The Australian share market has finished one of its most volatile years with a sharp last trading day loss that edged it into negative territory for the year.
The S&P/ASX200 benchmark index closed Thursday’s abbreviated New Year’s Eve session down 95.3 points, or 1.43 per cent, to 6587.10. The All Ordinaries ended 92.3 points, or 1.33 per cent lower, at 6910.50.
Sentiment was affected by the enduring issue for the year – coronavirus.
“It’s probably been a bit exaggerated but the precipitating factor is the COVID-19 situation emerging in NSW and Victoria,” IG markets analyst Kyle Rodda said.
NSW reported 10 locally-acquired cases, with five linked to Sydney’s northern beaches cluster. The outbreak has prompted stricter New Year’s Eve restrictions.
Another five local cases have been identified in Melbourne with at least three believed tied to the Sydney outbreak.
“The major concern is this could potentially lead to further restrictions, lockdowns and border closures. The market benefited from the situation in Australia being under control and now is having to price this in again,” Rodda added.
The local market shrugged off overnight gains on Wall Street, where investors turned upbeat on the back of vaccine rollouts and hopes for even more fiscal support in 2021.
Local investors preferred to cash in amid light trading volumes in a holiday-shortened trading week. The market will remain shut on New Year’s Day.
“Some traders are using it as an opportunity to take profits off the table because there have been some pretty significant rallies over the past few months,” said Jessica Amir at Bell Direct.
The ASX200 finished 2020 down 103.5 points or 1.5 per cent. It has, however, surged 45 per cent from the trough hit during the massive sell-off in March.
Every single sector ended closing day in the red, with financial, property and healthcare stocks worst affected.
Property landlords Unibail Rodamco Westfield, Stockland and Mirvac slid more than three per cent each on fears potential COVID restrictions could hit revenues.
The Big Four banks all closed more than 1.5 per cent lower, while insurers QBE and IAG also posted heavy losses.
Healthcare stocks also proved a drag, with Resmed, Ramsay Healthcare and CSL losing between 1.5 and 2.5 per cent for the session.
Oil Search was the rare exception, rising 1.4 per cent, even though other energy stocks slipped 0.5-1.0 per cent.
Gold and rare earth producers also bucked the trend, with Gold Resources, Northern Star, Iluka Resources and Lynas ending 1.5-4.0 per cent higher.
Despite the downbeat finish, 2020 turned out to be an excellent year for several sectors, with some stocks defying challenges to turn into money spinners.
Shares in Afterpay topped the charts, nearly quadrupling in value to end at $118 each as the buy-now, pay-later upstart benefited from the work-from-home related retail boom.
Kogan.com also leveraged on the surge in online retail to rack up gains of more than 150 per cent, ending the year at $19.
Iron ore producers Fortescue Metals and Mineral Resources were next best, benefiting on China’s unending hunger for the steel making ingredient.
“The outlook for the economy is still very strong and we’ve got so much stimulus circulating in the global economy,” Rodda predicts. He is betting on energy and banking stocks leading gains.
Amir is also forecasting an 8-10 per cent rise for the Australian market in 2021.
She is counting on the mining boom continuing most of the year and expects gains from downbeat stocks like banks, airlines and travel companies – which will all benefit from a reopening of the economy.
Meanwhile, analysts believe the Australian dollar will continue strengthening amid weakness in the US dollar and rising 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 compared to 76.61 US cents at the previous close.
ON THE ASX
* The S&P/ASX200 benchmark closed down 95.3 points, or 1.43 per cent, to 6587.10.
* The All Ordinaries ended 92.3 points, or 1.33 per cent lower, at 6910.50
* The SPI200 futures was down 80 points, or 1.2 per cent to 6537 points.
One Australian dollar buys:
* 76.61 US cents, from 76.61 cents on 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 NZ cents, from 106.62 cents.