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Stocks look set to open near a three-month high following a record close on Wall Street and “constructive” trade talks between the US and China.  

ASX SPI200 index futures eased three points or less than 0.1 per cent to 6794, a possible sign Australian stocks may have pre-empted Friday night’s US gains during a bullish local session. The ASX 200 surged 59 points or 0.9 per cent on Friday after news wires said lead trade negotiators would try to narrow their differences over the weekend.

US Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer spoke to Chinese Vice Premier Liu Hie on Saturday. “The two sides had constructive discussions on each other’s core concerns in the ‘phase one’ deal, and agreed to maintain close communication,” reported Chinese state mouthpiece Xinhua. The two-paragraph report gave no further details. The White House did not comment.

US stocks flew to fresh highs in anticipation that a deal is near. White House economic adviser Larry Kudlow told reporters on Thursday that the two sides were “close” to an agreement.

The S&P 500 rallied 24 points or 0.77 per cent to a sixth straight weekly advance, its best run since 2017. The Dow put on 223 points or 0.8 per cent, closing above 28,000 for the first time. The Nasdaq added 62 points or 0.73 per cent. All three indices ended at all-time highs.

Trade bellwethers performed well. Caterpillar, Boeing, Apple and computer semiconductor-makers all rallied. Health was the pick of the sectors after President Donald Trump announced a plan to force hospitals and insurers to disclose greater detail on rates to offer patients greater transparency on the true cost of services.  

Economic data were mixed, with retail sales rebounding, but industrial output taking the biggest hit in almost a year and a half. October retail sales were 0.3 per cent stronger, reversing September’s 0.3 per cent decline. Industrial output slumped 0.8 per tent.

A continuation of the rebound in iron ore saw solid buying support for Australia’s biggest miners in overseas trade. BHP’s US-listed stock gained 1.98 per cent and its UK-listed stock 0.92 per cent. Rio Tinto added 1.98 per cent in the US and 1.54 per cent in the UK. The spot price for ore landed at China’s Tianjin port rose for a fourth session, up $1.35 or 1.6 per cent to $US84.75 a dry ton.

A negative week for industrial metals ended with modest rebounds in copper and aluminium on the London Metal Exchange on Friday. Copper bounced 0.7 per cent, but ended more than 1 per cent lower for the week. Aluminium put on 1.2 per cent to trim its five-day deficit to less than 3 per cent. Lead lost 1.3 per cent on the day and almost 5 per cent for the week, nickel 1.2 per cent (day) and more than 7 per cent (week), tin 0.7 per cent (day) and 3.5 per cent (week), and zinc 1 per cent (day) and almost 4 per cent (week).

Oil ended a choppy week higher. Brent crude rallied $1.02 or 1.6 per cent to $US63.30 a barrel for a weekly gain of 1.3 per cent. Prices were supported by trade optimism and signs of declining US drilling activity.

Gold drifted lower during a “risk-on” session. Gold for December delivery eased $4.90 or 0.3 per cent to $US1,468.50 an ounce.

The dollar entered the week a tenth of a cent lower at 68.12 US cents.

The economic schedule for the week ahead is light on major news on both sides of the Pacific. Reserve Bank Governor Phil Lowe is due to deliver a speech in Tasmania today. The minutes from the last RBA meeting, due tomorrow, are the likely highlight of a thin week. Wall Street has housing data tonight and tomorrow, the minutes from the latest Fed meeting on Thursday, and manufacturing figures on Friday.    

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