U.S. consumer prices rose 0.4% in December, led by a sharp rise in gasoline prices.
Last month’s increase, the largest in four months, followed a 0.2% rise in November and no change at all in October, according to Labor Department numbers released Wednesday.
Inflation for all of 2020 rose a modest 1.4%, well below the Federal Reserve’s 2% target. Analysts believe inflation will remain subdued with the U.S. economy still unable to break out of a pandemic-induced downturn.
For December, energy prices rose 4% with gasoline prices surging 8.4%. Even with that big jump, gasoline prices are 15.2% below where they were a year ago, when people were still commuting to work. Food costs rose 0.4% in December and are 3.9% higher than a year ago.
Core inflation, excluding volatile food and energy, rose a slight 0.1% last month, and just 1.6% over the past 12 months.
Inflation has been dormant over the past decade, a development that is allowing the Federal Reserve to keep interest rates at ultra-low levels during a surge in Covid-19 cases that has forced more business shutdowns at a time when millions are out of work.
Kathy Bostjancic, chief U.S. financial economist, said the benign inflation performance will likely mean that the Fed does not start raising interest rates until 2024.
“The Fed’s policy objectives signal that monetary policy will remain very accommodative for a considerable time,” Bostjanci said.
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Investors have enjoyed a gain of about 1.5 per cent from the first session of 2021 on the Australian share market, after miners and particularly Fortescue Metals powered indices higher.
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Australian shares have risen slightly despite COVID-19 restrictions tightening in Victoria and NSW.
The Australian dollar is trading flat at 77.06 US cents
Asian markets have started the year strong with Japan’s Nikkei rising to a 30-year peak
Elections in the US on Wednesday will determine which party controls the Senate
The ASX 200 and All Ordinaries both rose 0.95 per cent by 12:00pm AEDT on Monday to 6,651 and 6,915 points respectively.
But the rise is not expected to last as the number of cases of coronavirus linked to Sydney’s Northern Beaches outbreak continues to grow.
Victoria recorded three new locally acquired cases of COVID-19 on Monday after testing sites filled up on the weekend, and residents of Greater Sydney now face $200 fines for not wearing a face masks in indoor venues.
Unsurprisingly, travel and casino stocks dipped, including Corporate Travel Management (-3.1pc), SkyCity Entertainment (-1.7pc), New Zealand’s Auckland International Airport (-1.1pc) and Flight Centre dropping early before regaining ground (+0.5pc).
Link Administrative Holdings led the bottom movers, tanking 14.5 per cent after it said SS&C Technology Holdings had withdrawn its takeover bid.
IDP Education was a top mover by midday rising 3.9 per cent and healthcare software company Pro Medicus followed suit (+3.6pc).
The big four banks have all risen between 1 and 1.5 per cent and the Australian dollar is trading flat at 77.06 US cents.
The tech and consumer staples sectors recorded the strongest start to trading with buy-now-pay-later company Afterpay up 1.5 per cent to $119.7 and Woolworths up 1.5 per cent.
Australia’s gold sub-index has risen almost 3 per cent with spot gold jumping 0.7 per cent to $1,911.90 an ounce.
Dacian Gold and Chalice Mining are biggest gainers in the sub-index, climbing as much as 8.5 per cent and 7.7 per cent, respectively.
Index heavyweight New Crest mining also rose 2.7 per cent.
Elections to determine if Democrats or Republicans control the senate
Investors are cautiously watching runoff elections in Georgia for two US senate seats on Tuesday (local time) that will determine which party controls the Senate.
If the Republicans win one or both, they will retain a slim majority in the chamber and can block president-elect Joe Biden’s legislative goals and judicial nominees.
“If Democrats win both races, vice-president-elect Kamala Harris would be the tie-breaking vote, giving the party unified control of the White House and Congress,” analysts at CBA said.
“This would raise the likelihood a material US infrastructure spending package gets fast-tracked through Congress.”
Minutes of the Federal Reserve’s December meeting, due on Wednesday, should offer more detail on discussions about making their forward policy guidance more explicit and the chance of a further increase in asset buying this year.
The data calendar includes a raft of manufacturing surveys across the globe, which will show how industry is coping with the spread of the coronavirus, and the closely watched ISM surveys of US factories and services.
Meanwhile, Asian share markets got the new year off to a solid start on Monday on expectations central banks would keep money cheap while the rollout of coronavirus vaccines helps slowly revive the global economy.
The largest global stock index, MSCI (outside Japan) edged up 0.1 per cent, a whisker from a record high.
Japan’s Nikkei rose 0.4 per cent to reach peaks not seen since August 1990, having added 16 per cent last year.
Oil prices have steadied after a couple of months of solid gains, with Brent meeting resistance around $52.50 a barrel. The rebound still left Brent down 21.5 per cent for the year.
On Monday, Brent crude futures fell 8 cents to $51.72, while US crude eased 12 cents to $48.40 a barrel.
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More than 4 per cent of 11 million residents in Wuhan — where COVID-19 was first detected — may have been infected with the virus, a new study by China’s top disease control agency shows.
Experts say the discrepancy between the official figures and actual case numbers is to be expected
Authorities initially did not count asymptomatic cases, which may have contributed to the discrepancy
Coverage of the CDC report by state-owned media has been sparse
The Chinese Centre of Disease Control and Prevention (CDC) published the results of a serological study of some 34,000 residents from Wuhan and other Chinese cities on its WeChat account earlier this week.
The post said the study was conducted one month after China successfully controlled the epidemic earlier this year, but did not specify which month.
The CDC said it found about 4.43 per cent of survey participants from Wuhan had COVID-19 antibodies in their blood.
Several mainstream international media outlets including the BBC and New York Times calculated that based on Wuhan’s population of 11.2 million people, nearly 500,000 people may have contracted COVID-19.
This figure would be 10 times the official count of 50,000 confirmed cases reported by the Wuhan Municipal Health Commission, not including asymptomatic cases.
Discrepancy in numbers ‘likely evidence of what did happen’
Terry Nolan, who is the Doherty Institute’s head of vaccine and immunisation research group in Melbourne, told the ABC this discrepancy was to be expected, as those counting cases during the early stages of Wuhan’s epidemic would have missed a lot of cases.
“In Wuhan in the beginning, no-one knew how [the virus] was behaving,” Dr Nolan said.
He said the 4.43 per cent antibody rate among those sampled in Wuhan was “where you’d expect it to be”, given that retrospective serological surveys often pick up antibodies in young people, who were less likely to have exhibited any symptoms during the initial outbreak.
To date, the CDC has not released the technical data from the study, which would show how the virus moved through different demographic groups, such as age, gender, or occupation.
Dr Nolan said it was also critical for people not to “jump to conclusions” about the numeric discrepancy signalling some greater conspiracy.
“The fundamental thing that underlies the suspicion [of China] is that the numbers are being manipulated for some greater political purpose. That’s something I’m very sceptical about,” Dr Nolan said.
When censorship and science collide
The CDC’s findings were first released on its official WeChat account earlier this week, though coverage of the report by state-owned media has been sparse.
While there is a report on Xinhua, another article on the findings on state-owned China Internet Information Centre — which also suggested that Wuhan could have recorded around 500,000 cases — was taken down last night.
No other state-owned Chinese media has since reported the near-500,000 projection.
However, the ABC has identified some 160 posts discussing the report on Chinese social media platform Weibo.
It is unclear if there have been Government-led attempts to censor, or downplay the findings of the CDC report in local media.
However, China’s censorship in general has led to criticism of Beijing’s handling of the pandemic in its early stages.
“I’m not naive about the way in which China operates as a country, but equally there are very fine Chinese scientists and epidemiologists, many of whom trained in Australia, and celebrate what we do internationally,” Dr Nolan said.
At the height of Wuhan’s epidemic in February, Matthew Kavanagh, a specialist in global health and political science at Washington’s Georgetown University, wrote in The Lancet that Beijing’s top-down control of information hindered its capacity to get on top of the virus when it first emerged.
“Healthcare workers suspected an outbreak in early December, 2019, but information with which the public might have taken preventive measures was suppressed, and communication channels that might have alerted senior officials to the growing threat were shut down,” Dr Kavanagh wrote.
“Police detained a clinician and seven other people posting reports on 2019-nCoV, threatening punishment for spreading so-called ‘rumours’.
“Social media was censored; a preliminary analysis of Weibo and WeChat published on China’s biggest online platform showed outbreak discussions were nearly non-existent through much of January, 2020, until the Chinese Government changed its official stance on Jan 20, 2020.”
More than 50 sporting bodies have called on the government to allow community sport to return in areas in the higher tiers of coronavirus restrictions “as soon as possible”.
A joint statement – signed by organisations including the Football Association, England and Wales Cricket Board and the Lawn Tennis Association – also called for the return of fans.
It said efforts to increase sporting participation were “vital”, describing the sector as “essential to the nation’s recovery”.
Under current coronavirus restrictions in England, a maximum of 4,000 fans are allowed at outdoor events in tier one and up to 2,000 supporters can attend in tier-two areas but none in tiers three and four.
In tier four, indoor gyms and sports facilities must close. In tier three they can open but indoor group activities are not allowed.
The statement, which the organisations have called a “New Year’s resolution”, is part of a campaign entitled #SaveOurSports which launched in September with the aim of protecting community sport during the pandemic.
The organisations thanked the government “for their support to date in getting elite and community sport back being played”.
The statement continued: “We ask for the Government to do the same for community sport and activity in the higher tiers of restrictions to ensure people can get back to participating in what they love as soon as possible.”
The bodies called for sport “to be at the heart of our nation’s post-Covid renewal in 2021 and beyond”, adding that “there is a golden opportunity for sport and physical activity to build back better”.
“Our specific aim is to see activity and levels of participation return to their pre-Covid levels by 2022,” the statement said.
Returns wise, Novavax (NVAX) has undoubtedly been the most successful coronavirus stock of them all, with 2020 gains hitting an amazing 2920%. However, heading into the year’s final stretch, the vaccine specialist’s COVID-19 vaccine candidate NVX-CoV2373 has been at danger of getting cut adrift from the competition.
Both Moderna’s (MRNA) mRNA-1273 and Pfizer (PFE)/BioNTech’s (BNTX) BNT162b2, have already been granted emergency use authorization and are already being distributed across the U.S. and the world.
But now Novavax can finally work toward closing the gap. At long last, on Monday, the company announced the U.S. and Mexico Phase 3 study’s lift off.
The PREVENT-19 trial evaluating NVX-CoV2373 has been launched in 115 locations and 30,000 participants are expected to enroll in the program. With more than 25% of participants over the age of 65, and black/African American patients making up an additional 15%, the study has been specially designed to assess the vaccine candidate’s impact on as diverse a population as possible.
Novavax already has a fully enrolled Phase 3 clinical trial in process in the U.K. with an interim data readout expected shortly.
The company might be lagging behind the competition, but its offering has unique properties differentiating it from the already available vaccines. Unlike Moderna’s vaccine which must be kept in a freezer and Pfizer/BioNTech’s offering which requires even more extreme ultra-cold temperatures, NVX-CoV2373 can be stored in a refrigerator.
B.Riley analyst Mayank Mamtani says a first interim data readout from the U.S. study is likely in early 2Q21. The analyst believes Novavax’ offering could still have a starring role in the global distribution of Covid-19 vaccines and tells investors to buy the recent dip.
“We remain favorably biased towards our bull case scenario of NVAX’s best-in-class immunogenicity translating into 90%+ VE and differentiated target product profile in terms of reactogenicity to position ‘2373 as a preferred global vaccine solution,” the 5-star analyst said. “We believe NVAX 12/28 equity weakness (-10%), largely attributed to AZ’s positive comments regarding AZD1222 being reviewed by U.K. regulators this week, presents a compelling buying opportunity.”
Accordingly, Mamtani’s rating stays a Buy, whilst the $223 price target remains, too. Gains of 85% could be in the cards, should the target be met over the next 12 months. (To watch Mamtani’s track record, click here)
Barring 1 Sell, all 5 other current analyst reviews rate Novavax a Buy. NVAX’s Moderate Buy consensus rating is backed by a $183.20 average price target, implying potential upside of 52% in the year ahead. (See NVAX stock analysis on TipRanks)
To find good ideas for coronavirus stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
U.S. stock index futures were slightly higher in overnight trading on Wednesday, ahead of the final trading day of the holiday-shortened week.
Futures on the Dow Jones Industrial Average advanced 48 points. S&P 500 futures rose 0.12%, while Nasdaq 100 futures advanced 0.08%.
The S&P 500 finished Wednesday’s session little changed — rising less than 0.1% — after sliding in the final minutes of trading. Still, the benchmark index did manage to snap a three-day losing streak. The Dow gained 114.32 points, or 0.38%, after rising more than 270 points at one point during the session. The Nasdaq Composite hit a record high, before erasing those gains and closing 0.29% lower.
“It was selling in the index-dominating tech names that weighed on the SPX, not broad market weakness,” Adam Crisafulli of Vital Knowledge said in a note. Netflix and Microsoft were among the tech names that declined, falling 2.4% and 1.3%, respectively.
The late-day slide came as investors took profits into the end of the year, and as President Donald Trump vetoed a sweeping defense bill. The move came after he called Congress’ $900 billion Covid relief package — months long in the making — an unsuitable “disgrace.” The president took particular issue with the direct payments, which he said should be lifted from $600 to $2,000.
House Speaker Nancy Pelosi agreed with Trump’s call for higher payments, and said House Democrats will seek to pass a standalone bill by unanimous consent Thursday.
The major averages are mixed heading into the final day of the holiday-shortened week. The Nasdaq is on track to end the week higher, while the Dow and S&P 500 are modestly lower for the week. The Russell 2,000, which hit a new intraday and all-time closing high on Wednesday, is also higher for the week. Amid strength in small cap names, the index is on track for its eighth straight week of gains — the longest weekly winning streak since Feb. 2019.
On the data front, U.S. jobless claims totaled 803,000 during the week ending Dec. 19, better than an estimate of 888,000 according to economists polled by Dow Jones. However, core durable goods and personal income both fell short of expectations in November.
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