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Hopes for a fourth straight ASX advance were dented by a late slump on Wall Street after Pfizer slashed its vaccine rollout plans.
The outlook for the day was overturned in the final hour of US trade when the Wall Street Journal revealed supply-chain problems had set back Pfizer’s production schedule. The drug-maker now expects to roll out half as many vaccines this year as originally planned, potentially delaying the long-awaited economic recovery from the pandemic.
US stocks surrendered much of the day’s gains in the final minutes of trade. Australian index futures finished seven points or 0.1 per cent in the red.
Wall Street
The Nasdaq Composite finished 28 points or 0.23 per cent ahead but well off its session high. Earlier, the tech-heavy index joined the Dow and S&P 500 at record levels as investors continued to look beyond a bleak present to a brighter future. Hints of progress in stimulus negotiations and faith in imminent vaccines helped offset a record coronavirus death toll and elevated unemployment figures.
The Dow Jones Industrial Average clung on to a final gain of 86 points or 0.29 per cent. The S&P 500 gave up its gains, closing two points or 0.06 per cent lower.
Earlier, investors seized on signs of compromise on Capitol Hill. Democrat support for a bipartisan bill suggested a shift away from previous demands for a broader proposal with a bigger price tag. Senate Majority Leader Mitch McConnell said he saw “hopeful signs” a deal was within reach before the end of the year.
“Compromise is within reach. We know where we agree. We can do this,” he told the Senate.
The night’s economic data supported the case for fiscal stimulus. A measure of services activity in the US slowed to a six-month low. The number of Americans filing for unemployment benefits declined, but remained extraordinarily high by historical standards.
Wednesday brought a new record for deaths attributed to the virus: 2,600. More than 100,000 Americans are currently in hospital receiving treatment, according to CNBC.
Nonetheless, investors bought stocks that will benefit most from economic recovery once effective vaccines are available. The S&P 1500 airlines index jumped 3.8 per cent. Hotels, resort groups and cruise companies also shone. Planemaker Boeing surged 6 per cent following a US$9 billion order from Ryanair. Tesla rallied 4.3 per cent ahead of its entry to the S&P 500.
Australian outlook
Despite the late setback, the ASX has a shot at maintaining its 100% December record. The iron ore giants that provided all of yesterday’s momentum have positive leads again this morning.
The spot price for iron ore landed in China climbed $1.05 or 0.8 per cent yesterday to a new seven-year high of US$137.80 a tonne. BHP’s US-listed stock added another 2.44 per cent overnight. Its UK-listed stock gained 2.24 per cent. Rio Tinto put on 3.39 per cent in the US and 2.71 per cent in the UK.
Potential support today might come from energy stocks. The US sector rose 1.1 per cent. US industrials gained 0.5 per cent and REITs 0.7 per cent.
The dollar looms as a potential headwind. The Aussie hit a 28-month high this week, a broad negative for Australia’s export-driven economy. The higher the dollar rises, the more expensive Australian exports become for overseas buyers. The currency was last up 0.3 per cent at 74.37 US cents.
October retail sales figures are due today. Premier Investments holds its virtual AGM.
Commodities
Oil rallied despite an OPEC+ decision to increase production from next month. The Organization of the Petroleum Exporting Countries and its allies announced they will reduce production caps in stages. Brent crude settled 46 cents or 1 per cent higher at US$48.71 a barrel.
Gold stocks retreated despite a third straight advance in the metal to a near two-week high. The NYSE Arca Gold Bugs Index dipped 1 per cent. Gold for February delivery settled $12.10 or 0.7 per cent higher at US$1,842.30 an ounce.
