Australia shares end higher on trade talk optimism, virus treatment hopes

By Arpit Nayak

Financials helped Australian shares finish higher on Tuesday, as sentiment was boosted by signs of progress in Sino-U.S. trade talks and positive developments in Covid-19 treatments, but weak unemployment data capped gains.

Investors cheered news that top U.S. and Chinese trade officials reaffirmed their commitment to the Phase 1 trade deal that has seen China lagging on its obligations to buy American goods.

The S&P/ASX 200 index rose 0.5 per cent to 6,161.4 at the close of trade.

Also supporting sentiment was the U.S. Food and Drug Administration authorising the use of blood plasma from recovered Covid-19 patients as a treatment and a report that the U.S. government was mulling fast-tracking an experimental vaccine.

“The market is still being propped up by stimulus and hopes of a vaccines while the actual economy is not doing that well,” said Henry Jennings, analyst at Marcustoday.

“But we’re prepared to ignore that and look through the dark shadows of the moment at the promised land on the other side.”

The benchmark index pared some early gains after data from the Australian Bureau of Statistics showed employment fell further over the month till Aug. 8, as the state of Victoria grapples with a second wave of virus infections.

On the bright side, financials rose 2.5 per cent with the country’s No.2 lender Westpac Banking Corp climbing 4.3 per cent.

Tech stocks rose for a sixth straight session to hit another record high, with buy-now-pay-later firm Afterpay surging 11.8 per cent.

Qantas ended 3 per cent higher after the Australian flag carrier said it would cut up to 2,500 jobs and flagged a A$10 billion ($7.17 billion) revenue hit due to the Covid-19 pandemic.

New Zealand’s benchmark S&P/NZX 50 index rose 0.6 per cent to 11,993.18, its highest close since Feb. 21.

Local shares of Westpac Banking Corp and Australia and New Zealand Banking Group climbed 4.1 per cent and 3.8 per cent, respectively. ($1 = 1.3953 Australian dollars)