ASX hovers at nine-month highs after CSL, CBA, BHP fuel 0.8% rise

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ASX hovers at nine-month highs after CSL, CBA, BHP fuel 0.8% rise

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The Australian sharemarket finished higher for a seventh straight session on Wednesday as Commonwealth Bank, mining titan BHP, and biotech CSL lead a blue-chip charge.

The benchmark ASX 200 rose 0.6 per cent to a new nine-month high of 6728.5 as iron ore prices improved again and consumer sentiment hit a decade-high amid encouraging vaccine developments.

Local investors also seemed to draw encouragement from progress around US stimulus talks.

Uncertainty over the shape and timing of the country’s latest economic rescue package had weighed on an otherwise buoyant Wall Street session, but an after-market development in Washington hinted that the deadlock between Republicans and Democrats may finally be thawing.

White House Treasury Secretary Steven Mnuchin reportedly offered Democrats a $US916 billion pandemic stimulus proposal, the first time since last month’s presidential election that the Trump administration had engaged directly in talks over a deal.

BetaShares ETFs chief economist David Bassanese said newsflow around the US stimulus deal would likely drive the local market now the delivery of a coronavirus vaccine has been priced in.

“As recently as a week or so ago the thinking was that we won’t get a stimulus package (in the US) until January,” Mr Bassanese said.

“The fact that there has been progress is very encouraging, it really is the gift that keeps on giving.”

“A positive newsflow from the negotiations could be enough to keep powering the market along on its own.”

The ASX hit a new eight-month intraday high of 6745.3 during Wednesday’s trade and has now gained 3.2 per cent for December so far. The market last rose for seven straight sessions in October, while it also achieved the feat in June during the initial stages of the coronavirus rebound.

The index is also back into positive territory for 2020, and is just 434 points below the all-time high set on 20 February.

Roger Taylor, investment advisor at Morgans, said the miners had given the ASX a leg-up this week, though there was room for the banks to join the party.

“The banks have taken a breather after a strong start to November, but they can potentially push us higher from here as well.”

“There continues to be rotation from some of the high flying IT stocks and health stocks that battled back quickly from March to some of the laggards.”

On Wednesday BHP climbed 1.1 per cent to a new nine-year high of $42.73, while Rio Tinto added 0.4 per cent to $115.44.

Fortescue Metals set another new record high close of $21.80 in rising 1.6 per cent.

Commonwealth Bank rose 1.7 per cent to a nine-month high of $83.18, while NAB finished 0.6 per cent ahead at $23.44. Biotech CSL soared 2.2 per cent to $304.14 and Wesfarmers jumped 1.6 per cent to $50.25.

Property stocks and goldminers dragged.

The S&P/ASX 200 is now within 434 points, or 6 per cent, of its highest every closing value of 7162.5 points on 20 February.

It has improved for seven sessions in a row and gained 0.6 per cent today thanks to gains in every sector except real estate and energy.

Healthcare out-performed with an increase of 2.1 per cent, followed by a 1.2 per cent gain in information technology and 1.1 per cent gain in communications. The heavyweight materials sector was up 0.6 per cent and financials improved by 0.4 per cent.

It’s also worth mentioning the impact the proposed stimulus package would have on the US dollar, which is at 18-month lows against major trading partners like China. The US dollar is buying 6.52 renminbi today after falling steadily from 7 renminbi at the end of July.

The greenback is at a 82.46 euro cents, the lowest since April 2018, and near four-year lows against the Japanese Yen at ¥104.13 per dollar (apart from a sharp crash down to ¥102 in March, 2020)

“Today, the US Dollar has edged lower against the G-10 and Asian regional currencies, reflecting renewed fiscal stimulus hopes,” Oanda’s Jeffrey Halley said.

“Momentum remains weak though, and the price action points to more consolidation of the recent US Dollar gains for the remainder of the week. A breakthrough on Capitol Hill is likely to see the US Dollar weaken once again on global recovery/rotation flows.”

“Realistically though, currency markets may well be in a holding pattern until next week’s US FOMC meeting where I expect more easing and possibly some sort of yield curve control pivot. The latter would almost certainly spur more Dollar weakness.”

The ASX seems quietly confident this afternoon and very comfortable around 6730 points. The Aussie dollar has also been rising today, up from US74.1¢ at 10am to US74.42¢ currently. A rising Australian dollar indicates a risk-on mood in global markets.

Futures are pointing to more gains on Wall Street this evening with the Dow Jones mini up 0.3 per cent, the S&P500 mini up 0.2 per cent, and the Nasdaq mini up 0.1 per cent.

The ASX is out-performing China’s CSI300 index, down 0.1 per cent, but is under-performing the Nikkei, up 1.2 per cent, and Hang Seng, up 1.3 per cent, where mobile parts maker Xiaomi is up 5 per cent to an all-time high of HD27.75.

“In Asia, equity markets are off to a modestly positive start today, helped along by a new $US916 billion stimulus proposal by US Treasury Secretary Mnuchin that includes some support for state and local governments,” Oanda senior market analyst Jeffrey Halley wrote in a note to clients this afternoon.

“Whether that can get past the Senate Republicans is another question altogether, it being a red-line sticking point in negotiation until now. Still, with the proposal emanating from the White House, and not the Democrats, markets hope it represents a chance to break the deadlock.”

The Australian sharemarket is heading for a seventh straight session of gains as Commonwealth Bank and biotech CSL lead a blue-chip charge on Wednesday.

Miners BHP, Rio Tinto and Fortescue Metals are also higher, as is big four lender NAB, with the ASX 200 up 0.7 per cent at 6735.4.

The ASX 200 was up 0.7 per cent with just over an hour left of trade. Credit:Jim Rice

The index earlier hit a new eight-month intraday high of 6745.3 and has gained 3.3 per cent for the week so far.

The market last rose for seven straight sessions in October, while it also achieved the feat in June during the initial stages of the coronavirus rebound.

The index is also back into positive territory for 2020, even though it is yet to reclaim all-time highs of February.

Trade has been relatively stable in the past month, with the daily range of points only rising above 100 in two sessions since 12 November. That includes the last day of trading in November, when the index ranged 123 points and fell 1.3 per cent from 6601 to 6517.

And 1 December, when the index gained 1 per cent and went from 6517 points to as high as 6613 before closing at 6588. And since then it has not moved more than 80 points.

In comparison on 13 March the index moved 665 points in one day. In fact, for most of March the ASX 200 moved more than 200 points a day.

That volatility has eased substantially. In 2019 the daily range was 52 points, but so far in 2020 the average is 110 points.

A company called Aurumin floated on the ASX today and shares are up by 10 cents, or 50 per cent, to 30 cents since 10.45am. So far 2.7 million shares have traded hands.

The gold explorer raised a total of $7 million and has a market capitalisation of nearly $26 million. Directors hold most of the shares, while former director Mark Rowbottam holds 15.7 per cent of stock.

Aurumin has two mines in Western Australia – the Mt Dimer Project and the Mt Palmer Project.

Both are historical mines. They were formerly known as Aurumin Mt Dimer (formerly known as Acertim Resources) and Aurumin Mt Palmer, but Aurumin was established this year to place the projects in a separate entity.

Amazon will base its Melbourne staff in Charter Hall’s fast-tracked new office tower, allowing the turbo-charged fund manager to start construction on the $750 million project.

The global online shopping giant is understood is understood to have signed as anchor tenant in Charter Hall’s 48,000 square metre tower at 555 Collins Street, tipping the scales in favour of the building’s swift construction.

The tower at 555 Collins Street.Credit:Artist’s impression

Disruption from the COVID-19 pandemic is proving a boon for Charter Hall and its funds which have opened their chequebooks and acquired a stunning $3.5 billion in assets in just six months to December.

The group added to its deal making tally on Wednesday, announcing its Long WALE REIT (CLW) will undertake an equity $250 million raising to help pay for two properties.

It purchased 76-78 Pitt Street, Sydney via a sale and leaseback to Telstra for $281.5 million and a 100 per cent interest in a new Bunnings shed to be developed in Caboolture, Queensland for $28.1 million.

The REIT has also completed the purchase of an Endeavour Group leased pub the Parap Tavern in Darwin for $9.8 million.

As well, Charter Hall gained planning approval early this year through the Victoria’s Building Recovery Taskforce – part of the state’s pandemic economic stimulus – for two towers on the Collins Street site which will house about 7500 workers.

The second, smaller tower will have 32,000 sq m of office space. Both offices will sit in the group’s flagship CPOF office fund.

Charter Hall would not confirm the leasing deal with Amazon, but sources with knowledge of the transaction were firm. Amazon has been contacted for comment.

The fund manager confirmed Lendlease Constructions will be its construction partner on the project, following its successful completion of the 60,000 sq m premium grade “Wesley” office tower at 130 Lonsdale Street in June.

“We expect a flight to high quality modern office buildings as tenant customers refine their workplace to meet the changing appetite for modern, technology and health/hygiene driven accommodation requirements,”Charter Hall’s managing director and chief executive David Harrison said.

Melbourne lord mayor Sally Capp said the $750 million first stage of the $1.5 billion Collins Street project was a vote of confidence in the future of the city’s economy.

“The city’s economy is beginning its recovery from COVID-19 but city businesses are still doing it tough,” she said.

James Palmer from JLL negotiated the lease.

Eds note: A previous version of this post stated that Google was the company that would be basing its staff out of 555 Collins Street. This was incorrect.

Reuters

Silicon Valley billionaire Elon Musk said on Tuesday he had relocated to Texas from California as he wants to focus more on the new Tesla plant and his SpaceX venture.

Musk confirmed the move in an interview with Matt Murray, the Wall Street Journal‘s editor in chief.

Elon Musk may save a lot of money moving to Texas.Credit:AP

“The two biggest things that I got going on right now are the Starship development in South Texas … and then the big new US factory for Tesla,” 49-year-old Tesla chief said.

“It wasn’t necessarily a great use of my time here (in California)”.

Texas might potentially offer some tax reprieve for the world’s second richest man. It does not collect personal income tax while California has some of the highest state tax rates in the United States.

A 670 per cent rally in Tesla shares this year has boosted Musk’s net worth to $US155 billion ($209 billion) from $US27 billion, just behind Amazon’s Jeff Bezos, according to the Bloomberg Billionaires Index.

Full story here

The value of the US dollar has plunged this year amid forecasts of an even bigger decline in 2021. That’s not good news for Australian exporters, already battered by the intensifying tensions with China and its assault on Australian products.

Against the basket of currencies of its major trading partners the US dollar has tumbled more than 11 per cent since the severity of the pandemic and its economic implications were first appreciated by financial markets in March.

The US dollar has just had its best week since April. Credit:Phil Carrick

The dollar’s traditional status as a safe haven saw its value spike in March but it very quickly went into a downward spiral.

The shockwaves from the pandemic also slammed the Australian dollar, which plunged to a low of just above US55 cents on March 19, plumbing levels last seen nearly two decades ago. Subsequently, however, the Australian dollar has soared to more than US74 cents, its highest levels in more than two years.

The Reserve Bank, having nearly exhausted its monetary policy armoury by driving the cash rate down close to zero deploying quantitative easing – buying bonds – to force longer-term rates down, would be frustrated by the surge in the dollar’s value, which undermines the competitiveness and value of exports largely denominated in US dollars and acts as a deflationary force on the economy.

That makes the future of the US dollar of consequence for the Australian economy and, indeed, the global economy. Other economies, like Europe and Japan, are battling the same currency-driven tides as Australia and confronting the same inability to arrest the appreciation in their currencies which, like the Australian dollar, are touching levels last seen in early 2018.

Read Bartho’s full column here

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