Overnight: Then There Were Three

By Greg Peel

Rocking On

The ASX200 tracked a choppy path to up 55 points close to midday yesterday before slipping back sharply into lunch. Then everyone went home. Or so it seemed.

The closing 22 point gain was led almost entirely by the resource sectors following a night in which all key commodity prices posted solid increases. Energy closed up 2.8% and materials 1.6%, with utilities chiming in with 0.6%.

The notable move in energy was that of Oil Search ((OSH)). I had noted yesterday the stock fell -5% on Friday after several broker downgrades but yesterday that move was completely reversed. In materials, the big iron ore miners were back at the fore after a bit of a vacation of late.

Metals prices all went the other way last night, particularly iron ore, although oil prices ticked up further. But that won’t matter much to the index today given the AstraZeneca/Oxford news – there’ll just be different sectors taking over.

Healthcare was healthy enough yesterday (+0.4%) and IT posted a typical +1.0% so it took modest falls in all of financials, the consumer sectors and industrials to balance out the resource sectors. If Wall Street is any guide, they will all flip today.

In a delayed reaction to news of its drug deal with Swiss giant Novartis, Mesoblast ((MSB)) jumped 17.6% yesterday to blow away the winners’ table.

On the downside, Insurance Australia Group ((IAG)) came back on the boards after placing $650m with institutions in order to cover its business interruption claim obligations and promptly fell -6.0%.

The fall in the industrials sector was slightly surprising. One might have expected the big hitters of Qantas ((QAN)), Sydney Airport ((SYD)) and Transurban ((TCL)) to have solid sessions given the NSW-Victoria border reopening but it was not to be. Qantas and Sydney Airport rose modestly while Transurban fell, while selling in unrelated industrial names Downer EDI ((DOW)) and Bingo Industries ((BIN)) weighed on the sector.

Industrials like vaccines, so we’ll see what happens today.

The futures are up 33 points.

There’s another castle!

Of course the old joke about a goldfish swimming around in a bowl saying “Look, there’s a castle, look, there’s another castle, look there’s another castle…” has since been debunked. It seems goldfish are quite smart after all.

But that’s what it seemed like on Wall Street last night as the third Monday in a row brought news of yet more vaccine success. Late last week the earlier vaccine excitement had begun to wane as the exponentially rising case-count came more into focus, sending investors back into stay-at-home mode.

From the open last night it was yet again all about buying value and cyclicals as tech names sat back.

The Dow opened up 400 points, wavered a bit, but was heading back that way late into the session when news broke of Janet Yellen’s selection as Biden’s Treasury Secretary nominee. Yellen is seen as a candidate most likely to receive bipartisan support in Congress, but who knows these days? Half of them are raving lunatics.

The news provided a late kicker until right at the death, the sellers jumped in. Still, the Dow closed up 1.0% to the S&P’s 0.5% and the Nasdaq’s 0.2%.

The US retail sector also enjoyed a coincidental boost from a National Retail Federation prediction that this year’s holiday season sales will actually be better than last year’s. More big jumps in the department store names.

The AstraZeneca/Oxford Uni vaccine is paradoxical as it achieved 90% efficacy on a half dose followed up by a full dose one month later, but only 62% on a double dose. No, they don’t know either, but they’ve promised to look into it. While these results might pale in comparison to the 95% achieved by Pfizer and Moderna, this new vaccine does have other advantages.

The Pfizer vaccine has to be stored at ultra-low temperatures. The Astra/Oxford vaccine can be stored in a fridge for up to six months. The Pfizer and Moderna vaccines cost US$20-plus per dose. The Astra/Oxford vaccine costs a mere US$3-4. This is very encouraging for poorer countries.

Not to be outdone, Regeneron last night announced its covid antibody cocktail – famously used to bring Donald Trump back from the dead in mere days – has received emergency use approval.

In other news, US health authorities have warned that at the current accelerating pace of growth, the case-count could double by inauguration.

In more news, a federal court has thrown out Trump’s appeal against Biden’s win in Pennsylvania.

And now, the end is near…

Commodities

After all lining up together to the positive on Friday night, last night metal prices all lined up to the negative, albeit to a lesser extent, other than iron ore.

The oils kept on keeping on nevertheless.

Lower commodity prices have allowed the Aussie to slip back -0.2% to US$0.7291.

Today

The SPI Overnight closed up 33 points or 0.5%.

The US will see data for consumer confidence tonight.

We’ll see preliminary October trade numbers from the ABS.

TechnologyOne ((TNE)) reports full-year earnings today and National Storage REIT ((NSR)) quarterly earnings.

Ramsay Health Care ((RHC)) is among a handful of companies holding AGMs.

The Australian share market over the past thirty days…