The Overnight Report: Another Week, Another Vaccine

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This story features REA GROUP LIMITED.
For more info SHARE ANALYSIS: REA
The company is included in ASX100, ASX200, ASX300, ALL-ORDS and ALL-TECH

By Greg Peel

Short & Sweet

First the ASX updates its website and drives everyone mad, then it updates its trading system and it crashes after 23 minutes. Trading halted and eventually abandoned at 3pm but the exchange insists the problem is now fixed.

We’ll see. The futures market appears not to be taking any chances. With Wall Street racing ahead again, the SPI is up 4 points.

I am not going to highlight any stock or sector movements from yesterday for the simple reason the market was still going through its opening rotation (matching out buy/sell pre-orders and leftover orders on a VWAP basis) before it crashed. It is extremely common for the ASX200 to open sharply in one direction in the first half hour and then spin on a dime.

This is when the algos play their opening gambits before the humans take over.

So we’ll just stick with the day’s news, and see where we get to today, bearing in mind Wall Street’s shot up again.

A review by ASIC into the BNPL sector found total credit extended has almost doubled in a year and one in five consumers are missing payments. Despite this, no new recommendations on customer protection were forthcoming. There are, nonetheless, regulatory changes on their way which will become effective in October 2021.

So you’ve got about a year to spend your little hearts out. The industry’s also working on a code of conduct.

Chinese industrial production rose 6.9% year on year in October, matching September, and beating forecasts of 6.5%. Retail sales rose 4.3%, up from 3.3%, but missing 4.9% forecasts.

Fixed asset investment rose 1.8% year to date, up from 0.8% in September. Private sector investment continued to decline, so it’s all about the government.

Other data points of interest: Auto sales grew by 12.5% in the month due to a surge in demand for EVs; domestic tourism rebounded strongly in the Golden Week break last month, but numbers were still well down on last year.

Locally, the news is South Australia now has 18 cases and has immediately been ostracised by other states, except Victoria, which knows what it feels like, and will instead conduct health checks at the border, and NSW, which has said “come on in!”

Planes departing Adelaide that happened to be in the sky when WA and Queensland made their announcements were shot down.

Let’s see what today brings.

That’s not a vaccine!

Last Monday in the US Pfizer announced it had a vaccine showing 90% efficacy. Last night Moderna said I’ll see your 90% and raise you 4.5%.

The interesting point is the FDA is prepared to accept any vaccine showing 50% efficacy. I’ve got a coin that does that. I don’t pretend to understand all the medical gobbledegook but I believe Pfizer and Moderna took a similar biological pathway to their vaccines while the likes of AstraZeneca, Johnson & Johnson and others have gone down different pathways.

For one who remembers the Cola Wars of the seventies, I feel this could get interesting.

For those who can remember back to last Monday, just press replay. The only difference in last night’s rotation trade is it wasn’t pure rotation – last week the Nasdaq fell on the day as everyone rushed out of tech (stay-at-home) and into value (get-out-and-about). Last night the Nasdaq underperformed, but still closed higher.

Perhaps there is a clue in the recent virus news.

At a 150,000 a day average, the US case-count is growing 81% faster than two weeks ago.

Michigan and Washington State are going into partial lockdown.

Alaska, California, Colorado, Illinois, New York, New Mexico, North Dakota, Oregon and Vermont have announced travel “restrictions” ahead of Thanksgiving next week. However, these are just “advisories”, suggesting residents do not travel unnecessarily, quarantine themselves for two weeks if they do, and greet the turkey with a mask on.

But hey, we now have two vaccines!

Predictably, airlines, cruise lines, hotels, department stores and others rallied strongly again last night – not quite to the extent we saw a week ago, but they kicked on nonetheless. Will they do this every time there’s a vaccine announcement?

The Dow hit an all-time high last night. The biggest gainer was Boeing, which is also the biggest influence on the price average. Next came Chevron. The oil producer ETF is up another 6% already after a record 16% rally last week.

Yep, those international borders will be opening up before you know it.

Key to vaccination is of course distribution. It will be the Biden Administration’s task to manage this. The Trump Administration has long been working on a plan but refuses to share it.

Looks like Trump will go home with his bat and ball. Can’t wait for the broadcast of the White House handover day chat.

Commodities

See: vaccine.

It’s risk-off once more, so the US dollar is lower and the Aussie is up 0.6% at US$0.7312.

Today

The SPI Overnight closed up 4 points.

The minutes of the rather historical November RBA meeting are out today.

The US will see industrial production and retail sales numbers.

Following on from ASIC’s announcement, AfterPay ((APT)) happens to hold its AGM today. As does REA Group ((REA)) and a couple of others.

The Australian share market over the past thirty days…

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