Australian market falls, as retail trade surges on Black Friday and Victoria sales
Australian shares have fallen significantly in afternoon trade, but are still trading near their optimistic pre-COVID levels.
- Retail sales jumped (+7pc) to $31.65 billion in November
- The ASX 200 has risen 2pc since the new year began
- The Australian dollar hit 78.2 US cents last week, its highest value since April 2018
Markets have largely put aside concerns about more contagious strains of COVID-19 and another attempt to impeach Donald Trump in the final days of his presidency.
By 2:30pm AEDT, the benchmark ASX 200 had fallen (-0.9pc) to 6,697 points.
Despite the accelerating losses, the Australian market is still around where it was in late-February, before the massive coronavirus sell-off.
The broader All Ordinaries index was also down by a similar margin to 6,961 points, also near its highest level in 10 months.
The Australian dollar was moderately weaker (-0.7pc) at 77.07 US cents due to a stronger US greenback.
Last week, the local currency to 78.2 US cents, its strongest level since April 2018.
“The US dollar was supported with increasing calls for stimulus driving relative yields [for US long-term Treasury bonds] higher,” said ANZ’s head of Australian economics David Plank.
But he said “the outlook for the Australian dollar remains positive as stimulus expectations and falling volatility support the risk trade.”
Meanwhile, bitcoin surged to a fresh record high ($US41,962) on Saturday, according to figures from Coindesk.
But it has since plunged (-13pc) $US37,531 — just another day for the volatile cryptocurrency.
Black Friday, iPhones and Victoria boost retail sales
Australian consumers spent $31.65 billion in November, as the latest data from the Bureau of Statistics (ABS) pointed to the domestic economy’s ongoing recovery.
Retail sales jumped (+7.1pc) since the previous month, and were significantly higher (+13.3pc) compared to a year ago.
“The rise is led by Victoria (+22.4pc) as Melbourne retail stores were able to trade for a full month in November,” said Ben James, the ABS director of quarterly economy-wide surveys.
He said that if Victoria’s post-lockdown results were excluded, retail sales in November would have seen a much more tepid rise (+2.6pc), compared to the month before.
November’s strong result coincided with the popular Black Friday and Cyber Monday sales — as more consumers bring forward their Christmas shopping.
There was further evidence in the figures that COVID-19 has led to major changes in shopping habits of Australians.
Online sales made up 11 per cent of all retail turnover in November, last year.
It was a big jump compared to November 2019, when 7.2 per cent of retail sales were conducted online.
Apart from Victoria, other states and territories had relatively strong results, including Queensland (+4.5pc), NSW (+2.3pc), WA (+1.2pc), Tasmania (+3.4pc), the ACT (+2.5pc) and NT (+2.2pc).
South Australia was the only state where retail sales fell (-0.2pc) due to its “brief lockdown”, sparked by an Adelaide pizza bar worker giving false information to SA health authorities.
Meanwhile, the industries with the biggest rise in sales were household goods retailing (+12.7pc), clothing, footwear and personal accessory retailing (+26.7pc ), department stores (+21.1pc), and cafes, restaurants and takeaway food services (+6.7pc).
“The release of new games consoles and new iPhones added to sales in household goods and other retailing, while Black Friday sales also contributed to the increase across a number of industries,” Mr James said.
But a lot has changed since November, Commonwealth Bank’s senior economist Kristina Clifton warned.
“We are a little more cautious on the domestic economic outlook following Sydney’s outbreak and restrictions,” she said.
“Domestic tourism has received another hit from interstate border closures during a peak period for this sector.
“However, working the other way, a large pool of savings for the household sector will provide support to spending.”
Oil surges, while gold plunges on stimulus bets
Energy stocks were the best performers on the ASX, including Whitehaven Coal (+2.2pc), Woodside Petroleum (+2.9pc) and Santos (+3pc).
Brent crude had risen to its highest level in almost a year, but retreated (-1pc) to $US55.42 per barrel on Monday.
“Oil is still pricing in a great deal of optimism linked to the rollout of COVID-19 vaccines and any negative news flow on this front would prompt a sharp negative reaction,” said Stephen Innes, Axi’s chief global market strategist.
“Demand will always improve as the vaccines roll out, and the supply side is under control thanks to OPEC+ and Saudi Arabia’s continued efforts.”
Last week, oil prices surged after Saudi Arabia pledged to cut its output by 1 million barrels per day, in February and March.
It was part of a deal to persuade most OPEC+ producers, including Russia, Libya and others, to hold output steady amid concerns that new coronavirus lockdowns in Europe will crimp demand.
Apart from oil and gas stocks, Insurance Australia Group (+3.2pc), Crown Resorts (+1.6pc) and Magellan Financial Group (+1.6pc) also experienced solid gains.
On the flip side, gold miners suffered the heaviest losses, like Perseus Mining (-7.7pc), Westgold Resources (-8.3pc), Silver Lake Resources (-5.3pc) and Gold Road Resources (-6.3pc).
Spot gold dropped (-1pc) to $US1,830.69 an ounce today, which exacerbates its 4 per cent slump on Friday.
Technology stocks were also sold off, including Nearmap (-6.7pc), Xero (-4.4pc), Appen (-3.8pc) and Afterpay (-1.2pc).
Investors are betting US president-elect Joe Biden will push for more stimulus (hundreds of billions of dollars) to boost the US economy, propping up global share prices even further — given Democrats now control the House, Senate and presidency.
Expectations of a “blue wave” cash injection have propelled Wall Street to record highs.
The Dow Jones rose (+0.2pc) to 31,098 points, while the S&P 500 lifted (+0.6pc) to 3,825 and the Nasdaq Composite jumped (+1pc) to 13,202 on Friday.
Investors shrugged off the latest US job figures which showed that 140,000 Americans lost their jobs in December, and coincided with a surge in COVID-19 infections nationwide.
The results from the US Labor Department were far below expectations, as economists had predicted 71,000 jobs would be added to the US economy.
However, the US unemployment rate was steady at 6.7 per cent.