Markets Week Ahead: US Senate runoff to direct markets, Tesla posts record

Markets Week Ahead: US Senate runoff to direct markets, Tesla posts record

After the ASX dived in the closing minutes of the shortened trading week before the long weekend, the local market will need to play catch-up with US indexes, which closed at all-time highs.

Local sentiment is set to be dampened by lockdown and border restrictions that could dent consumer and business confidence, while a stronger Australian dollar has also been acting as a headwind in recent weeks.

Overseas, political action and jobs data out of the US could have a profound impact in providing a lead for the ASX throughout the week.

 

Economic calendar and news

The ongoing management of COVID clusters in New South Wales and Victoria will be watched closely this week, with border closures hinging on each state’s ability to contain the spread of new cases.

On the economic calendar, services and manufacturing activity for December will be published, as will data on building permits, exports and imports from November.

In the US, political action is set to dominate the coming days. With two positions up for grabs as part of the Senate runoff election in Georgia, the balance of power in Congress is set to be. Should the incumbent Republicans hold onto at least one of the two seats they are likely to stifle any attempts by Democrats to raise corporate taxes, among other policies impacting the market.

Meanwhile, the US presidential election is set to be formally certified this week. While some Republicans are expected to object to the certification in modest numbers, there appears to be insufficient backing to otherwise make an impact on the outcome.

Geopolitical tension is also growing between the US and China, with China seeking to address the delisting of three telecoms giants from the NYSE, as well as the US and Iran, with concern mounting Iran may launch a retaliatory attack in light of the anniversary of the assassination of its top general.

US job numbers are also on the schedule this week, albeit forecasts suggest the numbers will show the weakest growth in hiring since the recovery picked up. Factory orders, the trade balance, and manufacturing and services activity will also be released.

 

 

Major movers

Investors will digest Tesla’s (NASDAQ: TSLA) vehicle delivery announcement, which highlighted that the company achieved a personal record in terms of cars delivered globally in the final quarter of the year. Tesla delivered 180,570 vehicle across the three-month period, while its total for the year, 499,550 deliveries, was effectively in line with its guidance of half a million units.

Travel stocks are likely to see some heightened volume in light of broader travel restrictions that were hurriedly implemented over the New Year holiday season. This may have the greatest impact on the likes of Qantas (ASX: QAN), which was previously nearing a high proportion of its pre-COVID domestic flight capacity, as well as travel booking stocks like Flight Centre (ASX: FLT) and Webjet (ASX: WEB).

As gold prices flirt with the US$1900/oz mark, there may be some appetite for gold miners and producers if the commodity pushes through this level with conviction. The rising Australian dollar has been quelling some enthusiasm for local gold stocks in recent weeks, even as the commodity rebounded from its November low. Newcrest Mining (ASX: NCM) is one stock from the sector that has lagged its peers, last week hitting its lowest level since the start of May.

Also showing signs of weakness has been AGL Energy (ASX: AGL), which closed at a 52-week low on New Year’s Eve. The stock has been sliding in recent months due to lower wholesale electricity market pricing, as well as operational issues related to its coal-powered plant at Liddell, which recently led the company to downgrade its earnings outlook. While AGL has committed to pay out practically all its earnings in FY21 and FY22 as unfranked dividends, the stock has dropped 29.7% since mid-August and a total of 42% across 2020.

Meanwhile, stocks on the rise include Mineral Resources (ASX: MIN), Contact Energy (ASX: CEN), Nanosonics (ASX: NAN) and Summerset Group Holdings (ASX: SNZ), each of which enter 2021 trading at their respective all-time highs.

Numerous ETFs from the likes of BetaShares and Vanguard will trade ex-dividend today. This includes some of the most-held ETFs from across the SelfWealth community like BetaShares NASDAQ 100 ETF (ASX: NDQ), BetaShares Asia Technology Tigers ETF (ASX: ASIA), Vanguard Australian Shares Index (ASX: VAS), Vanguard Diversified High Growth Index ETF (ASX: VDHG) and Vanguard MSCI Index International Shares ETF (ASX: VGS). On Wednesday, certain Blackrock funds will trade ex-dividend, headlined by iShares Core S&P/ASX 200 ETF (ASX: IOZ).

Last but not least, the IPO class of 2021 looks set to start early, with Truscreen Group (ASX: TRU) anticipated to make its debut on Wednesday. The health care company, which develops, manufactures and sells cancel detections devices and systems, raised $2.5 million at a price of $0.07 per share.

 

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