The Australian share market is following Wall Street lower in a shortened final trading session for the year.
- Wall Street posted modest falls overnight, and the ASX is following
- The ASX looks set to end the year about 14 per cent higher, while Wall Street’s main index gained almost twice that
- US analysts warn that 2022 could be a more difficult year for markets
In early trade, the benchmark ASX 200 index was off 0.2 per cent at 7,496, while the broader All Ordinaries index was down the same percentage to 7,827 by 10:24am AEDT.
The final trading session of 2021 will wrap up two hours early at 2:10pm AEDT to allow the few traders not already on holiday to get out to their New Year’s Eve parties.
With most market participants on holiday this week, trading volumes have been much lighter than usual.
In today’s thin market trade, only the mining sector has been posting gains, led by some of the smaller and mid-tier gold producers.
Regis Resources was up 3.75 per cent by 10:28am AEDT, Northern Star up 1.9 per cent and St Barbara 1.8 per cent.
Uranium producer Paladin Energy had climbed 3 per cent to 85.5 cents in early trade, while lithium miner Liontown Resources was up 2.4 per cent.
Buy now, pay later companies Zip (2.2pc) and Afterpay (1.8pc) also posted early gains.
Heading the other way were Healius (-1.5 per cent), developer Mirvac (-1.5pc) and intellectual property specialist IPH Limited (-1.5pc).
Consumer stocks and financials were the worst performing sectors overall, with moderate declines of around half a per cent.
So far this year, with just a few hours of trade to go, the ASX 200 index had gained almost 14 per cent, while the broader All Ordinaries that also includes more of the mid-sized and smaller listed firms was up by just over 14 per cent.
Wall Street outpaces ASX
While Australia’s share market gains this year have been strong, they have been left behind by US markets.
With one trading day left, the S&P 500 was set to end the year more than 27 per cent higher, with the Nasdaq up about 23 per cent and the Dow’s annual rise just shy of 20 per cent.
Each of Wall Street’s main indexes was poised for its sharpest three-year surge since 1997-99, despite two of those years being in the midst of the worst pandemic in a century.
As the year draws to a close, some traders appeared to take some of those profits of the table.
The Dow Jones Industrial Average fell 91 points, or 0.25 per cent, to 36,398, the S&P 500 lost 14 points, or 0.3 per cent, to 4,779 and the Nasdaq Composite dropped 25 points, or 0.2 per cent, to 15,742.
Only four of the 11 major S&P 500 sector indexes traded higher, led by the real estate sector.
The market fell back from earlier session highs.
Investors had cheered a US Labor Department report that the number of Americans filing for new unemployment claims dropped to a seasonally adjusted 198,000 in the week leading up to Christmas, from a revised 206,000 a week earlier. Economists polled by Reuters had forecast weekly applications would rise to 208,000.
In other strong US data, the Chicago purchasing managers’ index (PMI) delivered a print of 63.1, a monthly increase of 1.3 points and 1.1 points above consensus.
A PMI number over 50 signifies expanded business activity over the previous month.
“The strong manufacturer data out of Chicago and impressive initial jobless claims continue to show an economy that is quite healthy, omitting the continued worries obviously over the Omicron variant,” Ryan Detrick, chief market strategist at LPL Financial, told Reuters.
Investors ‘pretty spoiled’ in 2021
But Mr Detrick cautioned that low holiday season trading volume could exaggerate price moves, and he was also cautious about prospects for the new year.
In 2022, investors will shift their attention to expected US interest rate hikes and mid-term elections for the US Congress, where President Joe Biden’s Democrats currently hold a slim majority.
“Mid-term years tend to be the most volatile out of the four-year [election] cycle,” Mr Detrick noted.
“There’s actually a 17 per cent average peak to trough correction during a mid-term year, which is the largest of the four years.