ASX to extend winning run; Tech shares lift Wall Street


  • ASX futures are up 0.5% and point to more gains for the local bourse at Thursday’s open¬†
  • Tech stocks soared on Wall Street, with the Nasdaq finishing 2% higher. The S&P500 added 0.8%, but the Dow slipped 0.1%¬†
  • The ASX 200 closed Wednesday’s session at its highest since February 27, moving out of correction territory and within 10% off the February 20 record high
  • Spot gold fell 0.8% to $US1863.03 an ounce, Brent crude rose 0.2%, US oil was flat and iron ore rose 1.9% to $US124.56 per tonne

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Wall Street wrap: Tech stocks shine as investors change gears

By Sinead Carew

The Nasdaq closed higher on Wednesday as investors switched back to technology stocks and away from economically sensitive sectors as they weighed COVID-19 vaccine progress against a virus surge and likely timing for an economic rebound.

After falling sharply for two days, the tech-heavy Nasdaq was boosted by “stay-at-home” stocks such as Microsoft, Inc, Apple Inc and Netflix Inc, which advanced in Wednesday’s session.

Tech stocks were the top performers overnight.
Tech stocks were the top performers overnight. Credit:AP

Monday’s encouraging late-stage coronavirus vaccine trial data had prompted a two-day rotation away from technology stocks into sectors that typically outperform coming out of a recession such as industrials, materials and energy.

But investors changed gears Wednesday to buy the S&P growth index, which includes the less economically sensitive technology stocks, and sell the value index, which includes banks and energy stocks.

“We’ll probably have these fits and starts of the rotation until we get into the spring,” said Shawn Snyder, head of Investment Strategy at Citi Personal Wealth Management. “There’s still really strong earnings for these technology companies and you’re still facing a potential surge in COVID cases through the winter months and renewed restrictions and lockdowns.”

Also, the top US infectious disease specialist urged caution until vaccines are distributed, as California and states across the US Midwest and the Northeast tightened restrictions aimed at containing the virus spread.

As the restrictions were announced, shares of retailers such as Macy’s fell along with restaurant owners including Darden Restaurants. The small-cap S&P 600 consumer discretionary index also lost ground.

“To think the style we’ve been living our lives in for the last nine months is suddenly going to change is a bit optimistic. It’s going to take longer,” said Citi’s Snyder.

Unofficially, the Dow Jones Industrial Average fell 6.18 points, or 0.02 per cent, to 29,414.74, the S&P 500 gained 26.8 points, or 0.76 per cent, to 3,572.33 and the Nasdaq Composite added 227.52 points, or 1.97 per cent, to 11,781.37.

“The story of the week and what’s persisting today is the almost see-saw, barbell view in the market between growth, tech and stay-at-home investments versus the more cyclical value investments that are tied to the broader rebound and recovery in the economy,” said Craig Fehr, investment strategist at Edward Jones in St. Louis, Missouri.

“The broad view is the greater optimism for the longer term view of the economy, post vaccine, post pandemic. We’re seeing a little bit of that shine come off it today.”

Markets, which also got a boost after Democrat Joe Biden was declared the projected the winner of the US election, have shrugged off legal challenges from President Donald Trump as no evidence of problems with votes has so far been produced.

The Democratic Party retained control of the US House of Representatives with a lower majority, the Associated Press reported. As a result, investors are now focused on whether they can wrestle Senate control from Republicans, which will not be decided until special elections in January.

Democrats may not be able to win enough votes for their larger economic stimulus plan if Republicans retain a Senate majority.


Good morning

Good morning, and welcome to this Thursday edition of Markets Live.

Alex Druce is your editor today. We’re set for another early rise, with ASX futures up 0.5 per cent.

This blog is not intended as financial advice

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