Trading Day: ASX higher after US-China trade agreement

The Australian sharemarket closed higher on Friday, with mining stocks rallying on news of a US-China trade deal and a Tory win in Britain.

Hopes were rising today of a US-China trade deal. Picture: AFP

• Pound surges as polls tip Tory win
• Thodey to chair Xero
• Lagarde launches ECB review

That’s all from the Trading Day blog for Friday, December 13. The Australian sharemarket has closed higher, with mining stocks rallying on news that the US would roll back tariffs on China as part of an interim trade deal.

You can follow developments in the British election in a separate live blog.

At the close on Friday, the benchmark S&P/ASX200 index was up 30.9 points, or 0.46 per cent, to 6739.7 points, while the broader All Ordinaries was up 33.8 points, or 0.5 per cent, to 6844.6 points.

The Aussie dollar hit a five-month high of US69.40c against its US counterpart before retreating to a six-week high, buying US69.25c, from US68.81c on Thursday.

AAP

3.24pm: ASIC apology to Dawkins

The corporate watchdog has apologised to former Labor treasurer John Dawkins as part of an update over civil proceedings against education company Vocation, of which he was once chairman.

“In late May 2019, ASIC published a media release about Federal Court proceedings concerning Vocation Ltd and its directors, including former Australian treasurer, John Dawkins AO,” ASIC said in a statement.

“The headline of that release, if read in isolation from the balance of the statement, may have incorrectly conveyed to a reader that the officers of Vocation Ltd (in liquidation), including Mr Dawkins, were found to have made misleading statements to the market.

“No such findings were made by the Court and ASIC did not intend to suggest otherwise. “After communications between Mr Dawkins AO’s lawyers and ASIC, a corrected release was subsequently published by ASIC on June 5 2019.

“ASIC apologises to John Dawkins and his family for any distress caused to them by the publication of the initial media release,” .

3.20pm: Platinum Asset surges 8pc

Platinum Asset Management has surged 8pc to 4-month high of $4.56.

The share price has risen above its 200-DMA for the first time since July.

It’s heading for best one-day rise in more than 2-years (August 2017).

This may be a play on lessening US-China trade tensions, given Platinum’s exposure to Chinese equities which have had a big valuation discount throughout the trade war.

China’s Shanghai Composite is outperforming with a 1.2pc rise today while the Hang Seng is up 2.1pc and the Nikkei 2225 is up 2.5pc. The S&P 500 rose 0.9pc to a record high daily close of 3168.57, but the Shanghai Comp is less than half of its 2007 peak.

Unlike its rival Magellan Financial, Platinum Asset Mangement has been suffering from fund outflows all year. Easing US-China trade and Brexit worries favour a decent economic rebound, which should also tend to help the Platinum’s value orientated investing style.

But Magellan is also having a good day, 3.5pc at $55.789.

2.45pm: AUD/USD has legs above 200-DMA - AxiTrader

The Australian dollar may now see a sustained move above its 200-day moving average at 0.6911, according to AxiTrader Asia-Pacific market strategist Stephen Innes.

“The 200 DMA has been testing, but with the market apparently wanting to play out the tremendous global growth recovery, the Aussie could have legs to run,” Mr Innes says.

“Sure, the recent run of domestic data, looks dreadful but forward-looking global growth optimism will always trump backwards-looking local data.”

AUD/USD hasn’t been above its 200-DMA in sustained fashion since March 2018.

A sustained move above the October peak at 0.6930 would also form a significant uptrend.

AUD/USD was last at 6923 after hitting a 4-month high of 0.6939 on easing jitters about US trade policy and UK political uncertainty.

2.40pm: Easing risks to fuel Santa rally - AMP

Easing geopolitical risks on US trade and the UK election may fuel a “Santa rally” in shares, according to AMP Capital’s head of investment strategy and chief economist, Shane Oliver.

In the decade to 2017, mid-December to year end has seen US shares rise 7 years out of 10, with an average gain of 1 per cent. In Australia, the market has been up 8 years of 10, for an average gain of 2.2 per cent, which is why December is normally a strong month.

While details of the trade deal are yet to be fully announced or finalised legally, it looks like it will avert threatened December 15 tariff hikes, roll back some earlier tariffs, increase US farm imports by China and improve IP protections.

“Whether Phase 2 talks happen remains to be seen but the de-escalation is good news for now and takes some pressure off the global economy which makes it good news for commodity prices and Australia,” Mr Oliver says.

Meanwhile an election win by UK Conservatives will mean that PM Johnson’s Brexit deal with the EU will be signed, the UK should have a soft exit from the EU - retaining current trading arrangements - by January 31 and then enter into negotiations for a free trade deal.

Mr Oliver says avoidance of far left policies under a Labour Government is probably also a short term positive for UK assets including shares and the British pound, although markets had generally anticipated a Conservative victory.

2.35pm: Trade deal better than expected - Citi

News reports on the details of the in-principle phase-one trade deal between the US and China look better than expected according to Citi chief economist Asia-Pacfic, Johanna Chua.

In recent months, expectations centered on a commitment by China to buy $US40bn-$US50bn of US farm goods in return for stopping the next tariff increase scheduled for December 15th.

But reports today suggest it will also include commitments on further intellectual property reform, currency policy, market access and dispute resolution.

The final legal text is yet to be agreed and China is yet to confirm the progress, but the Wall Street Journal earlier suggested reduction in existing tariff rates – 25 per cent on $US250bn and 15 per cent on US$100bn of China’s exports to the US - to half.

“This is more bullish than expectations of just a rollback in September tariffs,” Mr Chua says. “Timelines on the deal signings are yet to be decided or disclosed, but this certainly should be good news for risk assets.”

But she notes the deal seems to have a ‘snapback’ clause that risks a resumption in tariffs to current levels if there were to be a failure in follow-through of the commitments made.

The S&P/ASX 200 rose as much as 0.7pc to an intraday high of 6753.1.

2.30pm: Trade truce durability in question - Saxo

Saxo Bank macro strategist Kay Van Petersen says the market not has two big uncertainties out of the way regarding US-China trade policy and UK political uncertainty.

He says it looks like “Beijing blinked”, as a full rollback of tariffs had previously been something China swore not to compromise on.

“In a nutshell, it looks like China will buy farm goods from the US and Trump will scratch the tariffs that were to come on this Sunday and take the previous tariffs down by 50 per cent.

But the key issue will be for how long does this holds, especially given the fact that the probability of phase 2 and or phase 3 deals starts to get much lower, given the complexities around Intellectual property and enforcement.”

Gerard Cockburn 2.25pm: Suncorp shakeup

Suncorp has announced new executive appointments, with Lee Hatton to step into the role of CEO of Suncorp’s banking and wealth division and Jeremy Robson appointed as group chief financial officer.

Ms Hatton has been CEO of UBank since 2015 and has had an extensive financial career including senior roles at BNZ and NAB.

She will begin her new role in the first half of next year.

Mr Robson’s appointment comes after acting in the role as group CFO since May 2019.

He will start his new role effectively immediately.

Suncorp Group CEO Steve Johnston said Ms Hatton and Mr Robson will bring “deep specialist experience” to their respective roles.

Gerard Cockburn 1.10pm: Centuria slips

Centuria Industrial REIT shares have slipped slightly after JPMorgan lowered its price target on the group, following the acquisition of Arnott’s assets in Brisbane and Adelaide.

CIP shares at 12.45pm were trading at $3.36 per share, down 2.75 per cent.

JP Morgan analysts lowered their price target on the shares by 5 per cent to $4 per share, estimating the transaction will be neutral to earnings in FY20.

The drop in target price reflects the dilution to the value uplift ascribed to CIP’s existing portfolio.

The assets were acquired for $236m at a blended yield of 5.9 per cent (pre cost) and will be leased by to KKR with an average operating life left of 28 years.

12.50pm: HK surges on trade deal reports

Hong Kong stocks surged out of the blocks after reports China and the United States had finally reached a partial trade deal that will see Washington cancel the imposition of fresh tariffs planned for the weekend.

The Hang Seng index rose 1.85 per cent, or 500.37 points, to 27,494.51.

The benchmark Shanghai Composite Index gained 0.76 per cent, or 22.08 points, to 2,937.78 and the Shenzhen Composite Index, which tracks stocks on China’s second exchange, rose 0.74 percent, or 12.05 points, to 1,648.38.

AFP

12.30pm: ASX up on trade boost

The Australian share market has risen following overnight gains on Wall Street amid reports of a US-Chinese trade truce.

At noon the benchmark S&P/ASX200 index was up 31.8 points, or 0.47 per cent, to 6,740.6 points, while the broader All Ordinaries was up 32.6 points, or 0.48 per cent, to 6,843.4 points.

Financial and tech shares had the largest gains, rising 1.39 per cent and 1.08 per cent respectively.

The big four banks were all higher, with ANZ up 2.31 per cent to $24.78, Commonwealth - which said it will reimburse its staff up to $53.1 million in unpaid entitlements - up 0.41 per cent to $80.045, NAB up 1.45 per cent to $25.16 and Westpac up 2.01 per cent to $24.565.

Bendigo and Adelaide Bank was up 0.92 per cent, Bank of Queensland was up 3.09 per cent and Macquarie Group was up 1.77 per cent.

Among the volatile tech stocks, Bravura Solutions jumped 7.46 per cent and Appen gained 2.93 per cent but Afterpay fell 1.30 per cent and WiseTech shed 0.65 per cent.

The mining sector also gained more than 1.0 per cent, with BHP up 2.14 per cent to $39.425, Rio Tinto up 1.59 per cent to $100.59 and Fortescue Metals up 1.43 per cent to $10.66.

Despite a strong performance from the heavyweight financial and materials segments, six of the ASX’s 11 main sectors remained in negative territory at midday.

Property trusts fell 1.44 per cent, leading losses, as Mirvac sank 2.74 per cent, Stockland was down 2.17 per cent and Goodman Group slipped 1.81 per cent.

On Wall Street, the Dow Jones Industrial Average finished up 0.79 per cent, the S&P 500 was up 0.86 per cent and the tech-heavy Nasdaq Composite was up 0.73 per cent.

US President Donald Trump tweeted overnight that a trade deal was very close, with both the US and China keen on an agreement.

The pan-European STOXX 600 index rose 0.33 per cent as the European Central Bank kept its sub-zero interest rates steady.

The Australian dollar jumped to its highest level against the US dollar since July, but fell against the British pound, after the release of UK exit polls suggesting the Conservative party may have been re-elected with a majority. The Aussie dollar is buying US69.17 cents from US68.81 cents on Thursday.

AAP

11.55am: Tokyo jumps on trade, UK news

Tokyo’s key Nikkei stock index opened nearly two per cent higher Friday, boosted by hopes for an imminent US-China trade deal and polls predicting an election win for Britain’s ruling Conservative Party, setting the stage for Brexit.

The Nikkei 225 index rallied 1.87 percent or 437.99 points to 23,862.80 in early trade while the broader Topix index was up 1.48 percent or 25.30 points at 1,738.13.

Investors cheered as their two major concerns eased -- a trade war between the world’s two largest economies and uncertainty over Britain’s exit from the European Union.

“The market is reacting to the twin positive news, the reported US-China deal on trade, and the UK vote,” both of them removing some uncertainties, Kyoko Amemiya, senior market analyst at SBI Securities, told AFP.

AFP

11.45am: ASX/200 comings and goings

A dismal 2019 for lithium miner Galaxy Resources and satellite provider Speedcast will be capped with each firm dropping out of the ASX/200.

The quarterly rebalancing of the ASX/200 will elevate property group Ingenia Communities into the list at their expense, as well as car retailer AP Eagers, following its $2.3 billion takeover of Automotive Holdings Group in September.

AAP

11.40am: Hopes for global rebound intensify

Expectations of a global growth rebound in 2020 are set to intensify amid easing concern about US trade policy and UK political uncertainty.

“The devil will be in the trade deal agreement details and to the extent of the tariff rollbacks, but with a significant trade barrier now removed, it looks more and more like the market wants to play ‘The Big Global Growth Rebound in 2020’ trade,” says AxiTrader Asia Pacific strategist Stephen Innes. “With a tame inflation environment guaranteed to keep US rates in check and as the persistent global slowdown appears to be decreasing, it’s providing a great set up to extend “risk-on” horizons.

Indeed, with high-frequency indicators from PMIs suggesting the data is bottoming, we could be entering a global economic sweet spot.”

He concludes that this favours a “much lower” US dollar, especially against Asia and Euro - the two regions most devastated by the manufacturing recession due to the protracted trade war.

11.30am: Pound surges as polls tip Tory win

The British pound rose sharply as early exit polls from the British election pointed to a strong victory for Boris Johnson’s Conservative Party.

The pound surged 2.5pc against the dollar to $US1.3467, its highest level since May 2018. The euro also rose 0.4pc against the dollar, buying $US1.117, as Mr Johnson’s victory was seen as likely to bring some near-term certainty to the UK’s exit from the European Union. The Brexit process has dogged the region with uncertainty for more than three years.

“It’s not just that he’s got a majority it’s that he’s got a sizable majority,” said Peter Kinsella, global head of foreign exchange strategy at Swiss private bank UBP. “That indicates were going to get a swift ratification of the Brexit agreement.”

The pound is often seen as a barometer for the U.K.’s political fortunes and the effect the UKs exit from the EU will have on the economy. Mr. Johnson’s Brexit plan is set to take the UK out of the EU by January 31.

The EU-UK trading relationship will remain unchanged at least through the end of 2020 under the plan as Brussels and London hash out a long-term agreement over immigration, tariffs, and financial flows.

Before the election, market observers expected a Johnson victory to boost the pound and U.K. stocks.

Dow Jones

11.00am: RBA rate cut probabilities shrink

The chance of RBA rate cuts has dropped on fading risks from US trade policy and UK political uncertainty. The market-implied chance of a 25 basis point cut in the cash rate in February has fallen to 45pc from 55pc on Thursday and 64pc on Wednesday.

A rate cut is now fully priced by June, whereas on Thursday it was more than priced by May.

The rate cut probability now peaks at 1.2 cuts by September, whereas on Thursday the market saw 1.4 cuts by December. But there may be less chance of a near term cut, the caveat is that there are two employment reports due before the February meeting.

And the Australian dollar has risen 1.7pc in the past 48 hours, dampening the transmission of past rate cuts to the economy.

10.30am: ASX higher on trade news, UK poll

Australia’s sharemarket rose 0.5pc to 6751.3 in early trading, with a 0.3pc rise in S&P 500 futures adding to positive leads from Wall Street.

UK exit polls favourable for the Conservatives, and expectations of a US-China trade deal, caused a bigger rise in shares than indicated by overnight futures.

The wall Street Journal reported President Trump would sign a limited agreement aimed at ending the trade war with China that would prevent new tariffs planned for Sunday and roll back some existing tariffs.

Financials, materials and energy stocks are outperforming, with Westpac up 1.8pc, BHP up 2.3pc and Beach up 1.7pc in early trading.

But the gains have otherwise been narrow, with real estate, health care, industrials, sonsumer staples and utilities underperforming.

Healthcare stocks most reversed early gains. CSL for example rose 1.1pc before falling 0.6pc.

It seems as though the surging Australian dollar - up 1.9pc in 48 hours - is hurting some non-commodity offshore income earners.

Bond proxies are also in the firing line of higher bond yields, with Transurban down 1pc as 10-year bond yields surge 16 bps to 1.30pc.

10.09am: Lynas notes US Defence tender

Lynas noted an article in the West Australian referring to a US Dept of Defence tender for a heavy rare earths separation plant. It simply says “the tender period has not yet closed” and it “would expect to submit a compliant letter.”

10.01am: Lynas in trading halt

Lynas shares have been placed in a trading halt.

It comes after Lynas shares surged 10pc to $2.37 yesterday.

10.00am: Cimic flags 10pc share buyback

Cimic announced a new on-market share buyback of up to 10pc, starting December 29.

“The new buyback will continue to meet CIMIC’s previously stated aims of enhancing

shareholder returns and capital efficiency, and maintaining balance sheet flexibility to pursue

future growth and investment opportunities,” Cimic says.

“Funded by a combination of cash balances and working capital facilities, the new buyback

demonstrates CIMIC’s strong balance sheet position, solid cash flow generation, and disciplined approach to capital management.”

It comes after a year of massive underperformance.

CIM shares are down 10pc year to date while the index is up 19pc.

9.50: Exit poll sparks massive rise in Pound

Sterling seen a massive rise since the exit poll backed a Conservative win in the election.

GBP/USD rose a staggering 2.7pc in 45 minutes, hitting a 19-month high of USD1.3514.

Similarly, EUR/GBP has dropped 2pc to GBP0.8281.

For travellers heading to the UK, AUD/GBP has dropped 2.3pc to a 2.5-year low of 0.5130.

Together with US-China trade news, lessening UK political uncertainty lifted AUD/USD 0.4pc to a 4-month high of 0.6939 after the NY close.

AUD/USD has risen as much as 1.9pc in the past 48 hours.

9.48am: Afterpay in focus after Latitude deal

Buy now, pay later pioneer Afterpay to come under focus after the Ahmed Fahour rival Latitude Financial secures a major deal credit card giant MasterCard for its buy now, pay later product LatitudePay. The competitive challenge to AfterPay will enable LatitudePay customers to buy now and pay later, interest free, wherever Mastercard is accepted globally. The product will be first rolled out in early 2020 in New Zealand by Latitude’s New Zealand subsidiary Genoapay, which Latitude bought last year, before it is expanded to Australia and internationally. Afterpay on Thursday closed at 1 month low of $28.87.

https://www.theaustralian.com.au/business/financial-services/latitude-mastercard-in-deal-to-take-buy-now-pay-later-business-global/news-story/a3ccdce5b7b05891a554d2d78403db24

9.42am: What’s impressing analysts, what’s not

Afterpay started at Sector Perform - RBC

Oil Search cut to Hold - Morgans Financial

Viva Leisure started at Buy; $3.60 price target - Shaw and Partners

Zip Co started at Outperform; $4.40 price target - RBC

Charter Hall Group raised to Buy - UBS

Atlas Arteria resumed at Underweight - MS

Appen raised to Buy - Bell Potter

HRL started at Buy; $0.12 price target - Bell Potter

9.25am: Risk-on as Trump flags trade deal

A risk-on mood should keep Australia’s shares and the dollar buoyant while bonds sell off after US President Donald Trump flagged a trade deal with China.

Adding to the positive mood this morning, Bloomberg says: “Trump signs off on US-China trade deal to avert December tariffs”, according to unnamed sources.

An agreement has reportedly been reached in principle and an official announcement should be imminent.

And a UK election exit poll showed Conservatives winning 368 of 650 seats, with Labour getting just 191 seats in the election, ensuring a large majority for the Tories.

That pushed the British pound up 2.4pc to a 19-month high of US1.3478.

The Australian dollar subsequently hit a four-month high of 0.6938 and has now risen 1.9pc in 24 hours.

The surging exchange rate should restrain some of the already expensive offshore income earners like CSL.

Before the US open Trump tweeted: “ “Getting VERY close to a BIG DEAL with China. They want it, and so do we!”

The Wall Street Journal earlier said US negotiators had offered to slash existing tariffs by as much as half on roughly $US360 billion of Chinese-made goods as well as to cancel a new round of levies set to take effect Sunday.

But the US would reimpose original tariff levels if China fails to carry off pledges, including firm commitments on agricultural purchases.

CNBC confirmed that report and added that China would also have the right to reimpose tariffs, making enforcement equal and easier to agree to.

One remaining sticking point is sourced reports was China’s reluctance to put its agricultural purchase promises into the language of a trade deal.

That prompted moderate gains in European and US equities with the S&P 500 up 0.9pc to a record high close of 33168.57 after hitting an all-time high of 3176.28

Futures imply the S&P/ASX 200 will open up about 0.3pc but that seems light after it fell 0.7pc to 6708.8 yesterday.

In commodities, WTI crude rose 1.1pc to $US64.54 and nickel rose 1.9pc while safe-haven gold slipped 0.4pc to $US1469.2.

Bonds reacted badly with the US 10-year yield rising 10bps to a 4-week high of 1.90pc, pushing the Australian bond benchmark up 8bps to 1.23pc.

US PPI and retail sales data are due later today.

9.05am: Trump set to sign limited trade deal

President Trump is expected to sign off on a limited agreement aimed at ending the trade war with China that would prevent new tariffs planned for Sunday and roll back some existing tariffs, according to a person familiar with the matter.

Mr. Trump met top economic and trade advisers on the agreement for an hour Thursday, and senior administration officials were making calls to tout the outlines of an agreement that they hope to confirm with Beijing as early as Friday, the person said.

A spokesman for the Chinese embassy didn’t immediately respond to a request for comment.

Mr Trump declared two months ago that the two countries had reached a framework for a limited “phase one” pact to halt the trade war and allow negotiation on possible future phases to address bigger concerns of American businesses.

But efforts to finalize the terms proved elusive until Thursday, just days before the new tariffs targeting iPhones, toys and other consumer goods were set to take effect.

Trade groups hailed Thursday’s progress as a welcome respite from what amounts to additional taxes at the border. Importers, retailers and other American firms worried more duties -- essentially a U.S. tax charged at the border -- will have the effect of raising prices or hurting sales.

Dow Jones

9.00am: Exit polls back Boris

An early exit polll suggests British Prime Minister Boris Johnson is set to win a large majority in Thursday’s general election, an outcome that would mark a stunning victory for the Brexit cheerleader and pave the way for the U.K. Parliament to trigger a long-awaited split with the European Union.

The exit poll commissioned by three national broadcasters, released just after polling stations closed Thursday, said Mr. Johnson’s Conservative Party was on track to win 368 seats in Britain’s 650-seat House of Commons. The main opposition Labour Party was forecast to win 191, with smaller parties taking the rest.

The poll asks roughly 30,000 people how they voted and has correctly forecast the outcome of two out of the last three elections and the 2016 Brexit referendum. Its organizers say they should be able to predict the seats won by each of the main parties to within 10 or 15 seats.

The pound gained 1.5pc after the prediction.

Dow Jones

8.50am: Thodey to chair Xero

Xero has named former Telstra chief executive David Thodey as chair after family health issues prompted Graham Smith to retire from the board of the cloud accounting software firm.

Mr Thodey, who led Telstra for six years until April 2015 and has been a non- executive director at Xero since June, will take over as chair when Mr Smith steps down on February 1.

Mr Thodey is currently a non-executive director at UK-listed Vodafone and Ramsay Health Care, is chair of EFTPOS provider Tyro, and is chair of national scientific research agency CSIRO.

AAP

8.15am: Wall St rallies on trade deal reports

US stocks sailed to their first record closes of December, lifted by media reports that Washington and Beijing had struck a trade bargain at last.

Two of the three main indexes closed with new records: the broad-based S&P 500 gained one percent to end at 3,171.97, and the tech-heavy Nasdaq rose 0.7 percent to 8,717.32.

Meanwhile, the benchmark Dow Jones Industrial Average rose 0.8 percent to finish at 28,131.92.

The Australian share market is expected to follow Wall Street higher.

At 8am (AEDT) the SPI200 futures contract was up 29.0 points, or 0.43 per cent, at 6,732.0, suggesting a positive start for the benchmark S&P/ASX200.

AFP

8.10am: US reaches ‘deal in principle’ with China

The White House has reached a “deal in principle” with Beijing to resolve the 17-month-old US-China trade war, according to a source briefed on the trade talks.

The White House was expected to make an announcement later on Thursday, the source said.

“The written agreement is still being formulated, but they have reached an agreement in principle,” the source said. No details were immediately available. In an attempt to secure a “phase one” trade deal, US negotiators offered to cut existing tariffs on Chinese goods by as much as 50 per cent and suspend new tariffs that were scheduled to go into effect on Sunday, two people familiar with the negotiations said earlier on Thursday.

Media reports indicated the two sides at last reached an agreement in principle, two months after Trump first announced a “phase one” bargain had been struck.

“We still need to see some details of what’s actually in this agreement to get a true read on what’s happening but the sentiment is bullish at the moment,” Ryan McKay, a commodity strategist at TD Securities, said.

“We’ve been through this quite a few times with Trump where he says we’re close to a deal and then nothing really materializes from it.”

The US-China trade war has slowed global growth and dampened profits and investment for companies around the world.

Read more

Earlier in the day, investors also digested commentary from the European Central Bank, which on Thursday tweaked its eurozone growth forecasts and said a slowdown could be stabilizing.

British voters meanwhile were headed to the polls in a general election that could help determine the course of Brexit.

AFP

7.48am: Buffett protege’s venture raises $US340m

An investment vehicle co-founded by Tracy Britt Cool, one of Warren Buffett’s key lieutenants in recent years, said that it has raised $US340 million for acquisitions ahead of a listing on the London Stock Exchange.

EverArc Holdings Ltd., based in the British Virgin Islands, said it expects its shares to begin trading on the London Stock Exchange on Dec. 17.

Ms Britt Cool, 35, in September left Mr. Buffet’s Berkshire Hathaway Inc. to create an investment vehicle that acquires companies for the long term, like Berkshire does.

Along with Ms. Britt Cool, EverArc was co-founded by TransDigm Group Inc. Executive Chairman Nicholas Howley, Housatonic Partners founder William N. Thorndike, Vivek Raj and Haitham Khouri, the company said. Ms. Britt Cool will be one of seven nonexecutive directors.

Messrs. Thorndike and Howley are co-chairmen of the company, EverArc said.

EverArc expects to acquire a business with a significant proportion of its activities in North America, the company said, though it don’t intend to limit its options to any particular industry or geographic region.

EverArc said it raised $US325 million by selling shares at $US10 each and $US15 million directly from its founders.

Morgan Stanley & Co. International PLC and UBS Group AG London Branch are acting as joint global coordinators and joint bookrunners on the listing, EverArc said.

Dow Jones Newswires

7.32am: Oil rises on trade deal optimism

Oil prices rose more than 1.0 per cent overnight after US President Donald Trump said his country was “very close” to nailing down a trade deal with China.

Brent crude futures rose 76 US cents, or 1.2 per cent, to $US64.48 a barrel. West Texas Intermediate (WTI) crude futures rose 68 US cents, or 1.2 per cent, to $US59.44 a barrel.

Reuters

7.30am: More delays for 737 MAX

The global grounding of Boeing Co.’s 737 MAX is set to stretch to nearly a year as regulators expressed concern that the US plane maker set unrealistic expectations for the jetliner’s return to passenger service.

The Federal Aviation Administration is expected to approve fixes to a MAX flight-control system and related pilot training in February, about two months beyond what Boeing recently envisioned, according to people familiar with the matter. That means the troubled airliner might not carry passengers in the U.S. until much later in the spring.

The protracted grounding of the MAX following a second crash of the plane in Ethiopia last March is costing Boeing and its airline customers billions of dollars and disrupting airline passengers’ travel plans. The latest delay is likely to ratchet up pressure on Boeing executives as they consider whether to further cut or even halt MAX production at the company’s 737 factory in Renton, Wash.

Dow Jones

7.05am: ASX set to open higher on trade hopes

The Australian share market is expected to open higher after Wall Street gained overnight amid new hopes of a US-Chinese trade truce.

At 7am (AEDT) the SPI200 futures contract was up 21.0 points, or 0.31 per cent, at 6,724.0, suggesting a positive start for the benchmark S&P/ASX200 on Friday.

On Wall Street, the Dow Jones Industrial Average was up 0.77 per cent, the S&P 500 was up 0.69 per cent and the tech-heavy Nasdaq Composite was up 0.50 per cent.

“Getting VERY close to a BIG DEAL with China. They want it, and so do we!,” US President Donald Trump tweeted overnight.

The Aussie dollar is buying US68.99 cents from US68.81 cents on Thursday.

AAP

6.55am: Wall St jumps on trade deal report

US stocks got a boost following a Bloomberg report that US and Chinese officials have struck a partial trade deal that awaits President Donald Trump’s approval.

In afternoon trade the benchmark Dow Jones Industrial Average was up 0.8 per cent at 28,125.78, approaching earlier highs of the day.

The broader S&P 500 likewise gained 0.8 per cent to 3,166.21 and the Nasdaq rose 0.5 per cent to 8,699.68.

Earlier President Donald Trump tweeted that the United States was on the verge of easing the China trade war, days before new tariffs are due to kick in between the world’s two largest economies.

“Getting VERY close to a BIG DEAL with China. They want it, and so do we!” Trump tweeted in a markedly more optimistic tone, after months of false dawns in a trade war roiling world markets.

Mr Trump’s flagging of an imminent breakthrough came ahead of new tariffs planned to take effect Sunday and also just as he is almost sure to become only the third US president to be impeached.

Australian stocks are tipped to open higher. Shortly before 7am (AEDT) the SPI futures index was up 17 points, any US-China trade deal is likely to boost markets even further.

AFP

6.45am: Drainage issues caused Brazil dam tragedy

The collapse of a massive tailings dam in Brazil was caused by the accumulation of water and lack of drainage, although the facilities did not previously show signs of instability, according to a report commissioned by the dam’s owner and published Thursday.

The January 25 dam breach in the mineral-rich state of Minas Gerais spewed millions of tons of toxic mining waste across the countryside, leaving 270 people dead or missing and forcing owner Vale to suspend some of its operations.

A group of specialists hired by the Brazilian mining giant found “the rupture and resulting sludge slide was due to the static liquefaction of the waste from the dam,” meaning the solid dam waste became sludge due to the accumulation of water.

According to the specialists’ report, the dam had insufficient drainage and accumulated water in the middle of the rainy season. As a result, it was filled with “soft” and “heavy” waste, due to its high iron content.

The growing pressure created a “marginally stable dike” -- in other words, it was “near the breaking point” because it was almost unable to drain water.

The report added that the dike “showed no signs of instability, such as large deformations that caused cracks or swelling before the break.”

AFP

6.40am: US in tariff cut offer to China

US negotiators offered to slash existing tariffs by as much as half on roughly $US360 billion of Chinese-made goods as well as to cancel a new round of levies set to take effect Sunday, according to people briefed on the matter, as the two sides work toward a limited trade deal that could help prevent their shaky relationship from worsening.

President Trump wrote in a tweet on Thursday morning: “Getting VERY close to a BIG DEAL with China. They want it and so do we!”

The offer to reduce tariffs was made in roughly the past five days, the people said, and in exchange, the U.S. side has demanded Beijing make firm commitments to purchase large quantities of U.S. agricultural and other products, better protect U.S. intellectual-property rights and widen access to China’s financial-services sector.

Should China not carry out its pledges as part of the potential deal, the tariff rates would return to their original levels, a clause known in trade talks as a “snapback” provision.

Negotiations are grinding on. During several rounds since October, Chinese negotiators have balked at Washington’s request that Beijing guarantee its pledge to buy more U.S. soybeans, poultry and other products, saying doing so would violate World Trade Organization rules.

Dow Jones

6.38am: Markets rally on trade hopes

Global stock markets rallied, with Wall Street in record territory, after President Donald Trump said that a trade deal with China was close, emboldening investors to take fresh positions.

The British pound, meanwhile, dipped as Britons voted in a general election that seeks to determine the future of Brexit.

“Getting VERY close to a BIG DEAL with China. They want it, and so do we!” Trump tweeted.

The world’s top two economies have been locked in a trade war with negotiators working to reach at least a partial resolution -- called a phase-one deal -- before Washington is scheduled to increase tariffs on Sunday.

Anxiety had been building up ahead of the deadline and so relief was palpable across trading floors after Trump’s tweet.

“The Santa rally is coming early as President Trump signalled US negotiators are getting very close to a big deal with China,” said Edward Moya at OANDA, adding that Trump’s tweet “was more optimistic than usual”.

The dollar powered ahead, as did oil amid hopes that a trade deal would help the global economy.

US Treasury bonds fell as investors moved money back into riskier assets.

The British currency traded weaker throughout election day in the UK, having spiked overnight to a 10-month peak at $1.3229 on expectations of an election win for Prime Minister Boris Johnson’s Conservative Party.

Johnson called Thursday’s snap vote in a bid to gain a decisive mandate to leave the European Union on January 31, more than three-and-a-half years after Britain narrowly voted in a referendum to leave.

The ECB, meanwhile, gave markets little to trade on as Christine Lagarde chaired her first monetary policy council meeting and subsequent news conference.

The bank left interest rates unchanged and a maintained its massive bond-buying program, as expected.

London closed up 1.0pc, Frankfurt ended up 0.6pc and Paris was up 0.4pc.

Earlier Thursday in Asia, equity markets mostly closed higher after the Federal Reserve indicated it was unlikely to change US interest rates throughout next year.

AFP

6.35am: Lagarde launches major ECB review

Christine Lagarde announced a major review of the ECB’s tools and goals and said the eurozone slowdown was beginning to ease as she made her debut as president vowing to bring her “own style” to the job.

Speaking at a Frankfurt press conference after chairing her first governing council meeting, Lagarde said the bank’s “strategic review” would start next month and aim to be completed by “the end of 2020”.

A central focus of the reassessment, the ECB’s first since 2003, will be to look at whether the bank’s main objective of keeping inflation “close to, but below” two per cent was still relevant after years of anaemic price growth.

But Lagarde said she also wanted to focus on “major changes” that have taken place since the last review, including the challenges posed by climate change and technological advances as well as rising inequality.

As expected, Lagarde kept her predecessor Mario Draghi’s ultra-loose monetary policy unchanged Thursday, holding interest rates at historic lows and leaving a monthly bond-buying program untouched.

Christine Lagarde addresses the media during an ECB news conference. Picture: AFP

AFP

6.32am: Trump tweets ‘very close’ to China deal

President Donald Trump tweeted that the United States is “VERY close” to a trade deal with China, days before new tariffs are due to take effect.

“Getting VERY close to a BIG DEAL with China. They want it, and so do we!” Trump tweeted.

The two largest economies in the world are locked in a wide-ranging trade war but negotiators have been working to reach at least a partial resolution before Washington increases tariffs on Sunday.

AFP

6.30am: ECB keeps rates on hold

The European Central Bank has left its key interest rate benchmarks and stimulus programs unchanged.

The decision came at a meeting of the bank’s officials at its headquarters in Frankfurt, Germany. It follows a similar one by the U.S. Federal Reserve this week to leave rates low as central banks monitor the health of major economies.

The decision is the ECB’s first under newly appointed bank president Christine Lagarde.

AP

6.25am: EU flexes trade muscles

The EU has proposed a move to strengthen its power to hit back in global trade rows, looking for defensive alternatives after the US crippled the WTO.

The new measures would hand Brussels powers to unilaterally decide countermeasures against other countries, a power that traditionally sits with the World Trade Organization in Geneva.

Sometimes referred to as the supreme court of global trade, the WTO has since Wednesday been unable to issue rulings, victim of a campaign by President Donald Trump accusing it of anti-US bias.

AFP

6.20am: Aramco hits $US2 trillion goal

Saudi Aramco soared above the $US2 trillion valuation target sought by the kingdom’s de facto ruler as the energy giant’s share price surged on its second day of trading.

The valuation milestone, which defies widespread scepticism from investors, was coveted by Crown Prince Mohammed bin Salman ever since he first floated the idea of listing the world’s biggest oil firm four years ago.

Aramco shares jumped 9.7 per cent to 38.60 riyals ($US10.3) in morning trade - following a 10-per cent rise the previous day -- before paring some gains in the early afternoon.

That boosted the oil giant’s market capitalisation to over $US2 trillion, up from a $US1.7 trillion valuation set during its initial public offering, the world’s biggest.

Aramco shares on the kingdom’s Tadawul stock exchange are allowed to fluctuate by a maximum of 10 per cent each day.

Tadawul witnessed one of its most hectic trading sessions on Thursday, with some 400 million Aramco shares -- worth more than $US4 billion -- changing hands.

Thursday is the last weekly trading day in Muslim Saudi Arabia. Trading resumes on Sunday.

A Saudi trader watches Aramco’s progress. Picture: AP

AFP

6.15am: Resolute’s good news from Mali

Resolute Mining said it had excellent drilling results from its Tabakoroni drilling program in Mali.

The company said that infill and extensional drilling at the Tabakoroni mine are expected to extend the underground mineral resource, and that the drilling program there will continue throughout 2020. Additionally, the company said the development of a new underground mine has begun at the site.

Moreover, at its Syama satellite prospects, additional oxide resources have been identified by regional drilling, which confirm the exploration potential of the company’s Syama tenure.

“We expect our investment in exploration at Syama to accelerate in 2020 with strong cashflows from both the oxide and sulphide processing plants,” Managing Director and Chief Executive John Welborn said.

Dow Jones Newswires