US-China trade deal boosts ASX to fresh record

The ASX notched its third record-breaking session on Thursday, shooting past a key 7000 barrier.

CSL was a standout early on Thursday, becoming the first local stock to rise above $300 as it set a record high of $301.04. Picture: AAP

The ASX notched its third record-breaking session on Thursday, shooting past a key 7000 barrier on a wave of optimism after the signing of a phase one US-China trade deal.

In the US, the Dow Jones Industrial Average lifted past 29,000 for the first time, providing a strong lead for Australian shares, which smashed past 7000 within minutes of the open.

Positive momentum was maintained throughout the session, and the S&P/ASX 200 closed at its high for the day of 7041.8, a gain of 47 points, or 0.67 per cent.

Meanwhile, the All Ords lifted 45 points, or 0.63 per cent, to 7158.6.

The fresh gains came after US President Donald Trump heralded the signing of a phase one deal with China as “momentous”, a move that officials said would lead to a sharp increase in sales of US goods and services to China, further open Chinese markets to foreign firms, and provide strong new protections for trade secrets and intellectual property.

“Australia’s market has been pulled along by the global optimism, even though local fundamentals are far more challenging,” BetaShares chief economist David Bassanese said.

“Australia’s economic and corporate earnings outlook appears relatively weak compared to that of the US. Having the S&P/ASX 200 at 7000 points implies the market is trading at a relatively high 18.3 times forward earnings, compared to a longer-run average of only 14.5.

“Relying on an asset-led economic recovery comes with great risk - namely overly inflated asset prices that may need to fall somewhat harder than otherwise in coming years.”

Tech was the best-performing sector as the trade deal gave more clarity on intellectual property, the local sector finishing up by 1.7 per cent led by a 4.3 per cent jump in Altium to $38.14.

WiseTech Global lifted 4.1 per cent to $25.32, Xero rose by 1.9 per cent to $86.21 and Afterpay put on 1.3 per cent to $33.24.

The major banks finished higher, led by a 0.96 per cent rise in Commonwealth Bank as it closed at a 12-month high of $84.46.

Westpac edged up by 0.85 per cent to $24.90, National Australia Bank gained 0.75 per cent to $25.36 as it cut its savings rates and ANZ advanced by 0.7 per cent to $25.42.

CSL was a standout early, becoming the first local stock to rise above $300 as it set a record high of $301.04. The stock settled to a gain of 1.1 per cent at $300.89.

Elsewhere in the health sector, ResMed lifted by 0.22 per cent to $23.04 as it settled a US civil action alleging breaches of federal law prohibiting kickbacks.

Super Retail was the worst performing stock after analysts highlighted bushfire risks to earnings in their BCF and Macpac chains. The stock fell 6 per cent to $9.77.

Meanwhile, fellow retailer Mosaic continued its downward momentum, shedding 3.9 per cent to $1.75 after it, too, warned of a slide in sales from reduction in consumer sentiment.

Production reports prompted a mixed reaction in a number of miners. South32 finished flat at $2.85 after warning of lower full year coal production. Whitehaven reported a drop in sales and output, but its shares finished steady at $2.59.

Woodside’s optimistic update gave its shares a boost of 0.6 per cent to $36.

Caltex shares finished higher by 0.17 per cent to $35.62 as it agreed to allow suitor Couche-Tard access to non-public information.

The Australian dollar was 0.06 per cent stronger against the US dollar, buying US69.06c at the local close.