Monday Market Minutes: Water off a Duck’s Back

By Glenn Dyer | More Articles by Glenn Dyer

Just three weeks to go in 2021 and it looks like markets are recovering some of their poise that was rattled by Covid Omicron and inflation jitters.

Fading fears about Covid omicron and a high, but not frightening, consumer price inflation reading saw markets surge on Friday, led by Apple whose market value is now just $US60 billion away from an incredible $US3 trillion.

Another strong session tonight could see that value reached.

Apple shares rose 10.8% last week – that’s rise of more than $US300 billion in value which played a big part in the 3.8% rise in the S&P 500 to a record high and the 3.6% jump for the Nasdaq.

The shares were up 2.8% in trading on Friday, nearly three times the 0.95% rise in the S&P with the close of $US179.45 the all-time closing high while the intraday peak was a record $US179.63.

Wall Street ended higher on Friday and the S&P 500 notched an all-time closing high, as market participants analysed an inflation reading that was in line with consensus, but was the largest annual increase in consumer prices in nearly 40 years.

Consumer price inflation reached an annual rate of 6.8% in November, and 4.9% excluding the most volatile elements.

The initial reaction of markets was positive, perhaps because an upward slide would have definitely forced the Fed to accelerate its monetary tightening program at its two-day meeting this week.

The consumer price index increased 0.8% last month after surging 0.9% in October.

The 4.9% annual rise in core inflation was the largest rise since June 1991, after increasing 4.6% in October.

Economists pointed out that US petrol and energy prices have fallen and will be picked up more accurately in the December reading in a month’s time.

Wall Street saw all three major stock indexes advance on Friday and over the week, with tech shares (led by Apple) doing the heavy lifting.

The indexes all rose over the week, while the S&P 500 had its biggest weekly percentage gain since the week ended February 5 this year.

The S&P 500 rose 0.95% to 4,712.02 and sits just 0.7% from its all-time high. The Dow added 216.30 points, or 0.6%, to 35,970.99. The Nasdaq Composite climbed 0.7% to 15,630.60.

The Dow rose 4% over the week, ending a 4-week losing streak. The S&P 500 and Nasdaq Composite added 3.8% and 3.6%, respectively, this week — the best since February for both indexes.

The ASX rose 1.6% over the week after a small dip on Friday of 0.4% to end at 7,353.50. The overnight SPI futures market gained 13 points, meaning a softish start to the second last week of trading for 2021.

US bond yields eased on Friday to end at 1.48%, down from 1.503% the day before but up from 1.357 on December 3 when Covid omicron was thought to be a real danger.

The Aussie dollar rose on Friday to end at 71.71 US cents – up 2.5% for the week.

Apart from the US rise, Eurozone shares rose 2.6%, Japanese shares added 1.5% & Chinese shares gained 3% which tells us investors are there are confident the government will not lose control of the deepening property crisis that saw Evergrande put into default by Fitch ratings and having its affairs now controlled by a committee dominated by the government.

In Europe, despite some declines in recent days, weekly performances remain solid. The CAC 40 in Paris gained 3.3%, Germany’s Dax added 3.0% and London’s Footsie rose 2.4%.


About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

View more articles by Glenn Dyer →