Overnight: Dow 30k

By Greg Peel

Triple Whammy

The local market was ready for a strong opening yesterday after Wall Street had reacted positively to the AstraZeneca/Oxford Uni vaccine news and had also welcomed the selection of Janet Yellen as Biden’s Treasury Secretary nominee.

Then early in the session more news came through – that of the Trump Administration finally conceding to allow the transfer of power, while not actually conceding the election.

The ASX200 was up 70 points in the first half hour and was up 100 with half an hour to go before some late profit-taking emerged.

While excitement in the US over vaccines had begun to wane as the case-count runs out of control, the AstraZeneca/Oxford vaccine stands out as it is far cheaper and can easily be transported and stored using standard refrigeration. It may only be 90% efficacious to Pfizer and Moderna’s 95%, but considering the FDA was prepared to consider anything over 50%, let’s not quibble.

The excitement over Janet Yellen’s appointment, aside from the expectation the Republicans won’t block her, is that she was known as “Queen of the Doves” as Fed chair, with regard monetary policy, so if she brings that attitude to fiscal policy, then the long-awaited and much-needed second stimulus package should be a worthy one.

As for the transfer of power, apart from the mechanics of it all and allowing the Biden team to be in the loop on important security and other (eg vaccine distribution) matters, it simply removes the uncertainty of a potential blocked transition and non-concession.

So it was up, up and away on Wall Street last night, as clearly anticipated by the local market yesterday.

All sectors closed in the green, ranging from stay-at-home winner consumer staples (+0.4%) to hit-the-road, and the skies, winner energy (+3.5%).

Topping the index board yesterday was Beach Energy ((BPT)) with an 8.2% gain.

While energy stood out, a 2.7% jump for the banks provided the greatest number of index points. Aside from vaccine and other news, the rolling reopening of borders – NSW-Victoria, NSW-Queensland, and Victoria Queensland to come – is great news for business.

Consumer discretionary (including travel) rose 1.3%.

Despite the Nasdaq being the underperformer on Monday night, our tech sector went the other way in rising 2.3% yesterday.

Among the lesser-lights was materials (+0.8%), encumbered by falls in the gold miners as the gold price took a tumble. Indeed, every one of the top five index losers yesterday were gold miners, and the gold price is down over thirty bucks over 24 hours.

While arguably our performance yesterday was pre-emptive to a great extent of Wall Street’s performance overnight, out futures are still up 37 points this morning.

Christmas has come early.

Another Milestone

The Dow first hit 10,000 in 1999, then got tech-wrecked. It regained that level in late 2003 but then things went awry in 2007. The recovery from 2009 saw 10,000 conquered once more and, ironically, it was Trump’s election that drove the average through 20,000, with barely a blink.

Round numbers are just numbers like any other, but they still induce a certain psychological response. It it thus not unusual to see some consolidation around a round number, particularly due to investors who might have said “when the Dow hits 30k, get me out”.

As we note from a spread of Dow up 1.5%, S&P up 1.6% and the Nasdaq up 1.3%, this was not a clear rotation session. This was a buy-everything session. Corks were popping.

But not in Los Angeles, where two days ahead of Thanksgiving, outdoor dining is now banned in LA County. The move has perplexed and angered restaurant owners, who point out outdoor dining is a lot safer than forcing at-home only gatherings for the holiday period.

It has shocked restaurant workers, whose Christmas present this year is no job and no JobKeeper.

LA aside, it is expected millions of Americans will be evicted from their homes before Janet Yellen can do anything about it.

Heading into the busiest retail period of the American year, the Conference Board index of consumer confidence has fallen to a three-month low 96.1 from 101.4 a month ago. Note that falling below 100 implies crossing into pessimism from optimism.

Commodities

After stalling on Monday night, metals prices were back in rally mode last night, iron ore included.

The flag bearer is of course oil, up another 4% despite not at all stumbling on Monday night. It is fitting that oil is traded through benchmark futures contracts, as a surging oil price reflects a deep look into the future.

The victim of exuberance is gold. Bitcoin, on the other hand, is up 3%.

Were Americans buying Australia yesterday? The Aussie is up 0.9% at US$0.7357. Stay away from the ledge Phil.

Today

The SPI Overnight closed up 37 points or 0.6%.

Is it even worth reflecting on Australia’s September quarter economic performance now? Today brings construction work done, ahead of next week’s GDP result.

The US GDP result will be revised tonight, along with the latest numbers on durable goods orders and PCE inflation. The minutes of the last Fed meeting are also due.

Fisher & Paykel Healthcare ((FPH)) reports earnings today and Mesoblast ((MSB)) provides a quarterly result.

Harvey Norman ((HVN)) and Shopping Centres Australasia ((SCP)) are among those holding AGMs.

The Australian share market over the past thirty days…