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The prospect of a US-China trade deal as early as tonight helped Australian shares advance at the end of a choppy week.

The ASX 200 rallied 37 points or 0.6 per cent to 6746 as regional markets welcomed news the feuding trade partners had reached an “in principle” phase-one agreement. US President Donald Trump met with trade advisers this morning and is expected to unveil details of the deal tonight. Bloomberg reported Trump had signed off on the agreement.

China’s benchmark index, the Shanghai Composite, rose 0.8 per cent. Hong Kong’s Hang Seng put on 1.7 per cent and Japan’s Nikkei 2.3 per cent. S&P 500 index futures were recently ahead 13 points or 0.4 per cent.

Fox News reported the Chinese had verbally agreed to buy $US50 billion worth of US farm produce. The US will suspend tariffs on Chinese imports due to come into force on Sunday, and wind back some other tariffs. The deal will include protections for intellectual property.  

Australian gains were capped by a surge in the dollar to its highest level in nearly five months. The dollar was lately buying 69.24 US cents on the prospect of higher demand for Australian raw materials as Chinese manufacturing recovers from the hit from the trade war.

Finance stocks marched higher. Virgin Money UK soared 9.7 per cent as exit polling predicted a clear majority for Boris Johnson’s Conservative Party in Britain’s general election. CBA gained 0.6 per cent, ANZ 2.3 per cent, NAB 1.4 per cent and Westpac 2.1 per cent.

Resource stocks standing to profit from improvements in Chinese demand kicked higher. Fortescue Metals climbed 1.6 per cent to a post-GFC high. BHP advanced 2.2 per cent to its highest level in three months, Rio  Tinto 1.9 per cent  to a level last seen in July.

Medical device manufacturer PolyNovo was the index’s star turn, charging 12.1 per cent after gaining approval from European regulators to sell its NovoSorb skin repair product.  

The gold sector – a traditional hedge against market shocks – skidded 3 per cent to its weakest level since mid-June. Silver Lake Resource shed 8.4 per cent, Evolution Mining 5.5 per cent and sector giant Newcrest 1.9 per cent.

Also notably weak this morning: Mirvac down 3.4 per cent, Stockland down 2.7 per cent and Sydney Airport down 2.6 per cent.  

Brent crude futures put on 40 cents or 0.6 per cent this morning at $US64.62 a barrel. Gold inched up 70 cents or less than 0.1 per cent to $US1,473.10 an ounce.

What’s hot today and what’s not:

Hot today: relief for investors in Next Science as the share price rebounded off a seven-month low on news the medical company had been granted a patent for its acne treatment. Shares rallied 5.9 per cent to $1.79, a far cry from this year’s peak at $4.73, but an improvement on yesterday’s close. The US patent covers the Xbio technology used in the company’s acne gel and creams.  

Not today: Z Energy slumped to a five-year low after slashing its earnings outlook. The Kiwi fuel retailer downgraded its guidance for full-year earnings before interest and tax to a range of $350 – $385 million from a previous forecast of $390 – $430 million. The company also reduced its dividend  guidance from 48 – 50 cents to 40 cents per share. Shares dived 11.6 per cent to $4.10.

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