ASX 200 ends 2020 1.45pc down

A tumultuous year, but S&P/ASX 200 almost wipes out the year’s losses, while the Aussie dollar goes beyond US77c.

Australian markets have closed for 2020 with a shortened day ahead of New Year’s Eve. Picture: AAP

In a tumultuous year, the S&P/ASX 200 has ended 2020 by almost wiping out the year’s losses, while the Aussie dollar has surged above US77c.

Australian stocks slipped sharply a shortened session on the last trading day of 2020 amid growing concerns about coronavirus cases in NSW and Victoria, which outweighed optimism following gains on Wall Street. At the same time a late sell down by global pension funds in mostly large capitalisation stocks drove much of the losses in the index.

“Many sat (back) and watched - happy to see the year out and get ready for what should be another year of volatility,” said Bell Potter Institutional trader Richard Coppleson.

The S&P/ASX 200 closed down 1.43 per cent, or 95.3 points, at 6587.10, only a little lower than at the start of 2020, but had staged a stunning recovery from the global market shocks inflicted early in the year by the COVID-19 pandemic.

The benchmark ended down 8 per cent from its record closing high on February 20, but up 45 per cent from its Covid-hit low of 4546 points on March 23. The ASX 200 fall for the year was 1.45 per cent. Travel group Flight Centre, battered by the impact of COVID-19 tourism and aviation restrictions and border closures, was the the worst performer, slumping 60 per cent to $15.85 over the year. Buy now, pay later market-darling Afterpay took the crown as the star of the year, surging 303 per cent to $118.

The All Ordinaries closed on Thursday for the year at 6850.60, down 1.3 per cent for the day, or 92.30 points lower.

Earlier, the Dow Jones Industrial Average rose 0.2 per cent to a new record close, while the S&P 500 gained 0.1 per cent and Nasdaq added 0.2 per cent. Both fell shy of hitting new all-time highs.

Weakness on Australian markets came as concerns grow about the economic impact of tighter coronavirus restrictions in Sydney ahead of New Year’s Eve celebrations, and new community infections in Victoria.

The Australian dollar continued its climb, breaking through US77c because of greenback weakness to a two and a half year high, before slipping back to US76.95c in the afternoon on Thursday.

The best and worst movers for the 12 months to 31 December 2020

On Thursday, CBA dropped 1.8 per cent to close at $82.11 for the year, ANZ was down 1.6 per cent at $22.70, Westpac fell 1.5 per cent to $19.37 and NAB was 1.9 per cent lower at $22.60

Gold futures rose 0.6 per cent, iron ore eased by 2.2 per cent and global oil prices posted modest gains, with Brent crude up 0.5 per cent.

BHP closed down 1.65 per cent on Thursday to end the year at $42.43. Rio Tinto fell 1.7 per cent to close at $113.83 and Fortescue Metals, one of the best performers for the year gaining 124 per cent in the 12 months, closed on Thursday at $23.43, down 2.3 per cent on the day.

In energy stocks, Woodside was 1.3 per cent lower on Thursday at $22.74, Santos fell 1.3 per cent to $6.27 and Beach Energy was down 1.1 per cent at $1.80 by the close.

Travel stocks were hit again amid threats of fresh border closures across the country in response to the Sydney Covid outbreak that has now spread into Victoria.

The closures are likely to throw holiday season planning into disarray. Qantas on Thursday closed down 2.2 per cent to $4.85. Sydney Airport was down 0.6 per cent to $6.41 while Flight Centre was off 4 per cent.

In terms of global moves before Thursday’s trade, Wall Street’s Dow Jones was up 6.5 per cent, and the broader S&P 500 up 15.5 per cent on the past 12 months. The Nasdaq Composite has advanced 44 per cent.

Japan’s Nikkei is up 16 per cent while the Hang Seng is down 3.7 per cent. London’s FTSE 100 is down 13.1 per cent, while the Euro Stoxx 50 is down 4.6 per cent.

‘Poised to surge’

In the US, many investors believe Wall Street’s rally is poised to continue in the new year.

“The fundamental tailwinds that have propelled the market to all-time highs are still going to be in place next week and over the course of 2021,” said Hank Smith, head of investment strategy at Haverford Trust. “Extraordinary monetary policy, extraordinary fiscal stimulus, an economy that is poised to surge.”

The rollout of coronavirus vaccines and the passage of the new $US900 billion fiscal stimulus package have helped buoy investors’ sentiment in the final weeks of the year. But the ongoing pandemic, weakening economic data and debate in Washington over the size of stimulus checks has tempered some of that optimism.

“We are going to keep getting this push-pull, vaccine versus virus, politics versus economics, for a while yet,” said Altaf Kassam, head of investment strategy for State Street Global Advisors in Europe. “November was a great month for markets and there was always going to be a pause for breath. December seems to be just that.”

Shares of AstraZeneca fell 0.8 per cent in London trading after the UK approved a coronavirus vaccine developed by the company and the University of Oxford. The inoculation is the third Western-developed vaccine to receive emergency-use approval this month, and comes as cases rise sharply in the US and Europe.

Newly reported US coronavirus cases topped 247,000 on Tuesday, the second-highest daily tally since the pandemic began, while hospitalisations due to COVID-19 hit another record.

“There is a lot riding on the AstraZeneca vaccine in particular, much more than any other vaccine on a global level,” said Hani Redha, a multiasset portfolio manager at PineBridge Investments. “Just the sheer number of doses there will be and the fact that distribution of it is easier, particularly in developing countries, makes it important,” he added.

Investors are largely looking beyond the near-term challenges posed by the pandemic and betting that the vaccines will enable governments to begin easing restrictions and offer fresh momentum to the economic rebound. That could come as soon as April, said Emiel van den Heiligenberg, head of asset allocation at Legal and General Investment Management.

“As long as governments get immunity among the most vulnerable groups, they will see hospitalisation go down, death rates go down, and then will use that as their opportunity to open up the economy,” he said.

The Stoxx Europe 600 ticked down 0.3 per cent, its first fall in six sessions.

London stocks initially rose on news of the new vaccine, but turned lower in afternoon trading despite European Union and UK leaders signing their post-Brexit trade deal -- with just one day to go until the UK finally leaves the bloc.

London’s FTSE 100 index ended the day 0.7 per cent lower as tighter confinement measures were extended across England. In the eurozone, Paris stocks shed 0.2 per cent while Frankfurt slid 0.3 per cent in a shortened trading session as Germany mulled extending its virus lockdown in the face of rising cases and deaths.

Frankfurt’s blue-chip DAX 30 index rose 3.6 per cent over 2020, a roller coaster of a year that saw it hit new records at the beginning but then plunge 40 per cent over the coronavirus pandemic only to rally on stimulus measures and vaccines to hit a new peak in December.

In bond markets, the yield on the 10-year U.S. Treasury note edged down to 0.926 per cent from 0.934 per cent on Tuesday.

Bitcoin, the world’s most popular cyber currency, extended this month’s blistering run to strike another record high at $US28,572.10.

“Bitcoin mania is running wild as bearish bets against the dollar rise to the highest levels since 2011,” said OANDA’s Moya.

“Macro crypto traders and haters of fiat currencies remain blindly ultra-bullish and that could help Bitcoin test the $30,000 level before the year ends,” he added.

With Dow Jones, AFP