The armchair ride for Australian investors continued with the share market cruising to a nine-month high, supported by vaccine optimism and fierce Chinese demand for iron ore.
The S&P/ASX 200 rose 41 points or 0.6 per cent to maintain its perfect record for December. The index has risen for seven straight sessions. Today’s advance extended the December rally to 3.2 per cent.
What moved the market
The local market’s two largest companies by capitalisation, health giant CSL and Commonwealth Bank, provided much of the momentum. CSL put on 2.2 per cent following a US session when vaccine news dominated the headlines. The company is Australia’s leading contender in the vaccine race, in partnership with the University of Queensland.
CBA gained 1.7 per cent after Chinese regulators green-lit the sale of the bank’s 37.5 per cent equity interest in the BoCommLife Insurance Company. The sale is expected to be generate $886 million.
Overnight, US stocks closed at record levels as the UK began to roll out Pfizer’s vaccine and US regulators moved a step closer to clearing the vaccine for US use. The Food and Drug Administration’s vaccine committee sits tomorrow night and is expected to give the go-ahead. The S&P 500 rose 0.28 per cent.
US futures hinted at further gains tonight. S&P 500 index futures were recently ahead nine points or more than 0.2 per cent.
Mining giants BHP, Fortescue Metals and Rio Tinto tested multi-year levels after iron ore traded at its strongest price since March 2013. Fortescue rose 1.6 per cent to an all-time high. BHP advanced 1.1 per cent to a level last seen in April 2011. A 0.4 per cent gain kept Rio Tinto near Monday’s post-GFC peak. The spot price for ore landed in China rose 1.6 per cent yesterday to US$149.95 a tonne.
Winners’ circle
A broad rally lifted every sector expect REITs, down 1.1 per cent, and energy, down 0.1 per cent. Yield sectors health and utilities outperformed as an overnight decline in US bond yields increased the appeal of alternatives.
CSL is big enough to dictate the direction of the healthcare sector on its own, but it had plenty of support. Healius surged 7.4 per cent after announcing an on-market share buyback. Ansell bounced 3.9 per cent. Fisher & Paykel rallied 0.8 per cent and Sonic 2 per cent.
In the utilities space, Kiwi electricity giant Mercury NZ climbed 2.7 per cent to an all-time high. APA Group gained 2.1 per cent and AGL Energy 0.3 per cent.
NZ infrastructure owner Infratil edged up 1.5 per cent after rejecting two non-binding indicative offers from AustralianSuper. Infratil CEO Marko Bogoievski said both an initial and revised offer “materially undervalue our significant renewable energy and digital infrastructure platforms.”
CBA was the clear winner among the banks. NAB gained 0.6 per cent. Westpac and ANZ declined 0.4 per cent.
The tech sector touched its highest level in at least 20 years. Nextdc added 3.6 per cent, Afterpay 2.9 per cent and Iress 2.1 per cent.
Doghouse
REITs retreated as diversified property group Abacus tapped institutional investors for $356 million. Stockland and Scentre Group eased 2 per cent. Goodman shed 1.4 per cent and GPT Group 1.3 per cent.
The energy sector was kept in check by weakness in two of the three sector leaders. Woodside slipped 1.3 per cent and Origin Energy 1 per cent. Santos put on 0.9 per cent.
Other markets
A broadly positive session on Asian markets saw Hong Kong’s Hang Seng lift 1.3 per cent and Japan’s Nikkei 1.2 per cent. China’s Shanghai Composite trailled with a rise of 1.2 per cent,
Oil faded following news OPEC production increased to a six-month high last month. Brent crude eased 19 cents or 0.4 per cent to $US48.65 a barrel. Gold dipped $11 or 0.6 per cent to $US1,863.90, an ounce.
The dollar accelerated in afternoon trade, lately up 0.44 per cent at 74.4 US cents.
Hot today and not today
Hot today: Resonance Health (ASX:RHT) jumped 80.7 per cent on news the healthcare company’s software for assessing liver fat had been approved by US regulators. HepaFat-AI uses artificial intelligence to assess patients with confirmed or suspected fatty liver disease. Clearance by the Food and Drug Administration allows the company to market the software to physicians in the US.
Not today: Bitcoin’s biggest tumble in a week helped drag the ASX’s closest proxy down 11.8 per cent. DigitalX (ASX:DCC) skidded to a three-week low as the cryptocurrency slid from around US$18,770 to just above the key level of US$18,000. The company specialises in blockchain applications and cryptocurrency asset management. Bitcoin was last down 3.5 per cent at US$18,128.