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The ASX looks set to open higher after reports the US has reached an in-principle trade deal with China helped Wall Street hit record levels.

ASX SPI200 index futures rallied 30 points or 0.5 per cent to 6733. The dollar rose half a cent to 69.08 US cents.

Bloomberg News and CNBC reported that US and Chinese negotiators had finalised the terms of a phase-one deal. US trade advisers met President Donald Trump this morning to seek his sign-off. Bloomberg said an announcement could come this morning. Earlier, Trump tweeted, “Getting very close to a BIG DEAL with China. They want it, and so do we!”

US stocks hit all-time highs early in the session, then eased as wary traders waited to see if the unpredictable president would accept the deal. The S&P 500 rose 27 points or 0.86 per cent to a record close. The Dow put on 221 points or 0.79 per cent and the Nasdaq 63 points or 0.73 per cent.

Earlier reports said the US had offered to wind back tariffs on Chinese imports and abandon plans to introduce levies on another $US160 billion worth of imports on Sunday. The offer included cutting existing duties in half.

A phase-one deal would represent the first breakthrough in a trade war that has dragged on for almost two years. The White House introduced tariffs to force China to addressUS grievances over the trade deficit, intellectual property theft, forced technology transfers and other issues. However, traders have grown increasingly sceptical after being repeatedly assured a deal was “close”.

“How many times have we had Lucy pulling the football away in this trade deal?” Mark Hackett, chief of investment research at Nationwide in the US told Reuters. “This one seems a little bit more tangible than some of the previous ones, but I still think investors are wise to wait… for something actually being signed.”

Trade-sensitive stocks moved higher. Caterpillar put on 1.93 per cent and two indexes of computer chipmakers hit record levels. Apple edged up 0.25 per cent.

BHP and Rio Tinto caught an uplift from the trade optimism. BHP’s US-listed stock advanced 0.98 per cent and its UK-listed stock 0.84 per cent. Rio Tinto gained 1.05 per cent in the US and 0.72 per cent in the UK. The spot price for iron ore eased 55 cents or 0.6 per cent to $US93.80 a dry ton.

The ASX 200 stuttered yesterday, falling 44 points or 0.7 per cent and erasing the week’s gains. Declines were broad after the dollar climbed to its highest level in a month.

Oil reversed most of Wednesday’s losses on the prospect of a pick-up in demand if global trade improves. Brent crude futures settled 48 cents or 0.7 per cent ahead at $US64.20 a barrel.  

Copper touched a seven-month high before settling little changed. Benchmark copper hit $US6,175 a tonne on the London Metal Exchange before ending $1 lower at $US6,155. Nickel rose 1.8 per cent to a two-week peak. Aluminium gained 0.9 per cent, lead 0.1 per cent and zinc 1.9 per cent. Tin slid 0.2 per cent.

Gold settled modestly lower, cushioned by scepticism over the likelihood of a trade deal. February gold eased $2.70 or 0.2 per cent to $US1,472.30 an ounce.  

All eyes were on Washington ahead of the Australian session. Confirmation of a deal would likely rocket-charge US index futures and Australian shares. There is nothing major on the domestic economic calendar today. Wall Street has retail sales data due tonight, but economic data will take second place to any breakthrough on trade.

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