Australian shares snapped an eight-session losing streak on Tuesday as banks and Telstra, along with a handful of miners, helped the market take back some losses made amid ongoing Sino-US trade tensions and turmoil in emerging markets.
The benchmark S&P/ASX 200 index ended the session up 38 points, or 0.6 per cent, at 6179. The All Ordinaries index rose 37 points, or 0.6 per cent, to 6287, while the Australian dollar ticked up to US71.24¢ against the US dollar.
Australian shares have performed well this year, with the index up 1.9 per cent year-to-date, but the last week has been tough for Australian investors after the benchmark fell more than 3 per cent over seven sessions.
Investors started to worry about lofty valuations for some high-flying growth stocks and also about how the mining sector will perform if commodity prices tumble on a weaker outlook for China's economy.
But those worries took a backseat on Tuesday as investors pushed the benchmark higher. The telecom sector was the strongest performer by sector after Telstra shares climbed 2.9 per cent to $3.20.
Commonwealth Bank climbed as well. The bank's shares rose 1.6 per cent to $71.87, extending gains made in the previous session when Citi analysts upgraded the lending giant to 'neutral' from 'sell' with a $72 price target.
Banks were broadly higher as a sector, with ANZ ending the day up 1.1 per cent at $28.58 and Westpac gaining 0.7 per cent to $27.89.
Energy firms were the other big support to the market, with Woodside up 1.6 per cent to $36.12, Origin Energy up 3.2 per cent to $8.07 and Oil Search higher by 2.6 per cent to $8.68 a share.
Broker moves helped to support some mining stocks on Tuesday, with South32 jumping 2.3 per cent to $3.63 and Whitehaven Coal climbing 3.7 per cent to $5.00 after both firms were upgraded to buy Deutsche Bank.
CSL declined 0.7 per cent to $210.63 after the healthcare firm traded without the rights to its latest dividend payout.
Other stocks in the growth bucket trading lower included Aristocrat Leisure, down 1.3 per cent at $29.60, and Xero, down 1.9 per cent at $46.86.
The latest round of hearings of the Hayne inquiry into the financial services sector is zeroing in on the insurance sector and IAG shares lost 2.4 per cent to $7.29 and Suncorp shares were down 0.8 per cent at $14.77.
Commonwealth Bank shares climbed 1.6 per cent to $71.87, taking gains made so far this week to 2.5 per cent. Citi's banking team said on Monday that they see five strategies that CBA management should be able to use to restore shareholder confidence in the lending giant, a potential route they described as "the five Rs to redemption." That includes restoring lending growth, resizing the bank's divisional portfolio, reshaping institutional banking, reinvigorating the consumer finance business and rebalancing distributions while maintaining digital leadership. " The team lifted their stance on the stock to neutral from sell, citing turnaround hopes and recent underperformance of the shares.
The copper price slid for the second straight session as investors fretted about demand trends for the industrial metal should the trade tensions between China and the US escalate to a full-blown trade war. LME copper inched down 0.1 per cent to $US5906 a tonne. China is the largest source of demand for copper in the world but recent data has shown some signs that the world's second largest economy is softening from its previous rapid rate of growth, with producer inflation cooling in August.
The Australian dollar lifted a touch off recent lows to trade at US71.24¢ against the US dollar after business confidence hit a two-year low in August but business conditions rebounded, according to National Australia Bank's most recent survey. The currency fell to its lowest level since early 2016 at the start of the week, at one point trading around the high US70¢-mark. The currency has been under pressure from trade tensions between the US and China as well as emerging market turmoil as well as ongoing strength in the US economy.
Orderly Brexit hopes
Sterling held onto overnight gains after the European Union's top negotiator raised hopes a Brexit deal can be struck in the coming weeks. Reports that Michel Barnier told a forum in Slovenia that it was "realistic" to expect a Brexit deal in six to eight weeks helped send the pound sharply higher to $US1.3052, its highest level since early August. In recent weeks, the British pound had been under pressure on worries that Britain would exit from the EU without any formal trading agreement.
Win streak over?
Shares in Macau casino operators fell sharply as investors started to fret that a slowing Chinese economy will dampen the attraction of baccarat tables for high rollers. Deutsche Bank lowered revenue growth forecasts for Macau, with the move following closely on the heels of Sanford C Bernstein analysts estimating that Macau gaming revenue for the first nine days of September fell below estimates. Shares of MGM China Holdings dropped as much as 8.8 per cent to record their biggest drop in almost two years.