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A rally in US futures on revived vaccine and stimulus optimism helped the ASX advance into the last full trading week of the year.
The S&P/ASX 200 climbed 34 points or 0.5 per cent by mid-session. The rally positioned the index for its first gain in three sessions.
What’s driving the market
Soft end-of-week leads from Wall Street were superseded by a weekend of positive developments on several fronts. S&P 500 futures surged 20 points or almost 0.6 per cent this morning as Pfizer began rolling out its vaccine across the US following regulatory approval late on Friday. A bipartisan team of US politicians announced a new manoeuvre to try to break a deadlock in stimulus negotiations. Across the Atlantic, the UK and European Union agreed to extend Brexit talks.
“Last minute signs of compromise are emerging [in US stimulus talks] despite little progress having been made on Friday,” NAB Director of Economics, Tapas Strickland, said. “If a deal can be reached by Friday, that will provide a further boost to risk appetite and build the bridge to what is a more optimistic medium-picture given the rollout of a vaccine in the US.”
House and Senate negotiators this morning announced plans to divide their US$908 billion stimulus proposal in two. A US$748 billion package will contain measures that have attracted cross-party support. A smaller US$160 billion package will contain more contentious measures that have become sticking points in negotiations.
US stocks closed mixed but broadly lower on Friday. The S&P 500 eased 0.13 per cent.
Going up
Gains in banks, supermarkets and Wesfarmers kept the market ahead as CSL and resource stocks dragged. CBA put on 2 per cent, ANZ 1.6 per cent, NAB 1.3 per cent and Westpac 1.1 per cent. Supermarkets Coles and Woolworths added 1.6 and 1.3 per cent, respectively. Wesfarmers climbed 2.7 per cent.
Afterpay rallied 4.7 per cent to an all-time high on news it will replace insurer IAG on the S&P/ASX 20 index of market heavyweights. The rise of the domestic technology sector was underlined by news Afterpay and Xero will replace Oil Search and property company Vicinity Centres on the S&P/ASX 50. Retailers Kogan and Reece will join the ASX 200. Xero shares rose 1.2 per cent and IAG 0.7 per cent. Kogan shed 1.8 per cent, Oil Search 0.5 per cent, Reece 2.2 per cent and Vicinity Centres 0.9 per cent.
Toll road operator Transurban put on 1.3 per cent after announcing WestConnex Group had refinanced $4 billion of bank debt. Transurban owns a 25.5 per cent stake in the group, which is building a mostly-underground 33km motorway in western Sydney.
News Eagers Automotive sold its Daimler truck business and associated property for $108 million lifted the car dealership network 4.8 per cent to a new peak. Investment manager IOOF Holdings rose 2.8 per cent on news the Australian Competition and Consumer Commission will not oppose its proposed acquisition of wealth manager MLC from NAB.
Scandal-plagued Crown Resorts overcame early losses to advance 1 per cent after law firm Maurice Blackburn filed a class action in Victoria alleging the casino group failed its obligations under anti-money laundering laws and breached its continuous disclosure obligations. Software giant Altium edged up 0.3 per cent after agreeing to sell its TASKING business for US$110 million to a European private equity firm.
Going down
The parabolic rally in iron ore miners faltered at the end of last week, even as the price of ore hit fresh nine-year highs. Fortescue Metals retreated 2.3 per cent this morning, Rio Tinto 1 per cent and BHP 0.1 per cent. Woodside Petroleum fell 0.9 per cent and Newcrest 0.7 per cent.
Health giant CSL was the other major drag, falling 1.5 per cent after scrapping its experimental coronavirus vaccine at the end of last week. Fisher & Paykel Healthcare dipped 1.5 per cent and Cochlear 1.1 per cent. Property giant Goodman slid 0.3 per cent.
Other markets
A mixed morning on Asian markets saw China’s Shanghai Composite drop 0.1 per cent, Hong Kong’s Hang Seng fall 0.2 per cent and Japan’s Nikkei rise 0.6 per cent.
Oil reversed a quarter of Friday’s loss. Brent crude rebounded seven cents or 0.1 per cent to $US50.04 a barrel. Gold slipped $4 or 0.2 per cent to $US1,839.50 an ounce.
The dollar retreated 0.2 per cent to 75.35 US cents.
What’s hot today and what’s not
Hot today: Shares in medicinal cannabis manufacturer Zelira Therapeutics (ASX:ZLD) hit a level last seen in February 2018 after the company expanded its footprint in the US. The company will license its HOPE products to Alternative Solutions, a grower and manufacturer based in Washington DC. Zelira will receive an up-front fee and ongoing royalties. Shares lately pared their mid-session gain to 11.1 per cent.
Not today: A tough morning for investors in some of last week’s best performers at the speculative end of the market. Biotech Immutep (ASX:IMM), whose shares doubled in value last week, tanked 24.6 per cent. Nickel-copper explorer SI6 Metals (ASX:SI6) slumped 25 per cent. Mobile banking software maker Douugh (ASX:DOU) has been in retreat for several weeks, but dived 14 per cent today to a two-month low.
