The Benefits of Investing in US Shares
With the ASX representing just a small fraction of all investment opportunities across the world, we take a look at some of the benefits associated with investing in US shares.
With the US stock market grinding higher to a record close last Friday, Australian shares look set for an encouraging start when trading resumes this morning. The week ahead is set to be defined by action out of the US, including stimulus negotiations, widening lockdown restrictions, as well as the Food and Drug Administration’s decision on the emergency use authorisation of Pfizer’s COVID-19 vaccine.
Economic calendar and news
The Australian economic calendar will be light for news this week after last week’s packed diary. Job advertisements for November will be published by ANZ this morning, with forecasts suggesting month-on-month growth of about 8%.
Tomorrow, NAB’s business confidence data is expected to show an uptick from October, followed by Westpac’s consumer confidence reading on Wednesday, which is anticipated to ease a little after the strong run since September.
Overseas, negotiations regarding a new stimulus package in the US could be coming to a head as unemployment benefits look set to expire by the end of the month. Following bi-partisan efforts last week to table a new package, some analysts believe a deal could be close, particularly as Congress will need to pass a funding package this week in order to avoid a government shutdown.
The proposed package, at $900 billion, is significantly below where the two parties were at prior to the election, with the suggestion in some quarters that this might be a stop-gap manoeuvre until the Biden administration is in the Oval Office next year. It comes at a time where an increasing number of locations across the US roll back reopening plans or reintroduce strict stay-at-home measures, most notably in California.
On Thursday US-time the FDA is scheduled to make a decision on whether to grant emergency use authorisation for Pfizer’s COVID-19 vaccine. The vaccine was given the green light in the UK last week, and in Bahrain over the weekend, with inoculations set to commence as soon as possible.
Finally, inflation data out of the US could provide the next clues as to the price of gold, which gained some ground last week following speculation around a new stimulus deal.
ASX major movers
After iron ore prices surged to a seven-year high last week, the major miners are still likely to be in focus over the coming days. Fortescue Metals (ASX: FMG) enters the trading week having set a new all-time high, while BHP (ASX: BHP) and Rio Tinto (ASX: RIO) both hit multi-year highs last week.
Given Chinese demand for iron ore remains incredibly strong, and exports out of Brazil will be under pressure across the near future, traders will be scrutinising the commodities market for the prospect of a further increase in the price of iron ore. The commodity climbed to above US$145/tonne on Friday evening on the spot market.
With Australia-China trade tensions still in the spotlight, there may also be attention on some of the companies potentially exposed to trade relations. Among these are the likes of coal companies such as Whitehaven Coal (ASX: WHC), which has been steadily climbing in recent weeks, but also education provider IDP Education (ASX: IEL), where some shareholders have abandoned the stock over the risk that education could be the next sector caught in the crossfire.
Elsewhere, investment manager Washington H. Soul Pattinson (ASX: SOL) will host its AGM on Wednesday, December 9. The stock is trading within sight of its all-time high, so any developments from the meeting could prove decisive as to which direction the stock moves next.
There are more IPOs on the way this week as well, thanks to a number of companies that completed their raisings. Among those confirmed so far are:
- AI communications technology business Control Bionics (ASX: CBL), listing today;
- Ready-made meal company Youfoodz (ASX: YFZ), anticipated tomorrow;
- Online tutoring business Cluey Learning (ASX: CLU), scheduled for Wednesday;
- Export terminal operator Dalrymple Bay Infrastructure (ASX: DBI), set to list on Thursday;
- Iron ore explorer AKORA Resources (ASX: AKO), pencilled in for a Friday debut
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