Thanks for reading along with us at Markets Live today.
Great to be back with you all in 2021 – hopefully it is a prosperous year for you and your loved ones.
Alex Druce will be back in the morning with all the overnight moves from the US and Europe.
Until then, ta-ta.
ASX investors showed no sign of a New Year hangover with the big banks and major miners firing the market record its best start to a year in two decades.
The benchmark ASX 200 added 97.1 points, or 1.5 per cent, on Monday to close at 6684.2 and repair the losses suffered on New Year’s Eve.
You have to go back to January 2, 2001, to find a better start to a year, when the index rose 1.7 per cent.
The market’s strong start to 2021 defied gloomy futures trading, as coronavirus clusters in NSW and Victoria continue to boost fears of wider economic lockdowns.
But a promising Monday-morning update from NSW public health experts lifted the mood, adding momentum to an undercurrent of optimism that the eventual rollout of a vaccine will prove both a health and economic salve.
“I think we forget that markets are forward-looking,” Bell Direct analyst Jessica Amir said on Monday.
“People are focussed on what the world will look like after the pandemic, past the doom and gloom, lockdowns, restrictions, and outbreaks, past the end of JobKeeper.
“The vaccine rollout pretty much means markets are positive going into the new year.”
The market’s year-opening advance was fuelled by another record-setting session for Fortescue Metals and a glittering run by the local gold miners.
Twiggy Forest’s $75 billion miner rose 5.9 per cent to finish at a new peak of $24.80, brushing away fears around a renewed push from China to achieve iron ore self-sufficiency. Gold prices were back above $US1900 an ounce and at near two-month highs, lifting Newcrest, Northern Star, Saracen, and Evolution.
Commonwealth Bank led gains for the major lenders, adding 2 per cent to close at $83.75. NAB rose 1.5 per cent to $22.93, Westpac lifted 1.3 per cent to $19.63, and ANZ climbed 1.5 per cent to $23.04.
The Aussie dollar remained elevated above 77 US cents and near 30-month highs.
JP Morgan Asset Management strategist Kerry Craig agreed that COVID cases and vaccine distribution will remain the key focus for investors for now, with the political forces that influenced markets late in 2020 having almost faded almost with the passing of the US election and Brexit.
But he also expects the next couple of months to be bumpy.
“Without the wide distribution of vaccines, the paths of COVID and the economy are locked together, given the impact on social mobility and economic curtailment. This link will be broken as immunity levels rise into the middle of the year, but until then the economic path will be bumpy over the first quarter,” Mr Craig said.
“Investors should look through the bumpier start to the new economic cycle and focus on the improved earnings outlook and still supportive fiscal and monetary policy stance. Even if monetary and fiscal policy support may not increase as much in 2021 as it did in 2020, the fact that they are still at a very loose setting helps the outlook for risk assets like equities and credit.”
The local market accelerated its rise as US futures ticked higher ahead of this week’s crucial Georgia senate race in the US.
Patrik Schowitz, JP Morgan Asset Management’s global multi-asset strategist said the election could prove a market event if the Democrats win both of the Georgia senate seats, enabling president-elect Joe Biden to push more of his tax and spending policy.
“It’s quite possible we could see a negative initial reaction from equity markets over corporate tax and regulation worries. Conversely, it might give bond yields a lift,” Mr Schowitz said.
Among Monday’s other big-name winners were BHP and Rio Tinto. The mining titans added 1.5 per cent and 1.3 per cent respectively.
Wesfarmers rose 2.2 per cent to finish at a near-record high of $51.51, while supermarkets Woolworths and Coles added 1.8 per cent and 2 per cent respectively.
The ASX 200 has recorded its best year-opening session since 2001, adding 1.5 per cent to claw back the losses suffered on New Year’s Eve.
The market finished 97.1 points higher at 6684.2. You have to go back to January 2, 2001, to find a better start to a year. The index rose 1.7 per cent on that day, according to Bloomberg data.
US futures are flat, though have improved from a heavy early decline.
It was one of the most extraordinary years in living memory. A once-in-one-hundred-years kind of year with the pandemic causing wild market swings, huge gains, and some of the most unexpected business events in the country’s history.
But how much can you really remember?
There are 20 questions. Score one point per correct answer.
Lucy Battersby has devised a rating scheme, depending on you result.
Under 5 points: You will recover from 2020 without too much long term psychological scarring because you obviously avoided the news, but you also missed out the best gains in 30 years.
5 – 10 points: You managed to wake up and read the news most days. Congratulations!
10 – 15 points: Were you one of those annoying people who actually got fitter during lockdown?
15 – 20 points: Let’s hope you at least made a lot of money from paying so much attention to the rolling disaster that was 2020. Now go and spend it on someone who deserves it.
Investors have shown no sign of a New Year hangover with the ASX 200 tracking for its best start to a year in two decades.
The benchmark index was last 82.3 points – or 1.3 per cent – ahead at 6669.2 thanks to a strong session from the banks, miners, and consumer giants Wesfarmers and Woolworths.
If the market finishes the day with a gain of more than 1.2 per cent, it will beat the opening-day rise recorded on January 3, 2017.
You then have to go back to January 2, 2001, to find a better start to a year. The index rose 1.7 per cent on that day, according to Bloomberg data.
The Aussie dollar is also elevated, hovering at near 30-month highs of 77.13 US cents.
US futures ticked higher after lunchtime and point to modest gains on Wall Street tonight.
ASX-listed gold miners are luminous in the first trading session of the year as the precious metal rises 1.4 per cent to $US1924.11 an ounce.
Spot gold prices finished 2020 just shy of $US1900 an ounce but shot higher this morning, dragging the likes of Newcrest, Evolution, Northern Star, and Saracen higher.
The wider mining sector is buoyant on Monday, adding 2 per cent.
Newcrest is up 4.5 per cent to $26.05, Northern Star has gained 4.1 per cent to $13.21, Evolution is 5.3 per cent higher at $5.26, and Saracen is 5.5 per cent ahead at $5.01.
Agriculture, manufacturers and other exporters could suffer if the Australian dollar continues to push through two-year highs against the US dollar off the back of soaring commodity prices.
The Aussie rose 10 per cent against the greenback during 2020 to hit a two year-high of US77¢ on December 31 amid a broad weakening of the US dollar, while marking smaller gains against the pound (up 4.8 per cent), the Japanese yen (3.1 per cent), the NZ dollar (2.7 per cent) and Chinese yuan (up 1.3 per cent).
The rise against the US is expected to continue, with Westpac forecasting the Aussie to hit 83¢ by the end of 2021, ANZ predicting 80¢ and Commonwealth Bank 78¢.
Sarah Hunter, chief Australian economist for BIS Oxford Economics, said manufacturing, agriculture – already reeling from Chinese tariffs – and other exporters would be most exposed by the stronger dollar if overseas buyers shifted to cheaper competitors or had to accept lower sale prices.
A new year, and another new record high for Twiggy Forest’s Fortescue Metals.
The iron ore miner – which more than doubled in value to $72 billion in 2020 – was last 4.3 per cent higher at $24.44, topping the $24.38 price it set last month.
Iron ore prices edged higher at the tail end of 2020 to sit just above $US160 per tonne.
Investors are keeping a close eye on the miners today after China last week signalled its intent to become more self-sufficient with new mining projects in Africa and Western Australia.
Meanwhile, online real estate firm REA Group also touched a new record high on the first day of trade in 2021, rising 2.9 per cent to $153.10.
The firm – worth $19.6 billion and majority-owned by News Corp – gained nearly 50 per cent in value in 2020.
The REA rise comes after Corelogic data showed property prices defied the pandemic to rise in every capital city except Melbourne in 2020.
Jobs and education portal Seek is also at record highs on Monday. The $10 billion firm rose 2.1 per cent to $29.14, having gained 30 per cent in value last year.
Afterpay, Wesfarmers, Premier Investments, and Domain Holdings were also flirting with new highs.
Buying a home in every capital city across the country except for Melbourne became more expensive in 2020, while regional property prices grew three times as fast as the big smoke.
Despite the ongoing pandemic, Sydney house prices increased 4 per cent over the year to December, CoreLogic data released on Monday morning shows. Regional NSW house prices jumped 8.8 per cent over the same period. In Melbourne, prices slumped 2 per cent but increased 5.5 per cent in regional Victoria.
Capital city property values collectively increased 2 per cent over the year, while country home prices increased 6.9 per cent.
While prices did suffer during the height of the virus, falling about 2 per cent between April and September, national prices are now in their third consecutive month of price growth.
Improved coronavirus case numbers in NSW appear to be boosting investor sentiment, but the ASX-listed travel firms remain mixed as restrictions continue to bite.
The ASX 200 was 1.1 per cent higher at 6657.3 at 1pm – defying earlier expectations of a New Year’s slump – with the major banks and miners leading the charge.
NSW has no new cases of community transmission on Monday, with seven fresh cases in hotel quarantine. Two cases of community transmission, detected after 8pm last night, are linked to the Berala cluster and will be included in tomorrow’s numbers.
Victoria has recorded three new cases of local transmission from 32,468 tests, with an additional positive case in a returned traveller in hotel quarantine.
Sydney Airport shares are down 0.8 per cent at $6.36 as various state borders remained closed or under strict restrictions. Auckland International Airport’s ASX-listed shares were 1 per cent lower at $7.10.
However, Qantas was 0.6 per cent higher at $4.88, Air New Zealand rose 0.3 per cent to $1.67, and Regional Express gained 2.4 per cent to $2.11.
Flight Centre recovered ground to rise 0.4 per cent to $15.92, Webjet was 0.8 per cent ahead at $5.11, and Hellowrold Travel added 1.2 per cent to $2.55. Corporate Travel Management fell 2.7 per cent to $17.03.
Toll giant Transurban moved into positive territory, adding 0.1 per cent to $13.67.