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Australian shares succumbed to a regional sell-off, surrendering early gains as growing tensions between China and the west hurt risk appetite.
The S&P/ASX 200 eased seven points or 0.1 per cent. Asian markets declined following tit-for-tat sanctions between Europe and China. The Shanghai Composite slumped 1.19 per cent, dragging the Asia Dow down 0.81 per cent.
What moved the market
Retreats in energy, tech and bank stocks outweighed shrinking gains in miners and bond surrogates as the session wore on. Afterpay and the big four banks were among the deadweights. Telstra and the major iron ore producers cushioned the market from a deeper loss.
The session peaked mid-morning with a gain of 34 points and lost ground as US futures tracked Asian markets into the red. Hong Kong’s Hang Seng shed 1.18 per cent. Nasdaq futures gave up 0.4 per cent and S&P 500 futures 0.2 per cent.
A coalition of western nations including the US and European Union announced sanctions yesterday on Chinese officials for alleged human rights abuses against Uyghur Muslims. China immediately announced retaliatory sanctions against several EU politicians. The hostile exchange undermined buying interest in the region, particularly among foreign investors according to a Chinese analyst quoted by Reuters.
The political manoeuvring overshadowed broadly positive leads from the US. The Nasdaq Composite climbed 1.23 per cent overnight and the S&P 500 added 0.7 per cent following a retreat in bond yields.
Winners’ circle
The big three iron ore producers steadied near multi-week lows. Fortescue Metals gained 1.3 per cent and BHP 1 per cent. Rio Tinto eased less than 0.1 per cent. Rio and Fortescue fell yesterday to their weakest levels since early December after tightening environmental protections in China’s main steel-producing region drove ore prices to six-week lows.
Utilities, telecommunications, healthcare and REITs – low-risk assets that attract investment flows when returns on bonds weaken – were the best of the sectors. AGL Energy climbed 5.1 per cent, Sonic Healthcare 3.5 per cent, ResMed 3.3 per cent and Goodman Group 1.7 per cent. CSL added 0.3 per cent. The Australian ten-year yield declined four basis points this afternoon.
Telstra advanced for the seventh time in eight sessions, rising 2.5 per cent. The telecommunications giant yesterday announced plans to revise its corporate structure to unlock value.
Other notable gains at the top end of the market included Brambles +2.7 per cent, Transurban +0.8 per cent, Newcrest +0.5 per cent and Woolworths +0.1 per cent.
Pharmaceutical supplier Sigma Healthcare jumped 4.5 per cent after beating full-year earnings guidance. Underlying earnings increased by 39.2 per cent to $81.1 million.
Strong sales at its Rip Curl surf stores helped Kathmandu resume dividend payments. Shares in the adventure sport retailer surged 9.3 per cent after the company announced a 12.9 per cent bump in half-year sales and a 19 per cent increase in underlying earnings.
Newly-listed Airtasker almost doubled in value upon debut before trimming its gains. Shares in the services platform that listed at 65 cents hit $1.16 before easing to $1.05, a gain of 61.5 per cent.
Coalminer New Hope inched up 1.5 per cent after scraping out a half-year pre-tax net profit of $900,000. A rebound in coal prices helped offset a decline in production. Rival Whitehaven Coal eased 1.1 per cent as strong production at Maules Creek partly offset the impact of flooding in NSW.
Doghouse
Travel and tourism stocks mirrored US declines after fresh lockdowns in Europe dented optimism about the outlook for international travel. Flight Centre sank 4.2 per cent, Corporate Travel Management 3.9 per cent, Webjet 3.4 per cent and Qantas 2.3 per cent.
The banks were the biggest drags on the index. ANZ fell 1.3 per cent, Westpac 0.9 per cent, NAB 0.7 per cent and CBA 0.4 per cent. Woodside Petroleum dipped 1 per cent, Aristocrat Leisure 1 per cent and Coles 0.1 per cent.
Xero climbed 1.2 per cent to its highest level in three weeks, but the wider tech sector retreated as Afterpay sank. The buy now pay later leader fell 2.2 per cent. Nearmap shed 2.8 per cent and Technology One 1.3 per cent.
Some of the heat came out of yesterday’s rally in gaming stocks a day after Blackstone floated a takeover offer for Crown Resorts. Star Entertainment eased 2.8 per cent, Crown 1 per cent and SkyCity 0.6 per cent.
Other markets
Oil remained under pressure from European lockdowns. Brent crude declined 64 cents or 1 per cent to US$63.98 a barrel. Gold fell $3 or 0.2 per cent to US$1,735.10 an ounce.
The dollar faded 0.56 per cent to 77.02 US cents.
