Australian shares to recover, as Wall Street jumps on COVID-19 vaccine rollout

Australian shares are set to rebound from yesterday’s losses, as global markets staged an optimistic recovery amid COVID-19 vaccine rollouts in the United States.

ASX futures were up 48 points (+0.7pc) by 8:05am AEDT.

The Australian dollar had risen (+0.3pc) to 75.58 US cents, as the greenback hovered near a two-and-a-half year low.

But the local currency slipped (-0.65pc) to 56.19 British pence, on growing optimism about the chances of post-Brexit trade deal.

Overseas, investors watched closely as London and Brussels continued to debate a trade deal after months of inconclusive discussions, and the US Federal Reserve began its final policy meeting for 2020.

Vaccine distribution lifts confidence

Wall Street’s benchmark index, the S&P 500, snapped a four-day losing streak. It closed 1.3 per cent higher at 3,695.

The tech-heavy Nasdaq rose (+1.3pc) to 12,595 points, its highest ever closing figure.

The Dow Jones index lifted 338 points (+1.1pc) to 30,199.

Apple provided the biggest boost to the US market, as its share price gained 5 per cent (to a more than three-month high).

This was after a report from Japanese financial daily Nikkei (citing unnamed sources) said Apple planned to increase iPhone production by 30 per cent in the first half of 2021.

European markets were mixed, with Germany’s DAX making solid gains (+1.1pc) to 13,363, while Britain’s FTSE fell (-0.3pc) to 6,513.

Last week, the United States authorised the emergency use of its first COVID-19 vaccine, developed by Pfizer and BioNTech.

The vaccine has already been authorised in several countries, including Britain and Canada.

“The start of vaccine approvals and distribution heightens our confidence in strong global growth in 2021,” Goldman Sachs strategists said in a note.

“Combined with supportive policy and a fresh decline in US real yields, this remains a friendly backdrop for cyclical and risky assets.

“With the vaccine announcements behind us, and a sizable market response, it makes more sense to look for areas that have under-reflected the coming recovery.”

‘Lost quarter for growth’

The number of coronavirus deaths in the United States exceeded 300,000 on Monday as the hardest-hit nation started its first vaccine inoculations, while tighter COVID-19 restrictions were imposed on London.

Other countries across Europe were also set to impose new restrictions during the holiday season to limit the contagion. Germany adopted a stricter lockdown on Sunday.

“Much of Europe will have to weather tighter restrictions until at least early to mid-January,” said AFS analyst Arne Petimezas in Amsterdam.

“Markets remain bifurcated, with the solid post-vaccine advances for equities, credit and commodities intact.

“Bond yields refuse to budge though, and in particularly eurozone government bond yields remain terribly depressed.”

Positive news on vaccines, along with a market-friendly outcome of the US presidential election that has bolstered hopes of greater fiscal stimulus, have powered gains over the last few weeks, lifting shares to record highs.

A $US908 billion COVID-19 relief plan in the United States will be split into two packages in a bid to win approval, according to a Reuters report.

Politicians hope to attach the aid to a government funding measure that needs to be done by Friday.

The price of spot gold went up (+1.4pc) to $US1,852 an ounce.

Brent crude futures (for February delivery) lifted (+0.9pc) to $US50.75 a barrel.

Iron ore lifted (+0.5pc) to $US155.07 a tonne.


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