Market wrap: ASX200 rises as investors cheer expected interest rate cuts and US-China trade deal

Expectations of an imminent interest rate cut in the world’s largest economy and renewed optimism around a possible trade deal between China and the US sparked a fresh rally on the Australian sharemarket on Monday.

The benchmark ASX200 lifted 36.6 points, or 0.41 per cent, to close at 9,055.6 points, while the broader All Ordinaries index added 34.7 points, or 0.37 per cent, to 9,351.9.

The gains were broadbased, with eight of 11 industry sectors ending in the green, led by IT with an 0.89 per cent lift.

Megaport surged 4.25 per cent to $15.96 a share, Xero gained 0.92 per cent to $152.17 and Codan rose 1.23 per cent to $36.30.

Energy stocks tracked rising oil prices to advance 0.84 per cent, with Woodside Energy lifting 1.19 per cent to $24.69 and Santos rising 1.41 per cent to $6.46.

The big banks also rose, with Commonwealth Bank adding 0.76 per cent to $171.67, Westpac adding 0.62 per cent to $39.11, ANZ climbing 0.57 per cent to $36.85 and NAB gaining 0.67 per cent to $43.54.

The bourse-heavy materials advanced 0.42 per cent as the mining giants followed a 0.4 per cent lift in Singapore iron ore futures to US$104.1 a tonne.

BHP gained 0.69 per cent to $43.54, Rio Tinto rose 1.27 per cent to $133.49 and Fortescue lifted 1.32 per cent to $20.79.

The positive session followed a strong rally on Wall St overnight on Friday, propelled by a better-than-expected inflation print that investors believe all but guarantees a rate cut from the US Federal Reserve on Thursday morning.

The Dow Jones jumped 472 points to crack the 47,000 barrier for the first time in history, settling at 47,207 points, while the S & P500 rose 0.79 per cent to 6791 and the tech-heavy Nasdaq jumped 1.15 per cent to 23,204.

News of a possible comprehensive trade deal between the US and China also added to the bullish sentiment.

“US-China trade tensions are easing and the tit-for-tat brinkmanship that sparked the recent pull back on Wall Street and kept the markets locked in a range is settling down,” Capital.com senior financial market analyst Kyle Rodda said.

“The US has said that high level talks with China in Malaysia may yield a surprising comprehensive trade deal.

“US President Trump will be in Asia in the week ahead, with a meeting between him and Chinese President Xi all but locked-in.

“Such an event between leaders would likely not be scheduled if there weren’t some good news to try and sell.”

The deal could ease curbs on Chinese rare earths exports, Mr Rodda said, and Aussie rare earth miners plunged on Monday.

The Gina Rinehart-backed Arafura Rare Earths crashed 9.64 per cent to 38c, while Australian Strategic Materials lost nearly 11 per cent to 94c.

In corporate news, kitchen appliance manufacturer Breville Group jumped 4.18 per cent to $30.16 after a survey of 1900 coffee drinkers across the world suggested a shift to at-home coffee consumption.

Petrol retailer Viva Energy tumbled 4.34 per cent to $1.76 after reporting a slump in convenience sales in the three months to September 30 to $392m.

The top gainer on the ASX200 was AUB Group, which soared 12.1 per cent to $35.98.

The largest laggard was Iluka Resources, slumping 6.87 per cent to $7.18.

The Aussie dollar gained 0.3 per cent to buy US65.3c at the closing bell.