That’s a wrap from us at Markets Live today.
Alex Druce will be back in the morning to check who exactly will be driving the US Senate.
Thanks for reading along, see you tomorrow.
ASX investors headed to the sidelines on Wednesday as control of the US Senate – and the shape of Joe Biden’s Presidency – was left hanging in the balance.
The local benchmark started lower and kept sliding as counting commenced in the crucial Georgia Senate run-off.
The ASX 200 recovered some ground at the close but still shed 74.8 points, or 1.1 per cent, to finish at 6607.1, tracking a declining US futures market and unwinding Monday’s year-starting gains.
The banks and miners sagged, while biotech giant CSL dropped 2.5 per cent to a near five-month low. Energy stocks were rare gainers as oil prices jumped on the back of surprise Saudi oil production cuts.
Counting in the Georgia poll was ongoing at the local close, with a result too close to call.GSFM Funds management investment consultant Stephen Miller said the final result – no matter who wrests control of the Senate – had both positive and negative implications for investors.
A Republican-controlled chamber, for example, would likely maintain the market-friendly status quo that fuelled a record November run for the ASX, and would help block any tax and regulatory reforms that would have accompanied a Democrat clean sweep.
However, this outcome would likely stymie a larger US stimulus response by the Democrats to the coronavirus pandemic.
“I think markets will need to be careful of adopting a short-term – or what I would call a knee-jerk reaction – or whether they take a more medium-term outlook,” Mr Miller said.
“There are still a lot of challenges ahead in 2021 – particularly if you accept that markets look pretty fully priced in terms of the fiscal bridge to get to where we need to be after the vaccine arrives.”
Kunal Sawhney, the chief executive of independent equities research firm Kalkine Group, said investors could be in for a rocky ride until the ramifications of the result are known and understood. However, he also said any volatility may also be short-lived.
“While some volatility can grip financial markets in the near-term amidst prevailing uncertainty, the share market is unlikely to surpass volatility levels experienced in 2020,” Mr Sawhney said.
“Additional stimulus from the policymakers and rollouts of COVID-19 vaccines are further expected to stimulate (the) ASX 200’s recovery in 2021.”
Wall Street’s lead was weak on Wednesday, but improved commodity prices proved an early boon for the major miners.
However, as it turned out, BHP finished 0.2 per cent lower at $44.21, Rio Tinto fell 1.7 per cent to $115.75, and Fortescue Metals dropped 0.6 per cent to $25.05. Twiggy Forrest’s miner still managed to brush a new intraday record high of $25.80.
NAB was the weakest of the major banks, dropping 1.2 per cent to $22.41, while Macquarie Group fell 2.4 per cent to $135.82.
Oil Search led gains for energy stocks with a 5.7 per cent leap to $3.89.
Bitcoin, meanwhile, moved into record territory on Wednesday afternoon and touched $US35,854.
The ASX 200 ended 1.1 per cent lower at 6607.1 on Wednesday as the Georgia senate run-off – and control of the US Senate – was hanging in the balance.
If Republicans hold onto one of the two seats up for grabs in Georgia it will be enough to give the party narrow control of the Senate and a greater ability to block Democrat legislation, something the market generally prefers. On the flip side, a double Democrat win would open the door for a larger pandemic stimulus response.
US futures were subdued – pointing to losses on Wall Street tonight.
The ASX 200 remains deep in the red, with Wednesday’s losses appearing to track the progress of the vote count for the Georgia Senate run-off.
The local market is currently 1.4 per cent down at a near session-low of 6590.9. US futures are subdued, with the decline in investor sentiment seemingly mirroring the prospect of a favourable result for the Democrats.
If either of the sitting Republicans – David Perdue and Kelly Loeffer – can hold on to their seat in Georgia, it will be enough to maintain the party’s narrow control of the Senate and the ability to block Democrat legislation.
A double win by Democrat candidates Jon Ossoff and Reverend Raphael Warnock, meanwhile, will give the the party total control of the major organs of US government and a pathway to enact more radical pandemic support, a prospect that has caused concern among investors.
Results are yet to early to call, however.
The idea of split control of congress following a ‘gridlock election’ (a Biden White House that is hamstrung by a Republican senate from enacting steeper changes to the nation’s tax, energy, and regulatory regime) was one of the key drivers of a record-breaking November ASX rally.
Australia’s vaccine rollout has been brought forward by a few weeks, as the government expects the drugs watchdog to approve the country’s first jab later this month.
Federal Health Minister Greg Hunt said on Wednesday that Australia’s vaccine rollout had been brought forward slightly and was now expected to begin in early March.
Pfizer’s mRNA vaccine will be available first, followed by AstraZeneca’s vaccine later that month. Australia has purchased 10 million doses of the Pfizer vaccine and 53.8 million doses of AstraZeneca’s jab. Both are designed as two-dose vaccines.
The federal government has come under increasing pressure to defend its decision to roll out vaccinations in March, as the rest of the world starts rolling up its sleeves – and a new, more transmissible strain gathers pace.
Mr Hunt said he anticipated the Therapeutic Goods Administration would grant provisional registration to Pfizer’s jab later this month.
Tens of thousands of doses of the vaccine are then expected to arrive in Australia every month.
The energy sector remains the only corner of the ASX in the black this afternoon with the market’s losses fluctuating with the Georgia senate election count.
The banks and miners are now lower, but the worst-hit areas of the local index on Wednesday are the tech and health sectors.
Buy now, pay later darling Afterpay is down 4.6 per cent at a near two-week low of $113.38, while accounting software firm Xero has also backed away from near-record peaks to be 1.8 per cent lower at $149.96.
Appen, Altium, Computershare, and Wisetech Global are each down by between 1.7 per cent and 2.6 per cent. Megaport has fallen 4.4 per cent to $13.57 and Bravura Solutions is also 4.4 per cent lower at $3.03.
The Nasdaq finished higher overnight in choppy trade, though Nasdaq futures were down by more than a per cent in afternoon trade AEST.
Biotech giant CSL is at its lowest price since September, down 2.1 per cent at $279.67.
The $31 billion ResMed is 1.5 per cent down at $27.12, while Ramsay Health Care is 2.1 per cent lower at $60.49.
Fisher and Paykel is a rare gainer, adding 0.6 per cent to $31.31.
Cervical cancer tracking biotech TruScreen has had a strong first morning on the ASX boards, with shares jumping as high as 9.9c in early trade, more than 30 per cent above the 6.5c offer price.
TruScreen, which is also listed in New Zealand, raised $NZ2 million at the end of last year to list shares in Australia.
Its flagship technology, designed as a more sensitive measure of detecting cervical cancers, was invented in Australia and previously owned by listed company Polartechnics, which went into liquidation after the GFC.
The tech is now owned by TruScreen, which listed on the NZX in 2014.
It’s early days of course, but US futures have taken a dive on news that the Democrats are leading the race for both Georgia Senate seats. The ASX 200 followed suit, dropping 1.3 per cent to a session low 6596.5.
If the Republicans can hold onto one seat in Georgia it will be enough to give the party narrow control of the Senate chamber and a greater ability to block Democrat legislation.
A double win by the Democrats, meanwhile, will give them total control of the major organs of US government and a pathway to enact more radical pandemic support, a prospect that has caused concern among investors.
The idea of split control of congress following a ‘gridlock election’ (a Biden White House that is prevented from enacting steeper changes to the nation’s tax, energy, and regulatory regime) was one of the key drivers of a record-breaking November ASX rally.
The results of the Georgia senate elections will not likely be known until Thursday Australian time at the earliest.
The Australian sharemarket was down 0.9 per cent at a session low 6618.5 at lunchtime as mining giant BHP lost its early lead and the energy firms cooled off.
The local bourse had shown signs of repairing its early losses but instead fell further as early polling in the crucial Georgia senate runoff shows a lead for both Democrat candidates.
Losses for financial, health, and retailer stocks have accelerated.
During the 1980s, economists and public policy experts started to argue over the size of our government. Those on the Right said it was too big, while those on the Left disagreed.
The Right typically pointed to trends in government spending and taxing over time adjusted for inflation. Those on the Left preferred to look at public spending and taxing as a share of the economy, compared over time and to other countries. One lot of numbers showed big government, the other showed it to be relatively small.
Each side’s figures supported what they previously believed and rarely did they bother to engage.
It has become an article of faith among many on the Left that they won the debate but lost the policy war. The Right’s dodgy numbers were circulated by generously funded think tanks to bamboozle successive governments into swingeing cutbacks, leading to tax cuts aimed at the rich. From Keating and Hawke to Greiner and Kennett, from Tasmania to the Northern Territory, budgets were grim, assets were sold and the state began to relentlessly shrink.
In reality, the story was far more complex, involving a public sector that has been turned inside out and in ways no one could have reasonably expected when the reform caravan started rolling down the hill.
For all the cuts and privatisations, government is now much bigger than it was.