The Australian stock market ended one of its most volatile years with a strong loss on the last trading day that took it into negative territory for the year.
The benchmark S & P / ASX200 closed Thursday’s abbreviated New Year’s Eve session down 95.3 points, or 1.43%, to 6,587.10. The All Ordinaries finished 92.3 points, or 1.33 percent lower, at 6,910.50.
Sentiment has been affected by the lingering problem of the year – the coronavirus.
“It has probably been a bit of a stretch, but the precipitating factor is the COVID-19 situation emerging in New South Wales and Victoria,” IG market analyst Kyle Rodda said.
NSW has reported 10 locally acquired cases, including five linked to the North Sydney Beaches cluster. The outbreak has resulted in tighter restrictions on New Years Eve.
Five other local cases have been identified in Melbourne, at least three of which are believed to be linked to the Sydney epidemic.
“The main concern is that this could potentially lead to further restrictions, lockdowns and border closures. The market has taken advantage of the situation in Australia being under control and now owes the price again,” Rodda added.
The local market ignored overnight gains on Wall Street, where investors have been bullish on the vaccine rollout and are hoping for even more budget support in 2021.
Local investors preferred to cash in an environment of low trading volumes during a short holiday trading week. The market will remain closed on New Years Day.
“Some traders are using it as an opportunity to take profits off the table because there have been some pretty big rallies over the past few months,” said Jessica Amir of Bell Direct.
The ASX200 ended 2020 down 103.5 points or 1.5%. However, it jumped 45% from the low reached during the March sell-off.
Each sector ended the closing day in the red, with financials, real estate and healthcare being the hardest hit.
Unibail landowners Rodamco Westfield, Stockland and Mirvac have slipped more than three percent each on fears that potential COVID restrictions could affect income.
The big four banks all closed more than 1.5 percent less, while insurers QBE and IAG also took heavy losses.
Healthcare stocks were also found to be a drag, with Resmed, Ramsay Healthcare and CSL losing between 1.5 and 2.5% for the session.
Oil exploration was the rare exception, rising 1.4%, although other energy stocks slipped 0.5 to 1.0%.
Gold and rare earth producers also resisted the trend, with Gold Resources, Northern Star, Iluka Resources and Lynas finishing 1.5 to 4.0 percent higher.
Despite the end of the year, 2020 has turned out to be a great year for several sectors, with some stocks defying the challenges of turning into spinners.
Afterpay shares topped the charts, nearly quadrupling in value to end at $ 118 each, as upstarts to buy now and pay later benefited from the work-from-home retail boom.
Kogan.com also capitalized on the boom in online retailing to rack up gains of over 150%, ending the year at $ 19.
Iron ore producers Fortescue Metals and Mineral Resources followed next, capitalizing on China’s endless thirst for the steelmaking ingredient.
“The outlook for the economy is still very strong and we have so many stimulants circulating in the global economy,” Rodda predicts. He is betting on energy and banking stocks leading gains.
Amir also predicts an 8-10% increase in the Australian market in 2021.
She expects the mining boom to continue for most of the year and expects gains on declining stocks like banks, airlines and travel agencies – all of which will benefit from a reopening of the l ‘economy.
Meanwhile, analysts believe the Australian dollar will continue to strengthen amid a weak US dollar and growing risk appetite, with most expecting it to hit 80 US cents in 2021.
On Thursday, the local currency was at its highest since April 2018, buying 76.95 US cents from 76.61 US cents at the previous close.
* The benchmark S & P / ASX200 closed down 95.3 points, or 1.43%, at 6,587.10.
* The All Ordinaries finished 92.3 points, or 1.33% less, at 6,910.50
* SPI200 futures were down 80 points, or 1.2 percent to 6,537 points.
An Australian dollar buys:
* 76.61 cents US, compared to 76.61 cents Wednesday
* 79.43 Japanese yen, from 79.12 yen
* 62.67 euro cents, from 62.33 cents
* 56.55 British pence, from 56.53 pence
* 106.63 cents NZ, from 106.62 cents.