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Market takes flight as vaccine hopes turn losers into winners

Business

Stay-at-home stocks have been belted as investors speculated that the world was seeing the beginning of the end of the pandemic.

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The ASX 200 reached a 100-day high peaking at 6439 and fell back in late morning trade and by afternoon the market was up 41 points.

It was been a big day for companies that will benefit from a return to normal life but those that boomed during the lockdowns have been brought back to earth.

Brisbane’s Flight Centre jumped 10 per cent, Corporate Travel Management was up 15 per cent, Qantas 8 per cent, Webjet 13 per cent and the NAB rose 7 per cent. Suncorp was also up 6 per cent, but it also announced September quarter lending levels.

The big gains came from shopping centre owner Unibail which was up 37 per cent.

But it was bad news for pizza retailer Domino’s. The company has benefitted from the stay-at-home culture that has developed during the pandemic. Its shares fell 10 per cent.

Data centre owner NEXTDC fell 13 per cent and oddly Ansell was down 10 per cent. Eagers fell almost 12 per cent.

On overseas markets, shares in cruise operator Carnival surged 37 per cent, American Airlines Group gained 17 per cent, and Bank of America climbed 14 per cent, while Zoom, which has become a key to the way businesses have dealt with the crisis fell 14 per cent. Even Peleton Interactive, which runs a fitness streaming service used by people stuck at home fell 16 per cent.

Netflix was also down 6 per cent.

Pepperstone’s Chris Weston said the markets were expecting a bump from the US election results, not from a vaccine trial update. “However, the Pfizer/BioNtech Phase 3 preliminary trials have caused markets to come alive, not that they needed much encouragement,” he said.

“The vaccine should get FDA approval later this month and the market has treated this news release as a major breakthrough, with calls that at this efficacy rate governments would only need to vaccinate 60 per cent of the country to reach herd immunity.

He said the real winners in the US were energy, and financials, followed with impressive gains in REITS, industrials and materials.

The Dow Jones jumped 834 points, France’s CAC 40 was up 7.5 per cent “and a cure simply can’t come quick enough here, as is the case in the US where case count is exponential, and it is going to be a dark winter”.

“With the roll-out of a vaccine some way off, we question if the market is still overlooking the near-term threats? In fact, the Fed mentioned this in its Financial Stability Report (realised in US trade), detailing they see risks that markets take a hit if the virus is not contained the coming months,” Weston said.

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