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A nine-month opening high beckons for Australian shares after a string of positive vaccine developments carried Wall Street to a record close.
ASX SPI200 index futures climbed 33 points or 0.5 per cent, positioning the market for a shot at a seventh straight win.
The S&P/ASX 200 has risen every session so far this month. The index closed in positive territory for 2020 yesterday for the first time since late February.
Wall Street
US stocks drove further into the record zone as positive vaccine news and hints of progress in stimulus talks outweighed lockdown fears as the coronavirus rages through America.
The S&P 500 overcame early weakness to finish 10 points or 0.28 per cent ahead. The Dow Jones Industrial Average put on 104 points or 0.35 per cent. The Nasdaq Composite added 63 points or 0.5 per cent. All three indices ended at new closing highs.
In vaccine news:
- Pfizer and BioNTech began to roll out 40 million doses of vaccine across the UK, the first western country to approve the drug for use.
- The vaccine moved a stage nearer US approval after the Food & Drug Administration said it was safe and highly effective. The regulator is expected to green-light its use in the US within days. Pfizer shares rose 3.2 per cent. BioNTech shares gained 3.7 per cent in Frankfurt.
- Johnson & Johnson announced it could have results from a late-stage trial of its one-dose vaccine sooner than expected. The company’s chief scientific officer told a conference he hoped for results next month. Shares in the Dow component company rose 1.7 per cent.
Traders also kept an eye on Washington, where negotiations continued for a new coronavirus relief package. Talks were given fresh impetus last week by grim employment figures and record-high virus infection rates in much of the country.
“News out of DC that fiscal stimulus talks have resumed is also a positive development (though until a deal actually passes the President’s desk, this might be all hat, no cattle),” Willie Delwiche, investment strategist at Baird, wrote. “These headlines come at a critical time as we remain in a challenging time from both a health and economic perspective.”
Australian outlook
The December stealth rally looks set to continue into a seventh session as the market looks ahead to better times. While widely-available vaccines remain months away (March at the earliest), low infection rates mean investors are willing to buy Aussie equities now and wait for earnings to catch up with valuations.
The market has lost a little of its November vim, but continues to nudge higher. The index has averaged 28 points per day for a total gain of 2.6 per cent over six sessions this month.
Much of this month’s strength has come down to the big three iron ore majors. Iron ore closed just shy of US$150 a tonne yesterday, a new seven-and-a-half-year peak. The spot price for ore landed in China climbed $2.40 or 1.6 per cent to US$149.95 a tonne, its highest level since March 2013.
BHP‘s US-listed stock finished 0.77 per cent ahead, after its UK-listed stock dipped 0.39 per cent. Rio Tinto shed 0.12 per cent in the US and 0.31 per cent in the UK.
Energy stocks led the US advance, rising 1.6 per cent. Also strong were health +0.7 per cent and materials +0.6 per cent. The financial sector finished almost 0.1 per cent in the red. Traditional defensives such as real estate and utilities also declined.
Washington H. Soul Pattinson holds a virtual AGM today. Perpetual holds an investor day. Westpac’s consumer sentiment report is due at 10.30 AEDT.
The dollar retreated further from this month’s 28-month high. The Aussie was lately down 0.07 per cent at 74.1 US cents.
Commodities
A second day of gains lifted gold to its highest close in three weeks. Gold for February delivery settled $8.90 or 0.5 per cent ahead at US$1,874.90 an ounce. The NYSE Arca Gold Bugs Index failed to keep pace, falling 0.37 per cent.
“Gold prices have found renewed support on the back of falling [US] government bond yields, as investors realise the virus is not going anywhere for a while yet and interest rates will remain low for longer despite the rolling out vaccines in the months ahead,” Fawad Razaqzada, market analyst at ThinkMarkets, told MarketWatch.
Oil finished mixed but little changed following news production from OPEC countries increased to a six-month high last month. Brent crude settled five cents or less than 0.1 per cent ahead at US$48.84 a barrel. The US benchmark dipped 16 cents or 0.4 per cent to US$45.60.
