Weekly Market Update: 7th of December 2020

ASX Update

The ASX finished the week strong with a gain of 0.3% to close at 6,634 – peaking out a weekly gain of 0.5%, the fifth straight. The market now sits close to it’s nine-month high and just 50 points lower for the calendar year.

Retail sales exceeded expectations on Friday with October’s activity up 1.4% versus the expected 0.5% increase. Data from the ABS shows clothing sales rose 6.8% for the month and dining/takeaway grew 5.4%, though both are still down year-on-year. Household goods declined 1% for the month, but the category is still growing strongest in annual terms, up 15.2%. Friday was an active day for new listings on the ASX; Nuix, analytics software company, closed 50% higher on debut, MAAS Group, Doctor Care Anywhere and Prospech all finished in the green too after listing.

Top/Bottom Performers (in the ASX 200)

Top Gainers:

• Sandfire Resources Ltd +28.6% (SFR.AX)
• Polynovo Ltd +15.2% (PNV.AX)
• Oz Minerals Ltd +15.0% (OZL.AX)

Top Losers:

• IDP Education Ltd -9.6% (IEL.AX)
• Zip Co Ltd -7.8% (Z1P.AX)
• Magellan Financial Group Ltd -5.6% (MFG.AX)

Globally

US Markets finished the week off positive also, despite the negative news of missed expectation on the Jobs report of November. 245,000 jobs were added in November, well below the consensus estimate of 440,000 but the unemployment was inline with expectations dropping from 6.9% to 6.7%. US Coronavirus cases rose sharply on Friday, recording yet another record number of new cases, still over 200,000.

Still, the Dow added 248 points or 0.8%, the S&P500 gained 0.9% and the Nasdaq 0.7% positive. For the week, the Dow added 1%, the S&P 1.7% and the Nasdaq 2.2%. This marked a record closing high for all three indexes and the second week in a row the Nasdaq outperformed the other indices since we saw the large rotation.

Play of the Week – Buy the December Dip

7 out of 10 years December is a positive month on the market. As it stands, the ASX200 is up just 1.3% for the month. So any weakness in the market is likely to bid back up in this period. It is important to note that the market is coming off a stellar month before this, being an unbeaten November. But with the overall sentiment still positively skewed and retail spending likely to support this moving forward for the short-term.

Commodities

Gold gained 3% for the week, its first weekly gain in four.

Silver added 6.6% for the week.

Oil gained 0.9% on Friday to trade at $46 per USD and book the fifth straight weekly gain, as OPEC and Russia on Thursday agreed to ease deep oil output cuts from January by 500 thousand barrels per day. For the week, prices were up 1.8%.

Iron Ore currently trades at $141 after an extremely positive week on supply issues from Vale.

Looking Ahead…

With only two full trading weeks left of the year, the main drivers will be news out of the vaccine roll out – all eyes will be on the success of the UK’s planned rollout.

Locally, we will have consumer and business confidence surveys released on Tuesday which have been quiet positive, and expected to continue on low case numbers and the vaccine updates. AGMs will also take place from BOQ and WBC.