Investors risk sentiments were encouraged on reports that said American officials were weighing the possibility of easing tariffs on China, in a bid to push forward trade talks. As per reports, U.S. Treasury Secretary Steven Mnuchin proposed lifting all or some of the tariffs on Chinese imports to give Beijing a reason to make deeper concessions in ongoing trade talks between the two countries.

Chinese Vice Premier Liu He will visit the United States on Jan. 30 and 31 for the latest round of trade talks aimed at resolving the bitter dispute between the world's two largest economies. In December 2018, Washington and Beijing agreed to a 90-day truce in a trade war that has disrupted the flow of hundreds of billions of dollars of goods.

Indicators released recently have shown signs that the Chinese economy is losing some momentum. China will release its fourth-quarter and 2018 GDP data on Monday, along with December factory output, retail sales and fixed-asset investment.

China's fourth-quarter economic growth likely slowed to the weakest pace since the global financial crisis, as demand faltered at home and abroad. Market experts expect the world's second-largest economy to have grown 6.4% in the October-December quarter from a year earlier, slowing from the previous quarter's 6.5% pace and matching levels last seen in early 2009. Full-year growth is expected to have cooled to 6.6%, the weakest pace in 28 years, from 6.9% in 2017. Better-than-expected GDP readings could lift stocks and global commodity prices, and boost the yuan, which has firmed this year following a sharp drop in 2018.

Shares of information technology sector were top performer among ASX sector peers, on tracking gains in US counterparts. Language tech Appen was up 4.2% and Altium rose 2.1%, while Wisetech Global climbed 0.1% and Computershare rose 0.6%. Afterpay Touch shares soared 11.4% after announcing a record 240% rise in first half global underlying sales.

Shares in materials and resources advanced despite mixed trade for global oil and base metals prices overnight, with Fortescue Metals, Bluescope Steel, and the major gold miners were all up by between 0.6% and 1.8%. Rio Tinto jumped 0.7% after it announced 2% lift in iron ore production and shipping for 2018, while BHP rose 0.9%.

The big financials also gained early with ANZ, Commonwealth Bank, Macquarie Group, Westpac and NAB each up by between 0.5% and 0.8%. Insurer Suncorp climbed 1.4%.

Gambling companies were mixed, with Crown Resorts down 0.2% and The Star Entertainment Group falling 1.1%. However, poker machine maker Aristocrat Leisure rose 1.5% and Tabcorp lifted 0.8%.

Among individual stocks, shares in online retailer Kogan.com surged 22.2% after it announced a solid Christmas sales period had offset dwindling iPhone revenue.

CURRENCY: Australian Dollar gained against greenback and against a basket of other peers on Friday on trade optimism. The Australian dollar was quoted at 71.92 US cents from 71.58 US cents on Thursday.

OFFSHORE MARKET: US share market closed higher on Thursday, following a Wall Street Journal report that said US Treasury Secretary Steven Mnuchin is discussing lifting some or all tariffs imposed on Chinese imports. Also giving US stocks a boost was the defence sector, led by defence contractors Lockheed Martin and Northrop Grumman, after US President Donald Trump unveiled a revamped US missile defence strategy. The Dow Jones Industrial Average jumped 162.94 points, or 0.67%, to 24,370.10. The S&P 500 was up 19.86 points, or 0.76%, to 2,635.96. The Nasdaq Composite Index rose 49.77 points, or 0.71%, to 7,084.46.