Second positive vaccine result not enough to spur markets

Friday 20th November 2020

Second positive vaccine result not enough to spur markets

Friday 20th November 2020
Written by Chris Lioutas


  • Equity markets had a mixed week, with global markets flat to slightly lower on virus concerns, whilst the local market finished higher.
  • In local stock news, the Australian Stock Exchange was dealt an embarrassing blow to start the week after a “software glitch” caused trading to halt on Monday at 10.24am and they were unable to resolve the issue which saw the market shut for the day. Apparently, the glitch was part of a new trading platform for shares, introduced over the weekend, which had been tested for more than a year.
  • Ramsay Healthcare said operating results continued to be impacted by the virus during September quarter. Costs rose in their Australian operations due to using protective equipment, while elective surgery restrictions in Victoria only eased in September. The company declined to give any earnings guidance.
  • CSL struck a $1 billion 12-year deal with the federal government to provide influenza and other vaccines, as well as anti-venoms. Under the agreement, CSL will invest $800 million to develop a vaccine manufacturing facility to replace its existing site.
  • The Australian securities regulator, ASIC, published a report on the buy-now pay-later sector which showed that the amount of credit provided doubled in the last 12 months. Concerningly, ASIC said 1 in 5 customers were missing payments, and that some of these customers were going without essentials (eg. meals) and pushing closer to their credit card limits, to meet their payments. Missed payments either lock a customer out of using the service or result in additional charges and fees, depending on the operator.
  • Crown Resorts’ plans to open a $2.2 billion casino in Sydney next month were crushed after the NSW gaming regulator found it would pose unacceptable risks. The regulator has decided to withhold approval until an extraordinary probity inquiry into Crown’s fitness to run the casino finishes in February.
  • A2 Milk said sales to Chinese resellers would improve after supply difficulties from virus restrictions. At their AGM, management said they expected only a temporary sales impact from the earlier severe virus restrictions in Victoria, which hampered shipping milk to resellers in China.
  • Insurer IAG ended the week in a trading halt and forced to launch a snap $750 million equity raising to shore up its funding position, after a NSW Court of Appeal decision which found incorrectly worded pandemic exclusions policies to be void which means claims can be made. 


  • Employment in Australia grew modestly at the end of October with a jobs recovery in Victoria as Covid-19 restrictions were eased. Australian Bureau of Statistics data shows payroll jobs grew 0.5% nationally over the fortnight to October 31 and by 1% in Victoria. Key drivers of the lift in payrolls included education and retail, whilst agriculture and construction went the other way.
  • Restaurant vouchers and tax cuts are part of the NSW state budget plans, with the 6-year streak of budget surpluses ending in the year to June 30, going $6.9 billion into the red. The forecast deficit for 20/21 is $16 billion, mainly due to the $29 billion spent on health and economic support packages. The budget also includes a plan to phase out stamp duty in the state, giving homebuyers the option to pay an annual land tax instead. Community consultation is being sought until March.
  • Australian wages rose by just 0.1% in the 3rd quarter, bringing the annual rate down to 1.4%, versus 1.8% at the end of June. Wages growth will be weaker over the next 2 years (at least), but tax cuts should provide some reprieve for households. Wages growth in the private sector has been just 0.1% over both the June and September quarters versus 0.5% and 0.2% for the public sector.


  • Moderna Inc reported that their phase 3 vaccine trial results for Covid-19 show it to be almost 95% effective, providing another potential vaccine to Pfizer’s successful results released last week.
  • South Australia entered 6 days of lockdown after a cluster of 17 cases was identified. That then led the Victorians to shut their border to South Australia and others to consider the same. We then heard of no new cases in South Australia for 2 days, which has meant they will come out of lockdown earlier than expected. This comes at a time when most states were getting ready to open their borders to other states. Any increase in border restrictions from here simply hampers the economic recovery effort whilst destroying state budgets and cross-border businesses.
  • Australia-China relations appeared to get worse this week, with officials in Beijing unveiling a laundry list of grievances and saying that Australia must make the first move to mend the relationship. PM Morrison and Treasurer Frydenberg doubled down making it very clear that national interests come first and foremost. Absent a complete about-face from the PM, many Australian industries affected by the current Chinese restrictions will continue to struggle. There may be some reprieve through the recently signed 15-nation Regional Comprehensive Economic Partnership, with the agreement covering about 30% of global goods and services.
  • The US election result remains undecided with several legal challenges surfacing across multiple states via President Trump and his team. The US electoral system is very different to ours. December 8 is the next key date, in which states can certify the results of their elections, with December 14 being the date in which the Electors from each state vote. It’s only after this date that the President-elect title can be granted, prior to the inauguration on January 20. Throwing more complexity into this is that Georgia will also have a Senate run-off election on January 5 which will then decide the make-up of the US Senate.
  • Brexit talks could drag on for longer as both sides struggle to reach common ground, with state aid and fishing remaining key sticking points.


Chris Lioutas, Director, Insight Investment Consultants

Chris holds the position of asset consultant for Maxim Advisors and is a current sitting member of Maxim's investment committee. 

With permission of the author, this article is presented by Maxim Private Clients Pty Ltd ASFL No. 511972

Disclaimer: This material has been prepared without considering any potential investor's or clients objectives, financial situation or needs. This article is of a factual nature and does not consider the individual circumstances of its recipients. Any information contained within this publication should not be misinterpreted as advice in any way. Please consult your financial advisor should you have any questions or concerns.