offset the loss with a -0.62%. Ramsay gained +1.65%, Sonic gained +0.65%, but Fisher and Paykel lost -0.87%.

Meanwhile, Mesoblast buoyed the health care sector with a +5.4% rise to a near two-year high of $2.53.

Brickworks and Altium both set new all-time highs, with the brickmaker rising +1.1% to $20.01 and the printed circuit board software company gaining +0.8% to $38.44.

A2 Milk, a major exporter to China, advanced +3.3% to $14.68 after China announced the country’s economy grew in the fourth quarter more than analysts had expected, given the bruising U.S. and China trade spat.

Pilbara Minerals was the biggest riser on the ASX 200 after surging +8.6%, while Galaxy Resources gained +1.7%, while Orocobre gained +2.0%.

Nufarm plummeted -10% to $5.48 after the agricultural and chemical company said climate extremes hammered its Australian and New Zealand operations during the bushfire crisis.

Looking to the tech sector, Appen advanced +12.2% (also a two-month high) to $26.08, Altium firmed +7.9% to $38.60, EML Payments climbed +9% to $5.26, WiseTech Global rose +3.8% to $25.48, Nearmap added +1.7% to $2.64, Xero gained +2.2% to $85.81 and Afterpay closed +6.9% gained to $33.28.

The energy sector was the only red mark on an otherwise positive day. Woodside Petroleum lost -1.22% to $35.52, Santos lost -0.79% to $8.82, Origin Energy dropped -0.23% to $8.74, with Cooper Energy closed the week -3.6% lower at $0.60, Viva Energy slid -2.7% to $1.91, Caltex Australia plunged -2.1% to $34.95, Oil Search declined -1.1% to $7.85

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