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Growing optimism over a trade deal fired resource stocks higher this morning, but gains were capped by a profit decline at Westpac.

The ASX 200 rallied 44 points in early action before trimming its advance to 34 points or 0.5 per cent mid-session at 6702.

Trade-sensitive resource stocks were boosted by signs the US and China are inching closer to a deal. US stocks closed at a fresh record on Friday after the White House said talks had made “enormous progress” and a deal could be signed this month. The S&P 500 jumped 29 points or 0.97 per cent.

Trade progress, coupled with upbeat Chinese factory data, pushed commodity prices higher at the end of the week. That helped lift BHP 2.1 per cent this morning, and Rio Tinto 3.7 per cent. Fortescue rose 3.2 per cent to its strongest level in four months.

Takeover action helped sentiment towards the sector. Nickel miner Panoramic jumped 31.3 per cent to 44 cents after Independence Group launched an unsolicited offer valuing the company at 47.6 cents. Panoramic’s board recommended shareholders take no action until they had time to evaluate the offer.

Some of the heat ebbed from the initial market surge as Westpac became the second of the big four banks to disappoint this earnings season, following last week’s downbeat outlook from ANZ.

Westpac cut its dividend and announced it would raise $2.5 billion in fresh capital after statutory full-year net profit slumped 16 per cent. CEO Brian Hazer described a “disappointing year” due to customer remediation costs associated with the Royal Commission, falling interest rates and low economic growth. He said the capital raise would provide a buffer in the event of litigation, regulatory action or changes to capital rules.

With Westpac’s shares in a trading halt, other banks bore the brunt of the selling. CBA slid 1.3 per cent to its lowest level in a month. ANZ revisited August lows with a fall of 0.3 per cent. NAB, which reports on Thursday, skidded 2.9 per cent.

Soft retail sales and job advertising figures increased the pressure on the Reserve Bank ahead of tomorrow’s rates decision. Retail sales grew an anaemic 0.2 per cent during September, half the expected pace. Job advertising – an early indicator of employment growth – contracted 1 per cent to the lowest level since January 2017.

What’s hot today and what’s not:

Hot today: graphite miner Syrah Resources plumbed a seven-year low last month after the company slashed output while the cost of production remains higher than the return on sales. A rare morsel of good news this morning lifted the share price 8.5 per cent. The company reported a milestone at its battery material plant in the US, where it produced its first batch of purified spherical graphite. Syrah is developing the first graphite anode battery supply production facility outside China.

Not today: disappointment for investors in plastic pipe-maker Tubi, who saw their shareholdings briefly lose almost more than half their value less than five months after listing. Shares that listed at 20 cents in June were temporarily worth as little as 7.8 cents this morning before a partial recovery to 14.5 cents, still a decline of 40.8 per cent on Friday’s last trade. The bloodbath came after the company issued a profit warning, citing uncertain North American demand.

Asian markets kicked higher. China’s Shanghai Composite put on 0.4 per cent, Hong Kong’s Hang Seng 1 per cent. Japanese markets were closed for a public holiday. S&P 500 index futures were recently ahead five  points or 0.2 per cent.

Turning to commodity markets, Brent crude futures retreated 34 cents or 0.6 per cent this morning to $US61.35 a barrel. Gold futures rose $4.40 or 0.3 per cent to $US1,515.80 an ounce.

On currency markets, the dollar was flat at 69.14 US cents.

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