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The share market eked out a sixth straight winning week despite a second day of falls after CSL shelved its Covid-19 vaccine and the dollar hit a 30-month high.
The S&P/ASX 200 held on to a weekly gain of 8.5 points or 0.1 per cent, extending a rally that began in early November. The index has put on 12 per cent in six weeks amid optimism that the availability of vaccines will fuel a global economic recovery.
This afternoon, the index briefly turned negative for the week before trimming its session loss to 40 points or 0.6 per cent.
What moved the market
Weak leads from Wall Street and the handicap of a rapidly firming dollar were compounded today by news CSL had abandoned its experimental coronavirus vaccine. The health giant and partner University of Queensland scrapped the project after participants in a Phase I trial returned false positives for HIV. University of Queensland project co-lead Professor Paul Young said it would take too long to re-engineer the vaccine to fix the problem.
“Doing so would set back development by another 12 or so months, and while this is a tough decision to take, the urgent need for a vaccine has to be everyone’s priority,” he said.
The Federal Government had intended to buy 51 million doses of the vaccine. CSL will continue to manufacture an alternative vaccine created by AstraZeneca and Oxford University for distribution to Australians next year. Shares in CSL fell 3.2 per cent.
US futures became a gentle headwind as the session wore on. S&P 500 futures were lately down four points or 0.1 per cent despite news an independent US advisory panel had recommended Pfizer’s vaccine for emergency use. The vaccine could be approved as soon as tonight if the Food and Drug Administration accepts the recommendation.
Overnight, US stocks closed mixed but broadly lower amid grim economic data and stalled stimulus talks. The S&P 500 eased 0.13 per cent and the Dow 0.23 per cent. The Nasdaq rose 0.54 per cent.
Winners’ circle
A sharply divided ASX market saw gains in resources and technology companies outweighed by declines in currency-sensitive sectors. Surges in crude and iron ore lifted the energy sector 1.5 per cent and materials 0.7 per cent. Woodside Petroleum rose 2.6 per cent after oil closed above US$50 a barrel for the first time since March. Viva Energy gained 3.8 per cent and Santos 2.8 per cent.
Shares in Fortescue Metals, the purest of the big three iron ore producers, have gone parabolic with the price of ore. Iron ore jumped 5 per cent yesterday to its strongest level in eight years. Fortescue’s stock price advanced 2 per cent today to a fifth straight record high. BHP gained 0.8 per cent. Rio Tinto added 0.5 per cent.
Nickel miner IGO flew up 25.3 per cent after raising $707 million from investors. Whitehaven Coal continued to defy Chinese trade tensions, climbing 6.6 per cent to its highest close in six months.
A strong rebound in car sales helped lift Eagers Automotive 3.1 per cent. The dealership network raised its underlying pre-tax operating profit guidance for the calendar year to $195 – $205 million, around twice last year’s $100.4 million.
A partnership with Facebook boosted buy now pay later firm Z1P Co by 1.9 per cent. The deal enables small and medium-sized Australian business to use Z1P’s platform to buy advertising space. Outdoor advertiser oOh!media put on 3.5 per cent after reporting a significant rebound in revenue this quarter.
Doghouse
The dollar climbed more than 1 per cent overnight to its highest level in 30 months. While gains in commodity prices shielded miners from the impact of the rise, other companies that earn significant revenues overseas took a hit. Among the heavyweights, Brambles sank 3.8 per cent, Aristocrat Leisure 1.3 per cent and Macquarie Group 0.8 per cent.
Health companies with significant US earnings slid to their lowest levels in at least a month. ResMed shed 3.1 per cent and Cochlear 3.8 per cent. Ansell dipped 0.5 per cent.
In the tech space, Appen dropped another 2.9 per cent following yesterday’s profit warning. Altium, which also has significant US revenues, faded 1.4 per cent. Overnight strength in US technology stocks helped cushion the rest of the sector. Afterpay gained 5 per cent and Megaport 2.4 per cent.
A fall of 0.2 per cent made Westpac the best of the banks. Chair John McFarlane asked shareholders for time to change a culture that landed the bank in hot water with regulators.
“Implementing meaningful change takes time and persistence, and I ask for your patience as we work through it,” he told today’s virtual AGM.
ANZ gave up 1 per cent, NAB 0.9 per cent and CBA 0.8 per cent.
Other markets
Asian markets were mixed. Hong Kong’s Hang Seng rose 0.3 per cent. Japan’s currency-sensitive Nikkei slumped 0.5 per cent. China’s Shanghai Composite faded 1 per cent.
Oil pushed further above $US50. Brent crude put on nine cents or 0.2 per cent at $US50.34 a barrel. Gold bounced $3.90 or 0.2 per cent to $US1,841.30 an ounce.
The dollar rose 0.48 per cent to 75.6 US cents.
Hot today and not today
Hot today: Copper explorer Kingfisher Mining (ASX:KFM) brought some sunshine at the end of a stormy week for initial public offerings. The company, which has projects in the Ashburton and Gascoyne mineral fields, raised $6 million at 20 cents. The share price jumped 47.5 per cent today to 29.5 cents. Shareholders in the likes of Dalrymple Bay Infrastructure and YouFoodz, which sagged upon listing earlier this week, could only look on.
Not today: Graphite miner Syrah Resources (ASX:SYR) tumbled 10.8 per cent after raising $56 million from institutional investors. The company intends to raise another $12 million from retail shareholders and $56 million from convertible notes. The cash will be used to restart production at the Balama graphite mine in Mozambique and fund a decision on a battery anode material project in the US.
