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Gains in resource stocks and key commodities point to a positive start to Australian trade despite a pause in Wall Street’s run of records.

ASX SPI200 index futures rose 19 points or 0.3 per cent to 6686 as BHP and Rio Tinto advanced in overseas action, and copper and crude oil hit their highest levels in a month and a half.

The ASX will begin the day on a three-session winning run. The ASX 200 rose as much as 39 points in early action yesterday, but flagged over the later stages to finish just 10 points ahead after the Reserve Bank left rates on hold and the Melbourne Cup holiday in Victoria weighed on trading volumes.

Resource stocks have driven this week’s rally and may hold the key to further gains today after downbeat trading updates from ANZ and Westpac dulled buying interest in the banking sector. Overnight, BHP’s US-listed stock rose 1.83 per cent and its UK-listed stock gained 2.43 per cent. Rio Tinto added 1.07 per cent in the US and 1.14 per cent in the UK.

A consolidation session saw the major US stock indices close mixed but little changed as the market took a breather following a run of record highs. The S&P 500 slipped three points or 0.1 per cent. The Dow added 31 points or 0.11 per cent, and the Nasdaq a point or 0.02 per cent.

Optimism over a trade deal with China was sharpened by reports US negotiators were considering rolling back tariffs on billions of dollars worth of Chinese imports. The US would reverse a 15 per cent tariff introduced in September in exchange for tougher Chinese laws to protect intellectual property. The Wall Street Journal said both countries had agreed in principle to a ‘phase one’ deal.  

Worries about a slowdown in the US economy continued to abate after a measure of October services industry activity topped expectations. The ISM Services index rebounded to 54.7 from a three-year low of 52.6 in September. Economists polled by Reuters had expected a reading around 53.4. The dire September report fuelled concerns that trade-war weakness in US manufacturing was leaking into the broader economy.

Oil settled at its highest level in six weeks after OPEC – the Organization of the Petroleum Exporting Countries – forecast supplies will decline over the next five years. Brent crude advanced 83 cents or 1.3 per cent to $US62.96 a barrel.

Copper hit a seven-week peak as progress on US-China trade talks encouraged short-sellers to close bets on further declines. Benchmark copper on the London Metal Exchange gained 1.1 per cent in final open outcry trading. Aluminium fell 0.2 per cent, lead 0.5 per cent, nickel 0.6 per cent and zinc 1.6 per cent. Tin improved 0.2 per cent. The spot iron ore price was steady at $US82.70 a dry ton.

Gold suffered its biggest drop in more than a month, falling to a three-week low as a combination of trade optimism, a rising US dollar, rising bond yields and strong US economic data cruelled support for precious metals. December gold settled $27.40 or 1.8 per cent lower at $US1,483.70 an ounce.  

The dollar edged up almost a fifth of a cent to 68.94 US cents.

A relatively quiet 24 hours ahead for scheduled news. The domestic economic calendar is empty. Wall Street has second-tier reports due tonight and most of the big names have reported as another quarterly earnings season winds down. Newsflow picks up here tomorrow with an earnings update from NAB and BHP’s AGM in London.

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