ASX 200 lower as CSL shares fall, Aussie dollar lifts

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ASX 200 lower as CSL shares fall, Aussie dollar lifts

Australian shares have dropped for a second consecutive day as CSL shares slumped on its abandoned COVID-19 vaccine trial, while the Australian dollar rallied.

The All Ordinaries index closed slightly lower (-0.4pc) at 6,886 points on Friday. Meanwhile, the benchmark ASX 200 performed a little worse, down 0.6 per cent to 6,642.

Despite their losses, the All Ords and ASX ended the week with slight gains (up 0.3 and 0.1 per cent respectively).

Shares in biotech giant CSL were 3.2 per cent lower at $291.53, after the biotech company said it would abandon the next phase of trials for its COVID-19 vaccine.

In a statement to the ASX, CSL said the vaccine candidate, which was being developed with the University of Queensland, had caused some trial participants to return false positives in HIV tests.

In agreement with the Federal Government, CSL said vaccine development would therefore not proceed to phase 2 and 3 trials.

Westpac shares were 0.2 per cent higher, despite falls for the other major bank stocks, as it held its annual general meeting.

Westpac chairman John McFarlane said he hoped the bank would be able to pay more “consistent” dividends in future, after payouts were cut due to a record fine over anti-money laundering breaches and the COVID-19 pandemic.

“I am conscious how important dividends are to individual shareholders and know how unhappy you have been about the decision not to pay a first-half dividend as well as the lower dividend for the year,” Mr McFarlane said.

Despite Friday’s losses, the Australian market has surged 12 per cent in the past six weeks.

It was mainly driven by optimism that vaccines from Pfizer, Moderna and AstraZeneca will help drive a rebound from the coronavirus economic slump.

Miners, energy stocks rally, capping market losses

Mining stocks received a boost after iron ore prices continued a stellar run, at fresh seven-year highs.

The steelmaking material jumped (+4.3pc) to $US156.58 a tonne.

Shares in BHP (+0.8pc) and Rio Tinto (+0.5pc) posted solid gains. Fortescue Metals jumped (+2pc) to $22.95, its highest ever closing price.

“The China stimulus-led rally is nowhere better reflected than in the iron ore market, which is up 70 per cent this year amid strong demand,” ANZ economist Adelaide Timbrell wrote.

“The rally received an additional boost recently from supply side issues. Vale reduced its guidance on output for 2021, as it struggles to overcome issues relating to the reopening of dams associated with their operations.”

And in a risk to Australian supply, on Thursday, the Pilbara Ports Authority issued a cyclone warning and said it was clearing large vessels out of the Port Hedland export hub.

“A La Nina weather system is likely to increase the number of cyclones that hit the West Australian coast. In the past this has resulted in higher than normal levels of disruptions to iron ore exports,” Ms Timbrell said.

However, the China Iron and Steel Association said BHP had assured it that the adverse weather conditions would not affect its monthly shipment volumes.

Shares in nickel and gold miner IGO surged, up 24 per cent, in its best one-day gain in more than a decade.

It rally was sparked by confirmation IGO would purchase a stake in a lithium mine, a deal that has been favourably received by analysts.

Energy was the best-performing sector on the local market midway through the session, after crude oil prices lifted overnight.

The price of Brent crude reached more than $US50 a barrel for the first time since oil prices slumped in March.

Woodside (+2.6pc), Santos (+2.8pc) and Beach Energy (+0.8c) were among the energy stocks making gains.

Airbnb jumps on debut

Shares in Airbnb have soared on debut, in the biggest US stock market listing of 2020.

After a tumultuous year for the global travel market, the holiday rental platform listed on the Nasdaq, with its share price more than doubling on open.

The broader Nasdaq index closed higher, while the Dow Jones and S&P 500 lost ground.

Shares in Airbnb’s initial public offering were priced at $US68 and the stock soared past that during its first session of trade, closing at $US144.71.

However, the company has not turned an annual profit since its launch in 2008 and it is not expected to do so this year either, despite a better-than-expected third quarter.

Airbnb posted a quarterly net profit of $US219 million ahead of its listing, as it cut its costs, but it expects a decline in bookings and a rise in cancellations during the fourth quarter.

“I do think the company will benefit from the pent-up travel demand once the vaccine is widely distributed, but why would someone want to buy into a travel-related, unprofitable business with slowing growth?” Training the Street chief executive Scott Rostan told AP.

Airbnb has listed on the Nasdaq in a year that’s seen investors flock to tech stocks.(Reuters: Carlo Allegri)

It follows a year of investors flocking to technology stocks as equity markets recovered from the pandemic plunge.

The tech-heavy Nasdaq Composite is up 38 per cent this year and 80 per cent since its March low.

On Wednesday, food delivery company DoorDash listed in the US, with its shares also jumping on its first day of trade, after a big year for delivery services.

Australian dollar hits 2.5 year high

The Australian dollar jumped above 75 US cents overnight, its highest value in two-and-a-half years.

Its six-week rally was mainly driven by surging commodity prices and a weaker US greenback.

By 5:00pm AEDT, the local currency was buying 75.55 US cents.

The euro also jumped after the European Central Bank (ECB) expanded its stimulus, but not by as much as some investors had expected.

ING global head of macro Carsten Brzeski said the ECB did not present “a big new bazooka”, and rather offered “a well-engineered extension of all well-known instruments to ensure that the current level of monetary accommodation is extended until at least the spring of 2022.”

The British pound fell as post-Brexit trade talks were extended to the weekend.

The US dollar also weakened after data showed that the number of Americans filing for unemployment benefits for the first time rose last week, as COVID-19 cases continued to climb, leading to more restrictions.

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