The ASX follows Wall Street’s modest decline, but is heading for a sharp rise during 2021

The Australian stock market follows Wall Street lower in a shortened last trading session of the year.

In early trading, the benchmark ASX 200 index had fallen 0.2 percent to 7,496, while the broader All Ordinaries index fell the same percentage to 7,827 at. 10:24 AEDT.

The last trading session in 2021 ends two hours early at. 14:10 AEDT to give the few shoppers who are not already on vacation the opportunity to come out to their New Year’s parties.

With most market participants on holiday this week, trading volume has been much lower than usual.

In today’s thin market trade, only the mining sector has prospered, led by some of the smaller and medium-sized gold producers.

Regis Resources rose 3.75 percent at. 10:28 AEDT, Northern Star rose 1.9 percent and St Barbara 1.8 percent.

Uranium producer Paladin Energy had risen 3 percent to 85.5 cents in early trading, while lithium miner Liontown Resources had risen 2.4 percent.

Buy Now, Pay Later, companies Zip (2.2%) and Afterpay (1.8%) also showed early gains.

On the way the other way were Healius (-1.5 per cent), developer Mirvac (-1.5 per cent) and intellectual property specialist IPH Limited (-1.5 per cent).

Consumer stocks and finance were the sectors that generally performed worst, with moderate declines of about half a percent.

So far this year, with only a few hours of trading left, the ASX 200 index had risen almost 14 percent, while the broader All Ordinaries, which also includes several of the medium-sized and smaller listed companies, rose by just over 14 percent.

Wall Street surpasses ASX

While Australia’s stock 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 percent higher, with the Nasdaq up about 23 percent and the Dow’s annual rise just 20 percent.

Each of Wall Street’s main indices was ready for its sharpest three-year rise since 1997-99, despite two of those years being in the midst of the worst pandemic of a century.

As the year drew to a close, it seemed that some traders were taking some of these profits off the table.

The Dow Jones Industrial Average fell 91 points or 0.25 percent to 36,398, the S&P 500 lost 14 points or 0.3 percent to 4,779 and the Nasdaq Composite fell 25 points or 0.2 percent to 15,742.

Only four of the 11 major S&P 500 sector indices traded higher, led by the real estate sector.

The market fell back from previous session heights.

Investors had cheered on a report from the U.S. Department of Labor that the number of Americans applying for new unemployment applications fell to seasonally adjusted 198,000 in the week leading up to Christmas, from revised 206,000 a week earlier. Economists polled by Reuters had predicted that weekly applications would rise to 208,000.

In other strong U.S. 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 above 50 means increased business activity compared to the previous month.

“The strong producer data from Chicago and the impressive initial unemployment applications continue to show an economy that is quite healthy, without omitting the continuing concerns of course about the Omicron variant,” Ryan Detrick, chief marketing strategist at LPL Financial, told Reuters.

Investors “pretty spoiled” in 2021

But Mr Detrick warned that low trade volumes during the holiday season could exaggerate price movements, and he was also cautious about the outlook for the new year.

In 2022, investors will shift their attention to expected US rate hikes and midterm elections to the US Congress, where President Joe Biden’s Democrats currently have a slim majority.

“Medium-term years tend to be the most volatile out of the four years [election] cycle, “Mr. Detrick remarked.

“There’s actually a 17 percent average peak to lowest correction over an intermediate year, which is the largest of the four years.

ABC / Reuters

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