ASX set for gains despite soft Wall Street lead
US stock indexes are mixed in early afternoon trading on Wednesday in New York, easing off a fresh set of record highs reached on optimism that coronavirus vaccines could soon start driving a stronger economic recovery.
The S&P 500 has inched 0.1 per cent higher after opening December with a bang. It closed at a record high of 3,662.45 on Tuesday. The Nasdaq composite, which also opened the month with a new record, is 0.2 per cent lower while the Dow Jones has lost 0.1 per cent. Despite the soft lead, the Australian sharemarket is poised for gains at the open, with futures at 5.00am AEDT pointing to a gain of 18 points, or 0.3 per cent, at the open.
Technology companies were the biggest drag on the market. Salesforce.com fell 6.9 per cent after announcing a deal late on Tuesday to buy messaging platform Slack for $US27.7 billion. Microsoft fell 0.9 per cent. The sector has been leading the market higher since the pandemic started wreaking havoc on the global economy, but hopes for a vaccine and return to economic normalcy have been shifting money toward companies whose profits are more closely tied to the economy’s strength.
Pfizer and BioNTech said they’ve won permission for emergency use of their COVID-19 vaccine in Britain, the world’s first coronavirus shot that’s backed by rigorous science and a major step toward eventually ending the pandemic. The move makes Britain one of the first countries to begin vaccinating its population against the virus. The companies have already asked for approval to begin vaccinations in the US in December.
Meanwhile, Moderna is also asking US and European regulators to allow emergency use of its COVID-19 vaccine.
The positive developments on the vaccine front are helping to lift health care stocks. Pfizer rose 3.5 per cent and insurer UnitedHealth Group rose 2.5 per cent.
Stocks have been ramping higher in recent weeks as investors focus on the possibility that coronavirus vaccines could soon help usher in a fuller global economic recovery. Traders are also holding out hope that Democrats and Republicans may reach a deal on some amount of economic stimulus for the economy before 2021, though the parties remain divided on the details and the cost.
Unemployment remains high as the COVID-19 outbreak widens the gulf between average people and the wealthiest Americans. Payroll processor ADP said Wednesday that private US employers added 307,000 jobs last month. That fell short of Wall Street analysts’ expectations for a gain of 405,000 jobs, according to FactSet. The Labor Department issues its job data for November on Friday. Economists are forecasting that report will show the economy added about 441,000 jobs, down from a gain of 638,000 in October.
Lyft climbed 4.7 per cent after the ride-hailing company posted a smaller loss this quarter and better margins. The news helped boost rival Uber Technologies up 3.2 per cent.
Treasury yields headed higher, giving banks a boost because they allow them to charge more lucrative interest rates on loans. The yield on the 10-year Treasury rose to 0.95 per cent from 0.92 per cent late Tuesday. Bank of America rose 1.2 per cent and Citigroup gained 2.6 per cent.
Germany’s DAX shed 0.6 per cent and France’s CAC 40 fell 0.3 per cent. In Britain, the FTSE 100 rose 1.2 per cent.
AP
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