Weekly Market Update: 30th of November 2020

ASX Update

With little-read from Wall Street towards the end of the week the Aussie market softened – we closed 0.5% lower on Friday to finish at 6,601. Still managing a gain for the week of 0.9% to keep up November’s incredible run. With just one trading day left of the month, November still remains on track to be the best month yet for the index, up 11% for the calendar month. The week followed suit from last week, with a large boost to value names such as the banks, oil stock and travel stocks. However, towards the end of the week finally started to cool-off as the ASX posting back-to-back losses.

Treasury Wines copped the brunt of China’s latest announcement of tariffs of up to 200% on Australian wines. The stock was off 11.3% before halting trading. This escalating trade dispute now threatens to hit more than $20 billion in exports across half-a-dozen sectors including seafood, coal and timber.

Top/Bottom Performers (in the ASX 200)

Top Gainers:

• Platinum Asset Management Ltd +15.0% (PTM.AX)
• Whitehaven Coal Ltd +14.0% (WHC.AX)
• Pendal Group Ltd +13.0% (PDL.AX)

Top Losers:

• Virgin Money UK -13.0 (VUK.AX)
• Megaport Ltd -10.0% (MP1.AX)
• Northern Star Resources Ltd -8.0% (NST.AX)

Globally

Earlier in the week, US data started to show the impacts of Covid and some of the post-election positivity wore off. With markets only open for half a day between Thursday and Friday volumes were low but sentiment was high on the back of strong Black Friday sale numbers. Consumers spent $9 billion on the web the day after Thanksgiving, up 21.6% year on year. Cyber Monday 2020 is expected to become the biggest digital sales day in history in the United States.

The Dow and S&P 500 rose 2.2% and 2.3%, respectively, for the week. The Nasdaq, meanwhile, posted a weekly gain of nearly 3%. The CBOE Volatility Index (VIX), Wall Street’s preferred fear gauge, briefly dipped below 20 on Friday for the first time since late February.

Earlier In November, Pfizer and BioNTech said their vaccine was more than 90% effective. Moderna also said its drug was highly effective in a trial.That data helped push the Dow up 12.9% in November, putting it on track for its biggest monthly gain since January 1987. The S&P 500 and Nasdaq are up 11.3% and 11.9%, respectively, in November. Meanwhile, the small-cap Russell 2000 is on track for its best month ever, up about 20%. The US still reports over 200,000 new cases of coronavirus daily with their total now above 13 million.

Play of the Week – Value vs. Growth

The large shift away from growth and into value has been a prominent theme of both; local and global markets, for the past few weeks – since the positive vaccine news from Pfizer. However, with the Nasdaq outperforming the S&P500 and Dow, which are more geared towards growth rather than value, there appears to be a slight shift back to these strong-performers. Markets will determine this week which way to go as capital deployment nears full capacity.

Commodities

Gold dropped 1.3% to $1,787 an ounce on Friday, remaining close to levels not seen since early-July, and lost 4.5% on the week, the biggest weekly decline since late-September.

Silver fell 3.7% to $22.6 an ounce on Friday and booked a 6.5% plunge on the week.

Oil declined 0.4% to $45.50 a barrel on Friday, but booked an 8% gain for the week, its fourth consecutive weekly gain supported by hopes that a coronavirus vaccine will be rolled out soon and a possible delay in OPEC+’s planned production increase in January.

Iron Ore currently trades at $124.

Looking Ahead…

In the US, the main focus will be US Fed Chair Powell’s testimony before Congress next week, as well as the US jobs report due Friday. Here in Australia, we have GDP data and the decision from the RBA this week.