US election gridlock continues: Aus shares leap 4.2% over week

Market Reports

by Katrina Bullock

It has been a massive week for markets. On Tuesday the RBA slashed rates to a new historic low of 0.1 per cent. The Commonwealth Bank of Australia (ASX:CBA), the National Australia Bank (ASX:NAB) and Westpac (ASX:WBC) have each dropped their fixed term mortgage rates. Across the board though, the banks have chosen not to pass the rate cut on to variable home loan borrowers. The US Presidential election gridlock continues. Democratic candidate Joe Biden needs to secure one more swing state to win the election. But it’s shaping up to be a tight race with less than 1 per cent of votes separating the 2 candidates in Pennsylvania, and the 2 candidates’ neck and neck in Georgia, even after 99 per cent of the votes have been counted.

The S&P/ASX200 index

At the closing bell the S&P/ASX 200 index closed 51 points higher to finish at 6,190.

Over the week, the market has made a massive jump of 4.2 per cent or 262 points.

As for the sectors, all of the sectors advanced this week. Real Estate was the star performer rising over 8 per cent. The Industrials and Consumer Discretionary sectors both gained over 6 per cent.

Wall Street

Wrapped up our four trading days this week substantially higher: The Dow Jones added 6.7 per cent, The S&P 500 added 6.9 per cent and the Nasdaq gained 8.2 per cent.

Futures

US Futures markets are a different story, falling as election uncertainty looms and investors face the prospect of a drawn out, contested election.

Dow futures are suggesting a fall of 163 points.
S&P 500 futures are eyeing a drop of 22 points.
The Nasdaq futures are eyeing a fall of 133 points.
Back home, our ASX200 futures are unaffected by the election woes eyeing a 46 point rise on Monday morning.

Economic news

The Australian Industry Group released the Australian Performance of Services Index for the month of October. The index jumped 15.2 points, up to 51.4 points during the month of October. This signals that a tentative recovery in domestic demand may be under way. This was the first positive month for the services sectors since November 2019.

The Reserve Bank of Australia published a statement on monetary policy today. This comes just days after it announced a $100 billion quantitative easing program. While household spending is better than initially forecast, it says we should continue to expect subdued jobs growth. It now expects the economy to decline by 4 per cent in the calendar year but grow by 6 per cent in the period to 30 June 2021. It now projects that unemployment, which sat at 6.9 per cent in September will peak around 8 per cent by the end of the year, gradually declining to just above 6 per cent by the end of 2022. Wages growth and inflation are both likely to remain low. However, it was more upbeat about its forecast for household consumption, which it now expects to grow by 10 per cent over the second half.

Broker moves

Citi rates National Australia Bank (ASX:NAB) as a Buy, with a 12 month price target of $23.50. This comes as the bank takes a conservative stance and pulls forward virus-related provisions into the current year. The broker believes the bank is one of the better performers in the sector when it comes to revenue growth and sound cost control. Shares in National Australia Bank (ASX:NAB) closed 1.4 per cent higher at $19.57.

Company news

Managed investment account platform operator, Praemium (ASX:PPS) confirms that it has completed the off-market acquisition of all of the outstanding shares in Powerwrap in accordance with the compulsory acquisition process announced on 22 September 2020. Shares in Praemium (ASX:PPS) closed flat at $0.69.

Financial software provider, Iress (ASX:IRE) has completed the scheme with OneVue Holdings under which it acquired 100 per cent of the outstanding shares of OneVue. Iress CEO, Andrew Walsh, says “a combined Iress and OneVue will bring advice and investments closer together, leveraging combined strengths in the administration of managed funds, superannuation and investment, along with…technology and data.” Shares in Iress (ASX:IRE) closed 1.5 per cent higher at $10 on the nose.

Tabcorp (ASX:TAH) has responded to this morning’s article in the Australian saying it is “not aware of, and has not received, any [acquisition] proposal in respect of the company or its businesses.”

The Australian Competition and Consumer Commission has launched an investigation into acquisitions of iSelect (ASX:ISU) shares made by Innovation Holdings Australia.

AMP (ASX:AMP) has appointed Kathryn McKenzie as an independent, non-executive director.

International payment service provider, OFX Group (ASX:OFX) has formed a strategic alliance with WiseTech Global (ASX:WTC) which will see it become WiseTech’s preferred provider for international payments.

Best and worst performers

The best-performing sector was Materials, adding 2.2 per cent to $4.10; while the worst performing sector was Information Techologies, shedding 0.9 per cent

The best performing stock was Tabcorp (ASX:TAH), adding 15.8 per cent; followed by News Corp (ASX:NWS) and Treasury Wine Estates (ASX:TWE)

The worst performing stock was Nine Entertainment (ASX:NEC), dropping almost 3 per cent to $2.29; followed by CSR (ASX:CSR) and Afterpay (ASX:APT)


Asian Markets
Japan's Nikkei is tracking almost 1 per cent higher
Hong Kong's Hang Seng is tracking 0.3 per cent lower
The Shanghai Composite is trading 0.7 per cent lower

Commodities and the dollar

Gold is trading at $1941 an ounce
Iron Ore is steady at $116.95
Iron Futures are suggesting a rise of 0.9 per cent
Light crude has lost $1.07 to US$37.72
1 AUD is buying 72.68 US cents