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The share market wrapped up a second week of strong gains with a minor retrace after rising virus infection rates spooked Wall Street.
The S&P/ASX 200 eased 13 points or 0.2 per cent to trim its tally for the week to 3.5 per cent.
The index has put on more than 8 per cent in two weeks that included a US election and a Covid-19 vaccine breakthrough. Importantly, this week included a decisive breakout through a technical resistance zone that had held since June.
What moved the market
Investors in Europe and the US locked in profits overnight as record coronavirus infection rates in the US and the UK dulled some of the optimism over Pfizer’s vaccine news earlier in the week. The S&P 500 dropped 1 per cent. The pan-European Stoxx 600 shed 0.88 per cent.
Fresh social restrictions in New York and Chicago raised concerns about economic growth on a day the US reported a record tally of new cases. Federal Reserve Chair Jerome Powell warned “the next few months could be challenging”. Powell also shared concerns about the outlook for workers in services industries.
“We’re not going back to the same economy,” he said. “We’re recovering, but to a different economy and it will be one that is more leveraged to technology, and I worry that it’s going to make it even more difficult than it was for many workers.”
Nasdaq and S&P futures crept up this afternoon, while Dow futures fell. Nasdaq Composite futures were lately up almost 0.4 per cent. S&P 500 futures gained two points or less than 0.1 per cent. Dow futures dropped 22 points or 0.1 per cent.
Today’s Australian retreat was led by some of the week’s best-performing sectors. REITs fell 1.2 per cent, energy stocks 0.6 per cent, industrials 0.6 per cent and financials 0.3 per cent. Utilities and consumer staples also declined.
Winners’ circle
The ‘risk off’ tone overnight helped gold stocks at the end of a week when the goldminers’ index sagged to a near five-month low. Newcrest shone among the market heavyweights, rising 2.8 per cent. Saracen Mineral bounced 7.1 per cent, Northern Star 7.2 per cent and Perseus Mining 6.7 per cent.
Telstra climbed 1.6 per cent to a seventh straight gain. The telecom yesterday announced plans to split into three divisions to unlock equity in its infrastructure assets.
CSL edged up 0.3 per cent after the Minister for Health, Greg Hunt, said a vaccine developed with the University of Queensland was ready to move onto phase II clinical trials. If successful, the government hopes to have the vaccine ready by the third quarter next year.
“The vaccine is proving to be safe through phase I clinical trials and it is proving to produce a positive antibody response,” Hunt told reporters. “It is doing its job.”
Fortescue Metals rose for the first time since announcing plans to enter the green energy space. The iron ore juggernaut put on 0.3 per cent.
Medical device manufacturer Polynovo climbed 8.6 per cent on US regulatory approval for clinical trials on its NovoSorb product for skin repair. Jumbo Interactive jumped 8.3 per cent after inking a deal to provide software and services to the West Australian lottery.
Oil Search was an outlier, climbing 3.1 per cent as the energy sector‘s golden run stuttered. Cooper Energy retreated 2.8 per cent, Santos 2.2 per cent and Woodside 0.8 per cent.
Doghouse
More than two-thirds of the ASX 20 ended lower. Hardest hit were BHP -1.9 per cent, IAG -1.5 per cent and Brambles -1 per cent.
Commonwealth Bank resisted a mild downtrend in the big four, rising 0.1 per cent. ANZ fell 0.1 per cent, NAB 0.5 per cent and Westpac 0.2 per cent.
Companies with business interests in the heart of the latest Covid outbreaks fell back. Shopping centre operators Unibail-Rodamco-Westfield and Vicinity Centres lost 6.2 and 3.1 per cent, respectively. News Corp shed 3.3 per cent, Virgin Money UK 2.1 per cent and Omni Bridgeway 3.9 per cent.
Ramsay Health Care declined 1.6 per cent after warning higher costs associated with Covid and surgical restrictions associated with outbreaks in the UK and France were impacting trading. The company declined to provide full-year guidance.
Other markets
A downbeat session on Asian markets saw China’s Shanghai Composite and Japan’s Nikkei fall 0.8 per cent. Hong Kong’s Hang Seng gave up 0.6 per cent.
Oil extended overnight weakness. Brent crude retreated 57 cents or 1.3 per cent to $US42.96 a barrel. Gold improved $2.70 or 0.1 per cent to $US1,876 an ounce.
The dollar dipped 0.14 per cent to 72.3 US cents.
Hot today and not today
Hot today: Aged care operator Japara Healthcare (ASX:JHC) has flown under the radar this week, rising almost 68 per cent without a major announcement or “please explain” from the market regulator. Shares that traded at 40 cents on Monday climbed 21.8 per cent to 67 cents today. Trading notices lodged by substantial holders this morning may go some way to explaining the action. The company was subject to speculation back in June that it might spin out its real estate assets and lease them back.
Not today: Excitement over drilling at Troy Resources’ (ASX:TRY) Smarts Underground prospect in Guyana continued to dissipate. Shares that hit 20 cents when the company announced a “world class, spectacular drilling result” last month faded to half that price today. The company downplayed results from the final two holes, noting they targeted extremities of the known resource and were not expected to replicate the results that caused the initial share rally.
