ASX up 1.7pc, highest close since Feb: Wednesday 11 Nov

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Steven Deare
(Australian Associated Press)

 

Australia’s share market has closed at its highest level since February after another buying frenzy, based on belief a coronavirus vaccine is on its way.

The S&P/ASX200 benchmark index closed up 109.2 points, or 1.72 per cent, to 6449.7 on Wednesday.

The All Ordinaries closed higher by 107.1 points, or 1.64 per cent, to 6651.1.

The indices rose early, and moved higher in the last few hours of trade.

All industry sectors finished higher. Energy, which has plunged during the pandemic, continued a recent revival and gained 5.05 per cent.

Investors remain buoyed by Pfizer on Tuesday saying a vaccine it is developing was 90 per cent effective against COVID-19.

In US markets, investors sold technology stocks that benefited from virus lockdowns and favoured sectors that suffered most during the pandemic.

AMP Capital equities portfolio manager Dermot Ryan took the Pfizer news seriously.

He expected some form of treatment for coronavirus would be developed, which would allow people to go back to previous ways of living and spending.

While investors have gobbled up shares in technology and stay-at-home goods providers during the pandemic, many investors this week opted to buy banks, energy providers and travel companies.

“This is an important rotation in markets,” Mr Ryan said.

“For institutional investors, this could be a big shift. A lot of people have been positioned for tech, and not for value.”

He noted the gains of banks, energy and travel.

“The bounces in price have been strong because the expectations for earnings growth weren’t there early in the week,” he said, referring to Tuesday’s vaccine news.

The three sectors’ prices have slumped amid the pandemic, but investors who bought them cheaply stood to benefit coming out of the pandemic.

In another sign the economy is improving, the Westpac-Melbourne Institute consumer sentiment index rose further in November to a seven-year high.

Westpac chief economist Bill Evans said the unwinding of coronavirus restrictions across Victoria and the reopening of the Victoria-NSW border were the cause.

The Reserve Bank made modest cuts to interest rates during the November 2-6 survey.

Victoria has reached 12 days without new coronavirus deaths or cases after lockdown measures were eased. There were no cases or deaths in NSW.

The Commonwealth Bank reported a 16 per cent fall in quarterly cash earnings, citing ongoing pressure on margins due to historic low interest rates.

Australia’s biggest mortgage lender generated net cash earnings, its preferred measure of performance, of $1.8 billion in the first quarter of the financial year, down from the same period last year.

Shares closed up 2.76 per cent to $74.40. Among other banks, ANZ gained 3.17 per cent to $20.83, NAB rose 2.63 per cent to $21.82 and Westpac edged higher by 0.27 per cent to $18.73.

Energy companies did well from hope a COVID-19 vaccine will lead to more travel.

Oil Search was best of the big names, up 7.55 per cent to $3.56.

In mining, Fortescue Metals told its annual general meeting that it would start a green energy business. Shares fell 1.76 per cent to $17.29.

BHP rose 2.28 per cent to $36.85 and Rio Tinto crept up 1.8 per cent to $97.16.

Earlier in the US, there were mixed results from markets as investors sold technology stocks.

On Thursday, annual general meetings will be held for Woolworths, Medibank Private and broadcaster Nine.

Telstra will give a general update as part of the company’s annual investor day.

The Aussie dollar was buying 73.01 US cents at 1728 AEDT, higher from 72.82 US cents at Tuesday’s close.

ON THE ASX

* The S&P/ASX200 benchmark index closed higher by 109.2 points, or 1.72 per cent, to 6449.7 on Wednesday.

* The All Ordinaries closed higher by 107.1 points, or 1.64 per cent, to 6651.1.

* At 1728 AEDT, the SPI200 futures index was higher by 11 points, or 0.17 per cent, to 6450.

CURRENCY SNAPSHOT

One Australian dollar buys:

* 73.01 US cents, from 72.83 US cents on Tuesday

* 76.89 Japanese yen, from 76.45 yen

* 61.78 Euro cents, from 61.56 cents

* 55.09 British pence, from 55.24 pence

* 106.00 NZ cents, from 106.59 cents.

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