ASX avoids COVID gloom to cap record year

Mining and Telstra helped support the index, while big banks and CSL biotech lost some heat.

The session closed a ninth consecutive monthly gain for the stock market, with 11 of the past 12 months ending higher as investors continue to invest in stocks, supported by an unprecedented river of stimulus and record interest rates .

“It’s amazing because it’s not just the best year, it’s the best year as the economy went through a recession,” said Tribeca Alpha Plus fund manager Jun Bei Liu.

“The drop in income has not been as deep as expected, JobKeeper has really saved everyone.”

The post-COVID market recovery was already underway at the start of the 2020-21 fiscal year, but rising commodity prices, a surprisingly strong earnings season in August, and a better-than-expected federal budget in October were indicators early as the boost was not a lightning bolt in the pan.

Joe Biden’s investor-friendly nomination for US president in November sparked the strongest month for local stocks in three decades, as the recovery – both for equity portfolios and the economy in general – accelerated beyond what the central banks had expected.

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The continuing round of economic data signaled a switch in February of names from high-growth tech, healthcare and e-commerce that had performed well at the start of the pandemic to value stocks such as banks, energy companies. , minors.

The ASX 200 hit record highs in early June and – despite a flat end of the month – remains a touching distance from the record close of 7386.2.

The dynamics of creeping inflation fears and a value-driven recovery were perhaps best illustrated by the strongest ASX 200 stocks of the year, which include a number of miners.

Explorer Chalice Mining was the top stock on the index and climbed 645% – including a 4.7% gain on Wednesday – to end the year at $ 7.42.

Pilbara Minerals rose 522.6% to end the year at $ 1.45 and fellow lithium miner Orocobre gained 180 percent to $ 6.47. Lynas Rare Earths rose 200% to $ 5.71 and iron ore miner Mineral Resources gained 153% to $ 53.73.

Chalice mining was the top performing ASX 200 stock of 2020-21. Credit:Nic walker

Retirement platform Hub24, fitting maker Reece, radio and metal detector company Codan, and car dealership Eagers Automotive were also in the top 10 winners for 202-21.

Fallen tech darling Nuix has dominated the loss market, falling 58.4% since its listing in December. It closed at a new high of $ 2.21 as a former executive faces insider trading allegations.

Kalkine Group chief executive Kunal Sawhney said the year-end swing for tech and other home stocks could still prove temporary as the current foreclosure scenario rekindles the industry’s appeal. .

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“The new lockdown in parts of Australia draws a favorable scenario for tech players, increasing the likelihood of behavioral changes towards a digital first world,” he said on Wednesday.

“While inflationary worries have taken a break in the US market following the Fed’s stance that inflationary pressures will be transient, soaring fuel and real estate prices indicate further spikes in inflation over the course of coming year. “

Mr Miller said the US Fed’s move to control inflation remained the biggest risk for investors.

He said if the RBA had so far shown little appetite to remove ultra-accommodative policy settings, it wouldn’t matter if the Fed “crushed monetary breaks.”

“It will have repercussions around the world … and I think the markets are currently underestimating the risk of inflation,” Miller said.

As for the year ahead, Miller sees the federal government and the central bank maintaining their support.

“I think at the national level – and I think we’ll see a bit of that in July – I think the RBA will be extremely careful in removing all support,” he said.

“As far as (the RBA board meeting next Tuesday), I think any change will be on the margins, or almost of a technical nation.

“If there are episodic upheavals due to lockdowns or anything to come, I think the central bank and the government will fill the void for now at least. So I don’t see any particular motivation for domestic influence or to deter the market from its current exuberance. ”

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