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A second day of profit-taking among the post-election rally’s best-performing sectors took a little of the shine off a strong week for Australian equities.
The S&P/ASX 200 eased 38 points or 0.6 per cent by mid-session, but remained on course for a weekly tally of around 3.1 per cent. Stocks surged through the first half of the week after Pfizer and BioNTech revealed their vaccine candidate had performed well in late-stage trials.
What’s driving the market
Soft sessions in Europe and the US set the scene for further losses here following yesterday’s 0.5 per cent setback. The S&P 500 slumped 1 per cent as fresh social restrictions in New York and Chicago raised concerns about economic growth before a vaccine becomes widely available.
The US and UK reported record infection rates overnight. Federal Reserve Chair Jerome Powell warned “the next few months could be challenging”. The pan-European Stoxx 600 slid 0.88 per cent.
“There are reasons to be optimistic about the global economic recovery and eventual pandemic submission over the coming year, but we are not out of the woods yet,” NAB Currency Strategist Rodrigo Catril said. “The next few months are going to be challenging and we just need to hang on… New cases in the US hit a fresh record of 144k for the day, hospitalisation rate also printed a new high of 65k and fatalities were the highest since May.”
A brief uplift in US index futures following well-received updates from Disney and Cisco soon faded. S&P 500 index futures were lately down six points or 0.2 per cent.
Sectors that outperformed during two weeks of post-election/vaccine optimism led the retreat here. Energy stocks fell 2.2 per cent, REITs 1.3 per cent, industrials 1.2 per cent and financials 0.8 per cent.
Going up
Local gains reflected the ‘risk off’ tone of last night’s US action. Gold stocks, supermarkets and health companies advanced.
Goldminer Newcrest was the best of the market heavyweights, rising 3 per cent. Coles put on 0.2 per cent. Health giant CSL inched up 0.2 per cent.
Fortescue Metals bounced 1.2 per cent, its first advance since outlining plans to diversify from iron ore into renewable energy. Telstra climbed for a seventh straight session. The telecom, which yesterday announced plans to split into three divisions, rose 1.1 per cent. Wesfarmers added to yesterday’s AGM rally, climbing 0.6 per cent.
Medical device manufacturer Polynovo climbed 6.1 per cent on US regulatory approval for clinical trials on its NovoSorb product for skin repair. Jumbo Interactive jumped 7.3 per cent after inking a deal to provide software and services to the West Australian lottery.
Going down
The energy sector‘s golden run stuttered yesterday and dulled a little more this morning. The sector eased 1.6 per cent, paring its gain for the week to a still-spectacular 12.2 per cent. Cooper Energy retreated 3.5 per cent, Santos 3.3 per cent and Woodside 1.8 per cent.
Commonwealth Bank was the pick of the big four with a drop of 0.5 per cent. ANZ fell 0.6 per cent, NAB 1.3 per cent and Westpac 0.8 per cent.
The resurgence of virus fears overseas weighed on travel and tourism stocks. Corporate Travel Management slipped 4 per cent, Flight Centre 2.7 per cent, Webjet 2.6 per cent, Sydney Airport 1.8 per cent and Qantas 1.8 per cent.
Ramsay Health Care declined 1.9 per cent after warning higher costs associated with Covid and surgical restrictions associated with outbreaks in the UK and France were impacting trading. The company said there were too many uncertainties to offer full-year guidance.
Other markets
A downbeat morning on Asian markets saw China’s Shanghai Composite fall 0.3 per cent, Hong Kong’s Hang Seng 0.2 per cent and Japan’s Nikkei 0.9 per cent.
Oil extended overnight weakness, which followed an unexpected increase in US crude stockpiles. Brent crude retreated 42 cents or 1 per cent to $US43.11 a barrel. Gold improved $6.50 or 0.3 per cent to $US1,879.90 an ounce.
The dollar dipped 0.14 per cent to 72.3 US cents.
Hot today
Strong demand for accessories for Apple’s new iPhones delivered a significant profit surge at mobile distributor Cellnet (SX:CLT). Profits for the first four months of the year were 410 per cent stronger over the same period last year at $1.6 million. CEO Dave Clark said, “Our revenue and profit for October surpassed all expectations, delivering one of the best monthly results Cellnet has ever produced.” The company’s shares doubled in value before shaving their rise to 79.1 per cent at 7.7 cents.
