The ASX will be hit not only by uncertain trading on Wall Street overnight but by the news that CSL and Queensland University had abandoned their attempts to create a COVID-19 vaccine.
News of the abandonment of the attempt emerged in Australia around 7am Friday (https://www.smh.com.au/politics/federal/australian-covid-vaccine-terminated-due-to-hiv-false-positives-20201210-p56mju.html). The reason given was confusing and false test results, according to a statement from CSL before 8am.
CSL shares closed at $301.29 on Thursday, down 0.9%. The shares are down 2.3% in the past month so there hasn’t been a lot of recent bullishness around the stock and its vaccine efforts.
Despite that the overnight futures market improved slightly, with the loss of 39 points just before 6am falling to a dip of 32 points just before 8am as the losses in the Dow and S&P 500 were hauled back in the final hour.
That was after the ASX 200 fell for the first session in December on Thursday. The index slipped 0.7% to close at 6,683.1, with all sectors finishing lower.
The losses for the Dow and S&P 500 eased in the last hour of trading but both still ended in the red while the Nasdaq ended modestly higher as US investors looked for signs of progress in fiscal stimulus talks to buttress the economy after labour market data showed a jump in jobless claims.
The Dow Jones Industrial Average fell 0.23%, to 29,999.26, the S&P 500 lost 0.13%, to 3,668.10 and the Nasdaq Composite added 0.54%, to 12,405.81.
Wall Street even ignored the strong float of Airbnb whose shares started trading at $US146 on Thursday, more than double the $US68 at which they were priced on Wednesday evening.
The opening price valued the company at more than $US87 billion – it then surged past $US100 billion as the share price rose to a high of $US165 before slipping back to around $US144 near the close for a still impressive gain of 112%.
The price was up 146% for the offering with raised $US3.5 billion for the company and clearly left a lot of money on the table.
Overnight trading had ignored a new surge in global iron ore prices to new multi-year highs above $US156t a tonne for 62% Fe fines (the standard product) shipping to northern China.
A tropical low warning from the Pilbara Ports Authority saw ships in Port Hedland told to stop loading and prepare to move out to sea.
A rise in the value of the Aussie dollar to new 32 month highs above 75.30 US cents followed the surge in iron ore prices and another dip in the value of the US dollar as COVID-19 cases and deaths again hit unwanted record levels.
A rise in the number of people making first time unemployment claims to more than 800,000 – the biggest rise in months, also worried Wall Street.
But the pollyannaish investors preferred to focus on talks in Congress on a new stimulus package that at just over $US900 billion, won’t be enough to stave off a slump in the first half of 2021. There are 13.6 million Americans on Federal employment support that ends on December 31.
That has to be renewed or the US economy will slump into recession, again if it doesn’t. There’s talk of renewing the support but at a lower level, which would still see millions of people apply for jobless benefits.
Oil prices hit their highest level since March with US West Texas Intermediate settling at $US46.70 a barrel, up 2.8%. The weaker greenback played a part but so to did the misplaced optimism that the stimulus package talks in Washington will boost demand.
In Europe a dramatic the European Central Bank said on Thursday that it will increase its bond buying program by another $US600 billion to try to hold down longer-term interest rates (as Australia is doing and Japan).
It’s doing that to try and keep bottoming costs low for companies wanting to borrow to expand and to finance consumer spending. The program will be extended to March 2022 instead of mid 2021 with the cost now totalling $US2.2 trillion.
The Associated Press reported that the ECB’s action coincided with the highest single-day viral death toll in Germany, Europe’s largest economy, and the shutdown of restaurants, bars, gyms, movie theatres and museums in France.
The real story in American is the continuing slide in the country’s economy, not the buoyant time for floats and investors on Wall Street, as the latest jobs claims data shows with the highest number of new claims in three months.
853,000 Americans filed for first-time unemployment benefits last week on a seasonally adjusted basis, according to the Labor Department.
That was the largest number of claims since mid-September and in original terms, initial claims totalled nearly 950,000 and could top a million next week with the continuing surge in COVID cases and infections and tightening lockdowns.
Initial jobless claims rose for third time in the past four weeks. Last week’s fall was post the Thanksgiving holiday, indicating a slew of jobless despite the usual buoyant hiring period of retail workers.
US jobless claims are still above levels in the GFC, an indicator of how weak the labour market is for Americans.
On top of regular applications for jobless benefits, 427,609 workers filed claims under the Pandemic Unemployment Assistance program, which is designed to help people such as the self-employed. It was also an increase from the prior week. This number is not seasonally adjusted by the department’s economists.
Together, first-time claims totalled an original 1.4 million last week, which was also the highest level since mid-September.
