Weekly Market Update: 14th of December 2020

ASX Update

The ASX200 narrowly held on to its weekly gain despite a 40 point or 0.6% drop on Friday, marking the sixth straight week of gains with the index finishing just 0.1% higher for the week to 6,642. CSL dragged on the market on Friday after confirmation it will not proceed with further trials on its vaccine with University of Queensland after reporting false-positive HIV test results. Whilst Iron Ore miners buoyed the market after the underlying commodity added 4.3% the night before.  Both sides of supply and demand acted together to push Iron Ore higher, a strong demand from China's steel mills along with a lower supply from Brazilian miner, Vale. Fortescue rose another 2% to a new record closing high of $22.95, a gain of 11% for the week.

AUSTRAC released a report on Friday that will put pressure on casinos to cut ties with high risk junkets as it has identified it as a muse for serious criminal money laundering, this will likely put further pressure on Crown Casino after the inquiry from the NSW Independent Liquor and Gaming Authority.

Top/Bottom Performers (in the ASX 200)

Top Gainers:

• IGO Ltd +25.4% (IGO.AX)
• Link Administration Holdings Ltd +12.2% (LNK.AX)
• Fortescue Metals Group Ltd +11.4% (FMG.AX)

Top Losers:

• Appen Ltd -14.5% (APXAX)
• IDP Education Ltd -8.9% (IEL.AX)
• Webjet Ltd -8.7% (WEB.AX)

Globally

US Markets fell on Friday, wrapping up a losing week, as the outlook for additional fiscal stimulus remained uncertain.  The S&P 500 pulled back 0.1% to close at 3,683, and the Nasdaq dipped 0.2%. The Dow eked out a gain of 47 points, or 0.2%, to 30,046.37 as shares of Disney rallied.

Both the Dow and S&P 500 posted their first weekly declines in three weeks, losing 0.6% and 1%, respectively. The Nasdaq dropped 0.7% this week. Friday’s moves and the end-of week direction came as negotiations over a coronavirus relief deal dragged on. Lawmakers seek to pass a bill before the end of 2020, but disagreements over state and local stimulus, unemployment assistance and stimulus checks still exist.

Without fresh stimulus, millions of Americans could lose unemployment benefits in the new year. Meanwhile, weekly jobless claims jumped last week to 853,000, the highest total since Sept. 19, as new lockdown restrictions weighed on businesses amid rising coronavirus cases. Sentiment was downbeat on Friday even as a key Food and Drug Administration advisory panel recommended the approval of Pfizer and BioNTech’s coronavirus vaccine for emergency use. The recommendation marked the last step before the FDA gives the final approval to broadly distribute the first doses throughout the U.S.

Play of the Week - End of Year To-Do List!

With the end of year fast approaching, most of us are looking to get some key things ticked off our to do list - this is too relevant for the US economy. Lawmakers are desperately aiming to get a pre-Christmas stimulus out to the people of America and the same goes for the FDA with a vaccine (or at least confirmation it's on its way).

The first roll-out of the vaccine will start today in the US for emergency use at this stage and policy makers will push to make a decision before the new Friday deadline. The Christmas rally and how the market will start the new year will largely depend on whether these two key events can be completed before we all take a little breather over Christmas. This week is the last full trading week for the year.

Commodities

Gold increased 0.3% to $1,843 an ounce on Friday and booked its second weekly increase, as stimulus discussions in the US continued to drag with a one-week aid extension.

Silver declined just 1% to $23.90.

Oil added 1% for the week to $46.60 a barrel.

Iron Ore added 7.8% for the week to $152.

Looking Ahead...

Central banks in the US, Japan and the UK will be deciding on monetary policy in the coming week, while flash PMI surveys for the US, UK, Eurozone, Japan and Australia will give an insight about the state of the global economic recovery. Other important releases to follow include US and China industrial output and retail sales as well as Australia employment figures.