Australian shares rise as miners and financials gain on the easing of US-China trade tensions

Australian shares rose Monday as signs of easing U.S. China trade tensions boosted risk sentiment worldwide. However, investors' caution before key domestic inflation data which could undermine bets on a rate cut in the near future capped gains.

The S&P/ASX 200 Index rose by 0.41%, to 9,055.60 indices. Financials and miners, the two sectors that are heavily weighted on the benchmark index, were the main contributors.

China is Australia's biggest trading partner, and it is a major buyer of iron ore and coal, among other commodities. This makes its economic ties crucial to the resource-rich bourse.

Investors around the world are hopeful that the upcoming summit between U.S. president Donald Trump and Chinese president Xi Jinping will pave the path for a successful trade agreement, as both sides have signaled progress.

Meeting

Investor confidence was boosted by the weekend meeting between Australian Premier Anthony Albanese, and Chinese Premier Li Qiang, in which both leaders committed to deeper cooperation, despite recent tensions.

Financials gained 0.7% with each of the "Big Four' banks gaining over 0.6%.

The market is pricing in 60% of a rate cut for November based on a crucial reading on consumer prices for the third quarter due on Wednesday.

Luke Winchester said that banks' strength was a combination of catch-up purchases after months of underperformance. They also benefited from their appeal as a safe haven amid global uncertainty and the optimism of potential rate cuts to spur mortgage lending even though margin pressures persist.

The rise in iron ore was boosted by the easing of trade tensions. This outweighed concerns about demand from China, which is still the largest consumer.

BHP and Rio Tinto both saw their shares rise by 0.7% and 1.3% respectively.

Oil prices rose and energy stocks gained 0.8%.

Woodside Energy, a major player in the sector, gained 1.2% while Santos, a smaller competitor, gained 1.4%.

The benchmark S&P/NZX50 index in New Zealand rose by 0.108% to close at 13,391.59. (Reporting and editing by Harikrishnan Nair in Bengaluru)

(source: Reuters)