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Global Market Report - 24 November

Lex Hall  |  24 Nov 2020Text size  Decrease  Increase  |  
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Australian shares are set to rise following gains on Wall Street overnight as vaccine hopes boosted energy and industrial stocks.

The Australian SPI 200 futures contract was up 32 points, or 0.5 per cent, to 6,593 points at 8.30am Sydney time on Tuesday, suggesting a positive start to trading.

US stocks closed higher in a choppy session on Monday as hopes for a covid-19 vaccine lifted economically sensitive sectors such as energy and industrials, but a pullback in megacap shares curbed gains on the S&P 500 and Nasdaq.

The Dow Jones Industrial Average rose 291.48 points, or 1 per cent, to 29,554.96, the S&P 500 gained 15.67 points, or 0.44 per cent, to 3,573.21 and the Nasdaq Composite added 12.95 points, or 0.11 per cent, to 11,867.92.

Locally, Qantas CEO Alan Joyce says the airline is likely to ask for proof that travellers have been vaccinated against covid-19, once a vaccine is rolled out.

The S&P/ASX200 benchmark index closed higher by 22.4 points, or 0.34 per cent, to 6,561.6 on Monday. The All Ordinaries closed higher by 32.1 points, or 0.48 per cent, to 6,772.0.

Gold was down 1.7 per cent at $US1,839.11 an ounce; Brent oil was up 2.1 per cent to $US45.88 a barrel; Iron ore was down 1.2 per cent to $US127.24 a tonne.

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Meanwhile, the Australian dollar was buying 72.89 US cents at 8.30am, down from 73.13 US cents at Monday’s close.


China’s blue-chip index on Monday ended at its highest in more than five years, led by gains in materials and energy stocks, as hopes of a vaccine-led recovery boosted risk appetite.

The blue-chip CSI300 index rose 1.3 per cent to 5,005.03, its highest closing level since June 17, 2015, while the Shanghai Composite Index added 1.1 per cent to 3,414.49.

Hong Kong shares closed higher on Monday as cyclical stocks rose on hopes of a vaccine-led recovery, although Sino-US tensions capped gains.

The Hang Seng index ended up 34.66 points, or 0.13 per cent, at 26,486.20. The Hang Seng China Enterprises index rose 1.07 per cent to 10,666.53.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.83 per cent, while Japan’s Nikkei index closed down 0.42 per cent.


European shares closed lower on Monday as investors weighed signs of progress in developing a covid-19 vaccine against the threat of economic damage from sweeping business restrictions to contain a surge in infections.

Boosting global equity markets earlier on Monday, AstraZeneca Plc said its covid-19 vaccine, developed along with the University of Oxford, could be around 90 per cent effective.

But AstraZeneca’s shares fell 3.8 per cent as traders took into account its lower efficacy rate compared with rivals such as Pfizer, which has so far reported the highest efficacy rate of 95 per cent, followed by Moderna’s 94.5 per cent.

The pan-European STOXX 600 index ended down 0.2 per cent after having gained as much as 0.6 per cent in morning trading.

“There is a significant chance of continuing lockdown measures as the second wave isn’t under control yet,” said Bert Colijn, senior economist for the euro zone at ING.

“That means that some form of lockdown in December will continue to depress economic output before things actually start getting better.”

The benchmark index has gained nearly 40 per cent from its March lows, helped by a flood of stimulus measures, but gains remain capped as data points to a faltering economic recovery from a pandemic-induced recession.

Euro zone business activity contracted sharply in November as new virus restrictions across European countries forced many companies in the bloc’s dominant service industry to close temporarily, a survey showed.

Manufacturing activity, however, remained a bright spot as many factories remained open during lockdowns.

“The market seems to be looking through the current expected growth dip and focusing on the synchronous economic recovery next year,” analysts at Berenberg said.

British domestic stocks were buoyed by hopes of a swifter economic recovery, after the British government said it was working with Scotland, Wales and Northern Ireland to ease covid-19 restrictions over Christmas.

That helped the UK’s domestically focused mid-cap index gain 0.4 per cent, along with hopes of a post Brexit-trade deal with the European Union.

Among individual stocks, Cineworld, owner of the US Regal cinema chain, surged 20 per cent after securing an additional $750 million in funding to cushion itself against the impact of the coronavirus as it aims to reopen next year.

French bank Credit Agricole jumped 4.1 per cent after its Italian unit launched an offer to buy Italian bank Credito Valtellinese (Creval). Germany’s HelloFresh fell 3.3 per cent after the company said it bought Factor75, a US provider of fully prepared meals, for up to US$277 million ($380 million).

North America

US stocks closed higher in a choppy session on Monday as hopes for a covid-19 vaccine lifted economically sensitive sectors such as energy and industrials, but a pullback in megacap shares curbed gains on the S&P 500 and Nasdaq.

Cyclicals led gains, with energy ahead by more than 6 per cent while industrials and financials each rose more than 1 per cent, as data showed monthly business activity expanded at the fastest rate in more than five years.

Energy shares got a boost from another gain in oil prices, which have risen on anticipation a vaccine will help demand recover.

“It’s Monday vaccine trade day,” said Ken Polcari, managing partner at Kace Capital Advisors in Jupiter, Florida.

“As they move out of those growth names, it’s still this continued move into larger cyclical, value names, which is why you see the Dow performing so well and the Nasdaq under some pressure.”

Declines in technology and tech-related heavyweight names such as Apple Inc and Netflix Inc muted gains as investors rotated out of stocks seen as safe bets following a coronavirus-led crash earlier this year.

Major averages got a late boost after the Wall Street Journal reported US President-elect Joe Biden plans to nominate former Federal Reserve Chair Janet Yellen to be the next Treasury secretary.

“A known commodity in an uncertain situation is a potential boon for the market,” said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma.

“The Treasury is probably more important than congress in getting the next stimulus package through. This removes a huge roadblock.”

The Dow Jones Industrial Average rose 291.48 points, or 1 per cent, to 29,554.96, the S&P 500 gained 15.67 points, or 0.44 per cent, to 3,573.21 and the Nasdaq Composite added 12.95 points, or 0.11 per cent, to 11,867.92.

Evidence of high efficacy rates in experimental covid-19 vaccines had lifted the S&P 500 to a record high this month and brought the blue-chip Dow close to breaching 30,000 points for the first time, breathing new life into cyclical stocks that were beaten down during the recession.

AstraZeneca Plc on Monday became the latest major drugmaker to say its vaccine could be around 90 per cent effective, while the US health regulator is likely to approve in mid-December the distribution of Pfizer Inc’s vaccine.

Volume is expected to be on the lighter side given a trading week shortened by the Thanksgiving holiday on Thursday.

Sentiment was dented by new lockdowns to contain a surge in coronavirus infections. Nevada on Sunday tightened curbs on casinos, restaurants and bars, while imposing a broader mandate for face-coverings over the next three weeks.

Hopes of more monetary stimulus were dampened after Treasury Secretary Steven Mnuchin last week pulled the plug on some of the Fed’s pandemic emergency lending programs.

Richmond Federal Reserve Bank President Thomas Barkin said on Monday that households could struggle over the next several months without more government aid to provide support until a vaccine becomes widely available.

Tesla Inc shares surged closer toward hitting US$500 billion ($686 billion) in market capitalisation ahead of its inclusion in the S&P 500 next month.

is senior editor for Morningstar Australia

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