ASX to rise despite mixed Wall St session; NASDAQ drops 1.4%


  • ASX futures are up 0.8% and point to further gains for the local market on Wednesday
  • Any rise would come despite a mixed overnight session on Wall Street, where tech stocks were sold off and excitement over Pfizer’s COVID-19 vaccine trial faded
  • CBA first-quarter cash profit has fallen 16% to $1.8b, but the lender says deferral balances are shrinking and its loan book growing
  • Spot gold has risen 0.8% to $US1877.44 an ounce, Brent crude jumped 2.9% and US oil was 2.8% higher, while iron ore was up 0.7% to $US117.80 per tonne

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Wall Street wrap: Tech stocks suffer in “reopening trade”

By Sinéad Carew

The Nasdaq closed lower overnight as investors sold off technology stocks that benefited from virus lockdowns and favoured the sectors that suffered most during the pandemic on optimism that a COVID-19 vaccine would turn around the economy.

The heavyweight technology consumer discretionary sectors and communication services languished on Tuesday while investors favoured small caps and economically sensitive energy and industrials sectors as well as value stocks in consumer staples.

Markets were already buoyant about the result of the US election when Pfizer made its announcement.
Markets were already buoyant about the result of the US election when Pfizer made its announcement.Credit:AP

The main US indexes had hit intraday peaks on Monday after Pfizer Inc said a vaccine it is developing with German partner BioNTech SE was 90 per cent effective against COVID-19.

“It’s the reopening trade. To the extent the economy can reopen sooner rather than later the stay-at-home stocks won’t be as valuable,” said Jim Paulsen, chief investment strategist at The Leuthold Group in Minneapolis.

The Dow Jones Industrial Average rose 234.51 points, or 0.8 per cent, to 29,392.48, the S&P 500 lost 7.25 points, or 0.20 per cent, to 3,543.25 and the Nasdaq Composite dropped 164.62 points, or 1.41 per cent, to 11,549.16. Inc, Facebook Inc and Microsoft , which have boomed during this year’s work-from-home trend and powered Wall Street to new highs, extended Monday’s losses and weighed on the tech-heavy Nasdaq during the session.

After hitting a record in Monday’s session, the Philadelphia Semiconductor Index underperformed sharply on Tuesday with Nvidia and Xilinx falling hard.

And the S&P’s value stock index, which tends to outperform coming out of a recession, was well ahead of the less economically sensitive growth index on Tuesday.

“Everybody’s coming out of the woodwork saying the same thing that now is the time to be buying value” and selling technology said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut.

“People believe the Pfizer vaccine is going to initiate a reopening of the economy forcing people back on the road, back to work and back into the stores,” said Pavlik. “There’s some warrant to it but to see this kind of action is extreme.”

Trading was also choppy at times as some investors monitored for election uncertainty after US Secretary of State Mike Pompeo became the latest Republican to suggest President Donald Trump would not concede the White House to Democrat Joe Biden.


Good morning

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Early gains are tipped for the ASX200, even after a mixed overnight session in the US.

This blog is not intended as financial advice

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