The share market’s post-US election party showed signs of fatigue today, paring strong early gains after putting on 9 per cent in seven sessions.
Boosted by positive vaccine news, the S&P/ASX 200 rose 2.2 per cent to an eight-month high in early action as traders bought potential recovery plays for a post-Covid future. But a slow rot set in shortly after the open.
Post-pandemic losers ultimately cancelled out most of the day’s winners as the the benchmark index finished almost 100 points below its peak with a final tally of 42 points or almost 0.7 per cent.
What moved the market
US and European stocks soared overnight after Pfizer and BioNTech announced their experimental vaccine was 90 per cent effective in preventing Covid-19. Pfizer Chair and CEO D Albert Bourla described the breakthrough as “likely the most significant medical advance in the last 100 years”.
“This hopefully is the beginning of the end of our fight against Covid,” Peter Boockvar, chief investment officer at Bleakley Advisory Group, said.
The pan-European Stoxx 600 put on 3.98 per cent. Markets in the UK, Germany, France and Italy all rose by more than 4 per cent. The Dow Jones Industrial Average surged as much as 5.7 per cent before paring its gain to 2.95 per cent in a portent of what lay ahead for the ASX.
Oil recorded its biggest rise in six months. Safe haven assets plunged. Gold suffered its biggest single-session decline in seven years.
Here and overseas, a sharply bifurcated market split down the middle. Post-Covid recovery stories surged. Winners from the stay-at-home economy plunged.
Energy stocks had their best day of the year. The sector rose 8.5 per cent in a near mirror of crude’s overnight advance. Brent crude soared $2.95 or 7.5 per cent overnight to US$42.40 a barrel, its biggest advance in roughly six months. Oil Search charged 16.6 per cent, Beach Energy 14.8 per cent, Santos 12.2 per cent and Woodside Petroleum 7.3 per cent.
An industrial sector that had been depressed by lockdowns and travel bans climbed 5.5 per cent to its highest point since early March. Sydney Airport rose 9.6 per cent, toll road operator Atlas Arteria 8.1 per cent, Qantas 8.3 per cent, Auckland Airport 6 per cent and Transurban 3.7 per cent.
The financial sector had also been under a cloud, hampered by bad debts and the prospect of a wave of business failures when government support ends. The sector climbed 4.4 per cent to an eight-month peak amid speculation of a scramble among short-sellers to cover their positions. NAB tacked on 7.6 per cent, ANZ 5.1 per cent, Westpac 5.2 per cent and CBA 3 per cent. Macquarie Group added 2 per cent.
Shopping centre operators filled many of the top slots on the ASX 200. Unibail-Rodamco-Westfield put on 43.6 per cent, Vicinity Centres 14.5 per cent and Scentre Group 14.5 per cent.
Travel companies rebounded. Helloworld rose 19.2 per cent, Corporate Travel Management 15.8 per cent, Webjet 13.6 per cent and Flight Centre 9.3 per cent. Casino group Star Entertainment added 7.4 per cent and Crown Resorts 4.6 per cent.
A brutal rotation into recovery plays left the big winners from the stay at home economy battered and bruised. Businesses that rely on home delivery suffered double-digit losses. Meal delivery service Marley Spoon dived 23 per cent, online furniture retailer Temple & Webster 20.6 per cent. online art marketplace Redbubble 20 per cent, online retailer Kogan 17.1 per cent and Domino’s Pizza 11.2 per cent.
Supermarkets that had seen fat profits from stockpiling and dining in took a bath. Coles Group shed 5.3 per cent and Woolworths 4.6 per cent. Retail conglomerate Wesfarmers, which owns the Bunnings brand, fell 2.9 per cent. Property group Goodman tumbled 8.4 per cent.
Building products manufacturer James Hardie had performed well through the pandemic, but sank today despite reporting record half-year sales and operating profit. Shares fell 5.6 per cent after the company increased its sales by 12 per cent to $736.8 million and reaffirmed profit guidance.
Asian markets pared solid initial gains. Japan’s Nikkei hit a 29-year peak before trimming its rally to 0.1 per cent. China’s Shanghai Composite edged up 0.1 per cent, Hong Kong’s Hang Seng 0.7 per cent.
US index futures turned firmly lower after lunch. S&P 500 index futures were lately down 31 points or 0.9 per cent.
Oil gave back a portion of its 7.5 per cent overnight surge. Brent crude eased 45 cents or 1.1 per cent to $US41.95 a barrel.
Gold clawed back some of its $97.30 overnight loss. Gold for December delivery bounced $27.20 or 1.5 per cent to $US1,881.70 an ounce.
The dollar traded at 72.82 US cents after pushing as high as 73.4 cents overnight.
Hot today and not today
Hot today: Data centre host DC Two (ASX:DC2) almost tripled its market value upon debut. Shares that listed at 20 cents this afternoon finished the session at 59.5 cents, a gain of 197.5 per cent. The company designs and operates cloud platforms and data centres. An initial public offering raised $5.5 million.
Not today: Gold’s worst night in seven years wreaked havoc among miners. Gold for December delivery tanked $97.30 or 5 per cent last night to US$1,854.40 an ounce. The local sub-sector tumbled 8.3 per cent. Ramelius Resources (ASX:RMS) cratered 13.3 per cent and Northern Star (ASX:NST) 11.5 per cent. Saracen Mineral (ASX:SAR) fell 11.5 per cent and Newcrest (ASX:NCM) 4.8 per cent.