The Australian share market has ended six days in a row of gains in a shortened final trading session for the year.
Key points:
- Wall Street posted modest falls overnight, and the ASX followed
- The ASX ended the year up 13 per cent, while Wall Street’s main index gained twice that
- US analysts warn that 2022 could be a more difficult year for markets
The All Ordinaries index fell 0.8 per cent to 7,779, while the ASX 200 lost 0.9 per cent by the close to 7,445, amid a surge in COVID-19 cases.
While the share market ended the last trading day of the year in the red, the benchmark index rose 13 per cent for 2021, boosted by government stimulus, higher company profits and an economic rebound despite the pandemic.
The All Ordinaries rose 13.6 per cent in 2021.
The market also traded this week at the highest in more than three months.
With most market participants on holiday, trading volumes have been much lighter than usual.
In thin market trade, only the education sector increased, with miners giving up their gains.
Among the losers were banks, real estate and consumer stocks.
The best performers in the ASX 200 index were uranium miner Paladin Energy (+6pc), and gold miners Regis Resources (+4.6pc) and St Barbara (+3.9pc).
Biotech firm Mesoblast rose 3.7 per cent after a positive update from US authorities on its potential treatment for acute graft versus host disease in children, where the body is attacked by donated cells or bone marrow transplants.
Heading the other way were Clinuvel Pharmaceuticals (-4.8pc), investment administration firm Hub 24 (-4.6pc) and financial firm Challenger (-3.8pc).
The Australian dollar was steady at around 72.49 US cents in afternoon trade.
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.
