The surging toll of COVID-19 infections and deaths across the US finally forced Wall Street investors to revert to 2020 form on Monday and push back into megatechs and other shares seen as winners under stay at home rules and social distancing.
While the Dow and S&P 500 fell, the NASDAQ hit a succession of new highs as the great rotation out of these favourites and into value stocks sparked by the emergence of three valid COVID vaccines in November.
The trend started last week with the NASDAQ proving increasingly resistance to the rotation story as the surge in US cases accelerated.
That saw the silly surge in US bond yields snap and the yield on the 10-year Treasury fell from just over 0.97% last Friday to around 0.93% or a touch more just before 8 am.
That was the biggest fall in three weeks and a rude awakening for all those traders who were worried about inflation last week. This week its a case of recession looms?
But the yield on the 10-year Australian yield hopped back over 1% to end at 1.03%, up 4 points, and for no reason at all except silly bond investors.
As a result the Dow closed down 148.7 points, or 0.49%, at 30,069.79, the S&P 500 lost 7.16 points, or 0.1%, at 3,691.96, and the Nasdaq closed up 55.71 points, or 0.45%, at 12,519.95.
Trading on the ASX 200 futures platform has seen a small fall – around 10 points for the index to start the session at 10 am.
While gold rose and oil fell, another rise in iron ore prices to close to $US147 a tonne will grab early attention and the share prices of BHP, Rio Tinto, and Fortescue Metals.
Helping the push has been the studied (callous?) indifference of the Trump administration to masks and social distancing – evidenced by the President holding a rally in George on Saturday without a mask, with most of his audience also without masks.
Trump whinged about the election result and tried to pressure Georgia Republicans into reversing the Biden win. The Georgia state government replied on Monday by certifying for a third time, the win by the President-elect.
Shares in companies including Apple, Tesla, Facebook, and Microsoft boosted the Nasdaq with gains of around 2% each.
Oil prices dipped 1% (gold rose, again) as investors reckoned there would be a new stimulus package from Congress and the White House. They might be waiting a while as Congress and the White House have to agree to lift the US debt ceiling by Friday. There’s a House vote on Wednesday for a week-long extension which won’t do anything.
Brent crude fell 46 cents, or 0.9%, to settle at $US48.79 a barrel. US West Texas Intermediate crude fell 50 cents, or 1.1%, to settle at $US45.76 a barrel.
Helping oil ease was the rising COVID-19 cases and more forecasts of weak demand and production in the March quarter next year.
A weaker US dollar didn’t help. The Aussie dollar dipped to around 74.20 US cents just before 8am today.
Comex gold though settled higher, benefiting from the weaker greenback. It rose 1.4% or $US26 to settle at $US1,866 an ounce.
Comex copper was half a percent easier at just over $US3.50 a pound after OK Chinese copper import figures on Monday, even though the volume was at a six month low.
