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ASX Today: ASX caps off worst week since GFC with more losses

A bullish share market looks set for early gains as the improving domestic outlook once again outweighs declines on Wall Street.

ASX SPI200 index futures rallied 34 points or 0.5 per cent, implying a new near-nine-month high when trade resumes.

The S&P/ASX 200 has been on a tear this month, rising 10.3 per cent in three weeks amid optimism about low Covid infection rates and the prospect of effective vaccines next year.

Wall Street

US stocks sank on Friday as investors struggled with a deteriorating short-term outlook. The S&P 500 shed 24 points or 0.68 per cent, sealing its first weekly loss in three weeks. The benchmark lost 0.8 per cent during a week when the ASX 200 put on 2.1 per cent.

The Dow Jones Industrial Average gave up 220 points or 0.75 per cent. The blue-chip index lost 0.7 per cent last week.

The Nasdaq Composite fell 50 points or 0.42 per cent. The tech-heavy index was cushioned by gains in the likes of Netflix, Zoom Video and other stocks that have outperformed during the pandemic.

California became the latest state to re-impose restrictions after a record 187,833 new coronavirus cases were reported in the US on Thursday. JPMorgan Chase downgraded their economic growth outlook for the start of next year to a contraction of 1 per cent, citing pandemic restrictions.

Sentiment was also dented by news the White House wants to end several emergency stimulus programs, overriding resistance from the Federal Reserve. The Fed said it "would prefer that the full suite of emergency facilities established during the coronavirus pandemic continue to serve their important role as a backstop for our still-strained and vulnerable economy.”

“This dust-up between the Fed and Treasury could have serious implications, as markets want to see the two institutions working well together,” David Carter, chief investment officer at Lenox Wealth Advisors, told Reuters. “The timing of this dust-up is unfortunate, as the risk of Covid is still very much with us.”

Australian outlook

Wall Street outpaced Australian markets back to record levels, but the performance gap has narrowed  this month. The ASX has temporarily broken its slavish dependence on the US for direction, as evidenced by this morning's futures figure.  Barring fresh developments, the local market should continue to move towards pre-pandemic February highs. By Friday's close, the distance to the old top had narrowed to 9.5 per cent.

On a global level, sentiment remains strongly aligned with prospects for a mass-distributed vaccine. Announcements from Pfizer and Moderna bolstered hopes over the last two weeks. Other companies are due to release results in weeks ahead.

Thursday's Thanksgiving holiday in the US will dampen trading volumes over the second half of the week. The global money-go-round will start to slow on Wednesday as many American take an early mark to travel home. Wall Street is closed on Thursday, then re-opens on Friday for half a session

Back home, the virtual AGM season rolls on with around 30 companies holding meetings this week. Among the bigger names are: Mesoblast, Mayne Pharma, Ramsay Health Care and Monadelphous (tomorrow); Harvey Norman, Beach Energy, IOOF, SCA Property, Regis Resources, Fletcher Building and Northern Star (Wednesday); WiseTech, Ramelius Resources, Evolution Mining, Lynas and Qube Holdings (Thursday); and Sandfire Resources, Helloworld Travel and Karoon Gas (Friday).   

Earnings reports are due from Fisher & Paykel Healthcare, Virgin Money UK, Thorn Group, Technology One and Select Harvests. 

The economic calendar is light this week as the month winds down. Australian highlights are Wednesday's quarterly construction and Thursday's private capital expenditure reports - both numbers are important feeds into gross domestic product. US GDP figures on Wednesday night are another potential market-mover.

The dollar edged up 0.1 per cent this morning to 73.12 US cents.

Commodities

Iron ore and industrial metals have risen strongly with the prospects of a vaccine-driven global recovery. The spot price for ore landed in China rose $1.20 or 0.9 per cent on Friday to US$129.50 a tonne. Prices improved $6.85 or 5.6 per cent last week.

Copper soared to a two-year high on the London Metal Exchange. Benchmark copper climbed 2.6 per cent to US$7,262.50 a tonne. Nickel gained 2 per cent, lead 1.9 per cent, zinc 1.2 per cent and tin 0.3 per cent. Aluminium ended flat on the day but is up around 8 per cent for the month.

BHP's US-listed stock gained 1.17 per cent and its UK-listed stock 1.49 per cent. Rio Tinto added 0.67 per cent in the US and 1.21 per cent in the UK.

Oil advanced for a third straight week. Brent crude settled 76 cents or 1.7 per cent higher on Friday at US$44.96 a barrel. The international benchmark put on 5.1 per cent last week.

US goldminers attracted some haven buying as the metal bounced after three straight losses. The NYSE Arca Gold Bugs Index put on 0.72 per cent. Gold for December delivery settled $10.90 or 0.6 per cent ahead at US$1,872.40 an ounce.


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