Pre-Open Data
Key Data for the Week
Key economic data released this week:
Australian Market
The Australian sharemarket extended its post-election rally on Monday. The ASX 200 climbed 1.8% to hit its highest level since March. Gains were broad-based, led by the Materials, Information Technology and Communication sectors which all added over 2.8%.
The Materials sector was lifted by mining heavyweight BHP, up 3.5%, after the company announced the acquisition of a further 28% interest in Shenzi (Gulf of Mexico oil assets) from Hess Corporation, bringing BHP’s ownership to 72%. Fortescue Metals jumped 6.4%, while Rio Tinto added 2.9%. Goldminers also closed stronger; Evolution Mining gained 3.2% and Saracen Mineral rose 1.5%, while Northern Star and Newcrest Mining lifted 1.7% and 0.9% respectively.
The Financials sector also closed higher, despite a 1.9% decline in ANZ after the company traded ex-dividend. NAB closed up 1.0% and Commonwealth Bank rose 0.7%, while Westpac lost 0.1%. Insurers also enjoyed gains; QBE Insurance jumped 5.2%, while NIB climbed 3.9% and Insurance Australia Group added 3.3%.
Nine Entertainment climbed 2.2% after the company agreed to a $100 million deal with Rugby Australia to broadcast international games for the Wallabies and Wallaroos, along with domestic competitions over the next three years.
The Australian futures market points to a 2.02% rise today, driven by stronger overseas markets.
Overseas Markets
European sharemarkets reached an eight-month high overnight following strong progress in a COVID-19 vaccine by US pharmaceutical company Pfizer and its German partner BioNtech. Pfizer gained 7.7% and BioNtech surged 15.5% after data from the COVID-19 vaccine trial showed it is more than 90% effective. Travel and leisure stocks saw strong gains after the Irish government announced they are considering subsidising vital air routes; easyJet and International Airlines Group jumped 35.6% and 25.5% respectively, while Ryanair lifted 13.6%. By the close of trade, the STOXX Europe 600 gained 4.0%, the UK FTSE 100 added 4.7% and the German DAX climbed 4.9%.
US sharemarkets also closed higher following the Biden election victory and renewed hopes of a COVID-19 vaccine. The Financials sector outperformed; Bank of America soared 14.2%, while JP Morgan Chase and Morgan Stanley jumped 13.5% and 8.4% respectively. Financial Services also closed stronger; American Express surged 21.5%, MasterCard gained 9.9% and Visa lifted 7.2%. By the close of trade, the Dow Jones rose 3.0% and the S&P 500 added 1.2%, however, the NASDAQ fell 1.5%.
CNIS Perspective
Last Friday’s US jobs report is a classic case of good news being bad news!
The good news is the jobs report beat consensus expectations and was more positive than what most labour market indicators predicted. Private sector job growth accelerated, the unemployment rate fell 1% and permanent job losses as a percentage of employment did not rise.
Unfortunately, this news reduces the likelihood of additional stimulus, which is a key driver of higher equity markets.
The market wants another fiscal deal to extend emergency unemployment insurance benefits, direct cash payments to households and provision of support to state and local governments.
The next couple of months sees the transition of government from Trump to Biden, which suggests the timing and magnitude of any stimulus will be in question, consequently, fiscal policy uncertainty will remain elevated over the near term.
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