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That's it from us at Markets Live tonight, thanks for tuning in as we wrapped up a record month.
Alex Druce and Lucy Battersby will be back in the morning. Catch you then.
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The Australian sharemarket has just enjoyed its best month in 32 years after rising 10 per cent since the end of October.
The last trading day of November saw a slight unwinding of the massive rotation into financial, energy, and travel stocks that has occurred over the past four weeks, as investors locked in gains for their monthly performance figures.
The S&P/ASX 200 jumped higher at the start of Monday’s session, but spent most of the day in red before ending 83.2 points, or 1.3 per cent lower, at 6517.8.
However, this still delivered a monthly gain of 10 per cent for the S&P/ASX 200, exceeding the April 2020 rise of 8.7 per cent. The All Ords gained of 9.9 per cent in November, making it the best performing month since March 1988 when it gained 13.2 per cent.
Losses for the banking, mining and health giants handed the ASX200 its worst session for November but the fall was not enough to prevent a record month for investors.
The benchmark index faded badly from a strong start to finish 1.3 per cent lower at 6517.8, its worst performance since October 29. US futures are pointing to losses on Wall Street tonight.
Despite this, gains for November still finished at 10 per cent, the best since the ASX200 was launched in March 2000. The All Ords last rose by this amount in March 1988.
The Chinese government just launched a bazooka midships at Australia’s wine industry - and on Monday the size of the immediate financial damage to our largest producer Treasury Wine Estates became clear.
The size of the tariff - at 169 per cent - could not have been foreseen but the warnings that China had been lining its sights on Australian wine had reached fever pitch in recent months.
In particular, the Chinese government announced three months ago investigating allegations that Australian wine companies were dumping product in China. If Treasury Wine Estates had taken some comfort in the fact that it was entirely innocent of these claims it was either mistaken bravado or naive hope that the legalities were in its favour.
Australia's beef, lobster, coal, sugar and cotton producers like wine companies have done nothing wrong apart from underestimating the sovereign risk of exporting to China. Sure the recent covert diplomatic trade war has escalated the risk but it has always been simmering beneath the surface.
The latest episode of the Short Squeeze is here!
This week, Markets Live editor Alex Druce is joined by IG Markets analyst Kyle Rodda to discuss the sharemarket's record-setting run in November and whether any more early presents fall off the back of Santa's sleigh.
The pair also look at the risks lurking under the surface as we head towards 2021 and take a peek at this week's GDP data, as well as what the RBA board has on its plate as it prepares for its final rates decision of the year.
You can find past episodes of the weekly Short Squeeze podcast, which is produced in conjunction with IG, here. Each episode goes for about 10 minutes and is also available through Spotify and Google Podcasts.
China’s effective bans on a widening range of Australian products in retaliation for the effrontery of Australian politicians in calling for an independent investigation into the origins of the coronavirus, among other opinions it has taken exception to, are China’s version of Donald Trump’s tariffs.
Trump’s pretext for his initial burst of tariffs was “national security,” although they were imposed even on imports from some of America’s longest-standing allies. Were Canadian steel and aluminium imports really a threat to America’s national security?
China is more creative, using everything from investigations of contamination in our lobsters, to environmental standards that have hurt coal exports, to the dumping allegations against our wine exporters or the combination of dumping and subsidisation charges against Australian barley producers.
Chinese diplomats in Canberra, of course, made it very clear that China’s war on Australian exports is due to the Morrison government’s commentaries on the virus, Hong Kong, Taiwan, the South China Sea. As well as China’s spying and influence programs in Australia and its banning of Huawei from the 5G rollouts and blocking proposed acquisitions of Australian companies and agricultural assets
Wilson Asset Management's newsletter, the Asset Allocation Weekly, has had a closer look at whether the rotation out of growth stocks - mostly technology sector names - and into slower-moving but more reliable value stocks will last much longer.
The firm's analysts say they see "believe we are moving into a significant cyclical rebound phase for the value style" of stocks.
"The COVID-19-induced global recession arguably delivered a final blow-off in the performance of growth, driven in particular by the tech sector, which in many cases proved very resilient in the face of the economic shutdown."
A rally in value stocks will typically see energy, financials, industrials, and materials out-perform, as happened this month.
"With a vaccine driven solution likely to allow the global economic conditions to normalise over the next 1 to 2 years, this earnings recovery will favour many under pressure value/recovery plays. A gradual move up in interest rates will also act as a relative tailwind for value over growth in contrast to recent years."
Nut grower Select Harvests is headed for a fifth session in the red after slashing its final dividend. This comes after it halved of its full-year profit to $25 million.
The firm on Monday afternoon was trading 3.4 per cent lower at $6, and its share price dropped as much as 6.4 per cent to a three-week nadir of $5.80 during trade, after it announced high input costs and a below-expectation result at its food division melted annual profits by 52 per cent.
Select Harvest, which has now slipped as much as 14 per cent from a seven-month peak in early October, cut its full-franked final dividend to 4 cents per share, down from 20 cents a year ago.
The dividend will be paid on February 5.
Revenue for the year fell nearly 17 per cent to $248.3 million as strong demand for industrial value-added almond products was not enough to offset higher commodity input costs and continued private label penetration in the branded nuts category.
UBS economist George Tharenou has upgraded his growth predictions for global GDP and is expecting it to “rebound sharply” next year with 6.1 per cent growth followed by 4.9 per cent growth in 2022. Meanwhile Australia’s GDP is expected to grow 3.5 per cent in 2021 and 4.1 per cent in 2022, which would be the biggest improvement since 2012.
While many northern hemisphere countries were enduring a second wave of the virus, Australia's economic recovery could be very quick given the country has effectively eradicated COVID-19.
“We now expect Australia to reach its pre-COVID level of GDP in third quarter 2021,” Mr Thanrenou wrote in a note to clients.
“The main drivers are: 1) a vaccine is expected to be more effective and earlier; and 2) this combined with the boost to sentiment from our expectation of ongoing additional material support from Government budgets and the RBA delivering further easing, means the prior build-up of massive savings and left-over stimulus is more likely to be spent ahead”.
The institutional bank’s base case for global growth has been upgraded to their “optimistic vaccine scenario” thanks to the recent rush of COVID-19 vaccine breakthroughs.
The US dollar fell to a more than two-year low on Monday and is set to log its largest monthly fall since July. Driving investors out of the world's reserve currency is a combination of vaccine optimism and bets on more monetary easing in the United States .
Against a basket of currencies, the greenback slipped 0.1 per cent to 91.707, its lowest since April 2018.
The risk-sensitive New Zealand dollar hit a two-and-a-half year high and is headed for its best monthly percentage gain in seven years.
"The themes remain familiar: broad dollar weakness amid improving risk appetite," ANZ Bank analysts said in a note.
"This sentiment is likely to continue into December and the (U.S. Federal Reserve) meeting, at which some further action is likely, given the near-term virus risks in the United States."