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Traders breathed a sigh of relief as the share market resumed trading following yesterday’s technical outage, rising quickly to a new eight-month high.
The S&P/ASX 200 cracked 6500 for the first time since early March, rising as high as 6530 before paring its gain to 15 points or 0.2 per cent at 6499.
The market opened on time and performed faultlessly following technical issues that put a premature end to yesterday’s session after just 24 minutes. Exchange operator, the ASX, attributed the problem to the launch of a new system by its technology partner, Nasdaq. Shares in the market operator fell 2 per cent.
What’s driving the market
Traders on market chatroom HotCopper reported no problems with order execution or delays following yesterday’s incident. Brokers had forewarned clients of potential delays while they cleared backlogged orders.
An exceptionally strong month for the local market continued after positive vaccine news lifted US stocks to record levels. The S&P 500 rose 42 points or 1.16 per cent overnight to a new all-time high. The Dow Jones Industrial Average climbed 471 points or 1.6 per cent to its own record.
Cyclical stocks set to benefit from a post-pandemic recovery rallied in the US and here after Moderna reported its experimental Covid-19 vaccine proved 94.5 per cent effective in a late-stage trial. Energy stocks outperformed amid optimism a range of vaccines will become available next year following news last week that Pfizer’s vaccine also performed well in trials.
“The Moderna news lifted all boats although there was a clear preference for cyclical and small caps,” NAB Currency Strategist Rodrigo Catril said.
In the US, the Russell 2000 small-cap index surged 2.4 per cent to an all-time high. Here, the Small Ords has outpaced the top end of the market during the recovery, regaining most of its losses since February. This morning the index trailled with a drop of 0.2 per cent.
Going up
Cyclical sectors continued to outperform in a split market. Energy, financials, materials and industrials rallied. Technology and defensive sectors retreated.
The energy sector climbed 3.2 per cent to its highest level since June ahead of tonight’s meeting of the Organization of the Petroleum Exporting Countries and allies. The OPEC+ meeting is expected to push out an end to production caps that have supported crude prices while demand collapsed during the pandemic. Oil Search rose 5.5 per cent, Santos 3.4 per cent and Woodside 3.2 per cent.
Shopping centre operator Unibail-Rodamco-Westfield lost three-quarters of its market value during the pandemic, but has almost doubled from its lows since Pfizer’s vaccine announcement. The company’ shares climbed 18.2 per cent today. Virgin Money UK has doubled in seven weeks, rising 3.7 per cent today.
Resource stocks were boosted by solid Chinese factory data yesterday, underlining the strength of the recovery there. Iron ore prices improved and copper hit a two-and-a-half-year high. BHP gained 2.8 per cent, Fortescue Metals 1.5 per cent and Rio Tinto 0.1 per cent.
ANZ and NAB touched their strongest levels since March amid optimism the economy may recover faster than projected once vaccines are available. ANZ climbed 3.2 per cent, NAB 2.5 per cent, Westpac 3.3 per cent. and CBA 1.1 per cent.
Crown Resorts edged up 2 per cent after announcing it would stop dealing with junket operators while it consults with state regulators. The gaming group’s licence to operate the Barangaroo casino has been under a cloud amid allegations junket partners had links to Asian crime gangs.
Going down
Gold stocks and other traditional defensive assets were out of favour as the prospect of a successful vaccine drove investors into assets with better exposure to economic growth. At the top end, goldminer Newcrest fell 3.2 per cent, Telstra 1.6 per cent, Coles 1.1 per cent and Woolworths 0.6 per cent. Further down the food chain, AusNet Services sank 5.1 per cent, Evolution Mining 4.9 per cent, Charter Hall Group 4.9 percent and St Barbara 4.6 per cent.
ASIC’s call yesterday for Buy Now Pay Later companies to seek to “address customer harm” continued to cast a cloud over the industry. Afterpay fell 4.1 per cent, Sezzle 3 per cent and Z1P Co 1.5 per cent. At today’s AGM, Afterpay announced Nick Molnar would assume the role of co-CEO and Managing Director with co-founder and current CEO/MD Anthony Eisen.
Other markets
Asian markets edged higher. China’s Shanghai Composite gained less than 0.1 per cent. Hong Kong’s Hang Seng and Japan’s Nikkei each put on 0.3 per cent.
US index futures wobbled after last night’s record close. S&P 500 index futures were recently down six points or 0.2 per cent. Dow futures slipped 55 points or 0.2 per cent.
Oil added to last night’s rally. Brent crude rose 23 cents or 0.5 per cent to $US44.05 a barrel. Gold added $1.40 or 0.1 per cent to $US1,889.20 an ounce.
The dollar was steady at 73.18 US cents.
Hot today
Shares in Nanoveu (ASSX:NVU) surged after the tech minnow held out the promise of a digital display that would adjust so glasses-wearers could dispense with their spectacles. The company has lodged patents in Singapore for its EyeFyx product for people who suffer from farsightedness. EyeFyx is a screen and software application that adjusts output for different prescriptions. NVU’s share price jumped 37.8 per cent to 6.2 cents.
