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The ASX gave up early gains following news the economy expanded at its fastest pace since the 1960s.
The S&P/ASX 200 reached mid-session 17 points or 0.3 per cent in the red after being up as much as 28 points. The reversal tipped the market towards its fourth loss in five sessions.
What’s driving the market
The market was ahead shortly before the release of GDP data showing the economy expanded 3.3 per cent last quarter, accelerating out of recession after two quarters of contraction. The expansion was the strongest since the first quarter of 1976. Economists had expected a more moderate increase of around 2.5 per cent.
Earlier, the market struggled to get out of first gear as positive overnight leads were overshadowed by falling US index futures. Dow futures faded 175 points or 0.6 per cent after Senate Majority Leader Mitch McConnell shot down a bipartisan proposal for a new $908 billion package to support the US economy.
Overnight, US stocks marched higher on revived hopes for a stimulus deal. The Dow Jones Industrial Average climbed 0.63 per cent. The S&P 500 and Nasdaq Composite rose more than 1.1 per cent to all-time closing highs.
“There appears to be added momentum this time to the negotiations with McConnell stating ‘waiting until next year is not an answer’, ‘I’m focused on accomplishing as much as we can’,” NAB Director, Economics, Tapas Strickland, said. “Meanwhile President-elect Biden also called on Congress to pass a ‘robust package’ and that any package passed during the lame duck session would be ‘at best just a start’ and thus seemingly greenlighting a slimmed down stimulus with a more comprehensive plan coming after inauguration day.”
Going up
The materials sector climbed to its highest level since late August in belated response to a string of multi-year highs in iron ore and copper. BHP climbed 1.3 per cent and Rio Tinto 1.1 per cent. Fortescue Metals, the “third force” in iron ore, fell 1.2 per cent. Sandfire blasted 10 per cent higher after updating investors on its new Botswana copper project.
Gold stocks responded to the yellow metal’s best night in more than three weeks. Westgold put on 5 per cent, Gold Road Resources 3.1 per cent and Newcrest 0.1 per cent.
ANZ was the only one of the big four banks to advance, adding 0.2 per cent. Brambles put on 0.2 per cent and Woodside Petroleum 0.1 per cent.
US fast-track approval for Mesoblast‘s lead drug lifted shares in the medical company 8 per cent. The Food and Drug Administration granted the company’s remestemcel-L fast-track status for the treatment of acute respiratory distress syndrome (ARDS). ARDS is the primary cause of death in Covid-19 patients.
Transport services firm Downer EDI was flat after selling 70 per cent of its Laundries business for $155 million.
Going down
Banks, energy companies and real estate investment trusts led the retreat. Dollar-sensitive REITs sank 1.3 per cent. Goodman Group fell 2.5 per cent, Stockland 1.4 per cent and Mirvac 1 per cent.
Three of the big four banks declined. CBA shed 1 per cent, NAB 1.1 per cent and Westpac 0.8 per cent. Macquarie Group gave up 1.8 per cent. In the energy space, Origin dropped 1.7 per cent, Ampol 1.1 per cent and Soul Pattinson 1.8 per cent.
Record November transaction volumes failed to lift buy now pay later company Z1P Co. Volumes increased by 44 per cent from October to $577 million. The share price declined 1.1 per cent.
Gaming group Crown slid 0.2 per cent after appointing NAB’s Steven Blackburn as its new anti-money laundering chief.
Other markets
A subdued morning on Asian markets saw China’s Shanghai Composite off 0.1 per cent, Hong Kong’s Hang Seng up 0.2 per cent and Japan’s Nikkei down 0.2 per cent.
Oil continued to slide after OPEC postponed a decision on extending production caps. Brent crude dropped 29 cents or 0.6 per cent this morning to $US47.13 a barrel. Gold declined $1.70 or 0.1 per cent to $US1,817.20 an ounce.
The dollar dipped 0.13 per cent to 73.69 US cents.
What’s hot today and what’s not
Hot today: Shareholders welcomed news Pursuit Minerals (ASX:PUR) has snapped up prospective land similar to Chalice Gold Mine’s Julimar project, north-east of Perth. Pursuit will pay $300,000 in cash and 40 million shares for the Warrior Project, covering 583 square kilometres. Previous geochemical sampling identified a gold and copper anomaly along 14 km of strike. Shares in Pursuit jumped 46.7 per cent.
Not today: The abrupt termination of Oncosil Medical (ASX:OSL) CEO Daniel Kenny sent shares in the medical device company sharply lower. A brief announcement to the ASX said Kenny had been “terminated effective today” after six years. Shareholders searching for reasons for the sudden departure noted the announcement said European revenues were no longer expected this calendar year, as previously forecast. Chair Dr Chris Roberts will step into the role while a permanent replacement is found. The share price slumped 9.1 per cent.
