It was an interesting night in the US, we saw a move away from stocks that benefit from COVID-19 lockdowns and a move back towards Energy, Financials, Materials, and Real Estate. This move is directly coming from progress in COVID-19 vaccines. The Nasdaq closed in the red, I cannot remember the last time we have seen this against a positive Dow and SP500. We saw a clear move away from Bonds back into Equity markets.
Now that the election seems to be out of the way, markets focus will be back on Covid and Stimulus. We are waiting for a clear path forward on US Fiscal Stimulus. If the Democrats can push this through sooner rather than later markets will continue to push into all-time highs.
Markets, in general, are set to continue higher into Christmas, locally everything is set for the market to continue higher. We have everything we need to keep sentiment positive; an extremely accommodative RBA, a very stimulatory budget, and an economy that is starting to reopen. The two major negatives I see overall for us right now is the rising Australian dollar and the trade issues with China.
With strong leads from overseas last night our market is set to rally almost 140 points, putting us near 6440 on open. With the volatility night in the U.S, it is hard to know whether we will hold these gains through our session today or pull back like they did by the close.
With the election out of the way and the outcome almost precisely what the market wanted, the media lens will now likely shift back to the virus and its impacts. Indeed, last night’s extreme move was on the back of renewed vaccine hopes. Locally, with the virus under control (for now), and our market comparatively cheap, there is a good argument to see a strong push higher. Coupled with a seasonal Christmas rally and its hard not to be bullish going into the conclusion of 2020.
US shares moved strongly higher overnight again, with hopes around a vaccine for COVID-19 and the uncertainty of the election removed. The latest news is that a vaccine from Pfizer and BioNtech is showing 90 percent effectiveness at preventing COVID infections.
There was a bit of paring of gains after some spouted the view that a vaccine could lead to less stimulus overall. Stocks that rely on crowds such as theatres, cruise liners, and similar were some of the strongest performers as investors took the view that crowds could now come back sooner. Oil & Gas was the strongest sector overnight, while financials and Basic Materials were also very strong. Every other major sector also rose.