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

The last session of Spring has positive leads following a record close to Wall Street's holiday-shortened week amid multi-year highs in key commodities.

ASX SPI200 index futures rallied 39 points or 0.6 per cent as the S&P 500 and Nasdaq Composite finished at all-time highs.

Optimism over the economic outlook for next year lifted bellwether industrial metal copper to a seven-year peak and iron ore to its highest level in almost six years.

Wall Street

US stocks finished a strong week with additional gains during a truncated Black Friday session. The S&P 500 rose nine points or 0.24 per cent to extend its weekly tally to 2.3 per cent.

The Dow Jones Industrial Average put on 38 points or 0.13 per cent on the day and 2.2 per cent for the week. The Nasdaq Composite gained 111 points or 0.92 per cent as investors favoured market-leading tech stocks over cyclicals tied to the health of the economy. The tech-heavy index added almost 3 per cent over the week.

“It’s an abbreviated session and volume is light, so the only conclusion is that the rally is not faltering for now,” Peter Cardillo, chief market economist at Spartan Capital Securities, told Reuters. “It does bode well for next month.”

Wall Street's "fear gauge", the VIX, briefly dropped below 20 for the first time since February in a sign investors are increasingly relaxed about the future. Trading volumes were around half the average during a session that ended at 1 pm.

A divided market saw gains in health (+1 per cent), communication services (+0.6 per cent) and technology (+0.5 per cent) outweigh declines in energy (-1.3 per cent), utilities (-1 per cent) and financials (-0.4 per cent). The materials sector climbed 0.4 per cent.  

Walt Disney slumped 1.3 per cent after announcing plans to lay off more than twice as many workers as previously announced. Most of the redundancies will come from theme parks.

Australian outlook

Barring black swans, the local market will today wrap up its best month in decades. The S&P/ASX 200 is ahead 11.4 per cent for November, the best monthly return in its 20-year history. The older All Ordinaries is up 11.1 per cent and on track for its best tally since March 1988.

Aside from gold, the outlook for hard commodities continues to improve. Multi-year highs in iron ore and copper on Friday bode well for miners this week.

Record coronavirus rates in the US have had minimal impact on a market willing to respond to positive vaccine news and ignore the negatives. At least ten vaccines are at stage III trials, meaning plenty of potentially market-friendly news announcements are in the pipeline for the weeks ahead.

The health of the economy will be in focus with a flood of economic data this week. Wednesday's quarterly GDP report is a potential market-mover. The figures are expected to show the economy rebounded out of recession last quarter.

The Reserve Bank holds its last meeting of 2020 tomorrow but is not expected to signal any major change of policy. Likewise, Governor Philip Lowe is unlikely to spring surprises when he testifies before the House economics committee on Wednesday. Trade and retail sales reports are also scheduled this week.

AGM season is all but done. Tailenders today include Dubber, Atomos and Livetiles. 9 Spokes and Aguia Resources release earnings. Collins Foods reports tomorrow. Sezzle and Orion Metals report on Wednesday. Solomon Lew's Premier Investments holds its AGM on Friday. Domino's Pizza and IOOF hold investor days this week. 

The dollar has started the week on the front foot, edging up 0.11 per cent to 73.85 US cents.

Commodities

A fourth day of gains lifted copper to a seven-year high. Chinese imports have reached record levels this year, offsetting weak demand elsewhere. Benchmark copper on the London Metal Exchange climbed per 1.4 cent on Friday to US$7,487.50 a tonne. Aluminium added 1.4 per cent, nickel 1.1 per cent, lead 3.3 per cent, zinc 1.2 per cent and 0.5 tin per cent.

Gold stocks held firm despite a breakdown in the precious metal through critical technical support. Gold for February delivery slumped $23.10 or 1.3 per cent to settle at US$1,788.10 an ounce, its lowest finish in almost five months. The NYSE Arca Gold Bugs Index climbed 0.46 per cent despite last week's 4 per cent slump in the yellow metal.

“As soon as prices touched below the key US$1,800 level, it triggered a sell-off," OANDA analyst Craig Erlam told Reuters. "It is probable that prices might test the US$1,750 level.”

BHP and Rio Tinto rose in European trade, then dipped in the US. BHP's US-listed stock retreated 0.1 per cent after its UK-listed stock gained 0.56 per cent. Rio Tinto eased 0.35 per cent in the US and added 0.43 per cent in the UK. The spot price for iron ore landed in China rose $1 or 0.8 per cent to US$130.95 a tonne.

Oil traded mixed ahead of tonight's OPEC+ meeting. Brent crude settled 38 cents or 0.8 per cent ahead at US$48.18 a barrel. The US benchmark slid 18 cents or 0.3 per cent to US$45.53. Both measures gained roughly 7 per cent last week and were on track for monthly advances of around 27 per cent.


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