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The share market fell for the first time in three sessions as fresh Covid restrictions in China weighed on commodity prices and producers.
The S&P/ASX 200 dropped 12.5 points or 0.17 per cent to 7139.
Gains in traditional defensive sectors helped offset declines among mining, energy and tech stocks.
What moved the market
Bulk metal miners and energy producers fell with the price of iron ore and crude oil after China announced a sharp increase in Covid cases. The National Health Commission reported 27,095 new cases, up from 24,435 new cases yesterday.
Commodity prices retreated as authorities locked down the Baiyun district of the manufacturing hub of Guangzhou for five days from today.
“The risk of social transmission of the epidemic in Baiyun district has continued to increase, and the prevention and control situation is grim,” health authorities announced on an official social media channel.
Beijing instructed residents not to travel between districts. Large numbers of malls, office blocks and restaurants were reportedly in lockdown. Authorities in Shijiazhuang, the capital of Hebei province, advised all residents to stay home.
“With more relaxed Covid measures it is not surprising to see the number of cases increase. However, this should not trigger a reversal of the policy direction towards further easing of Covid policies in 2023,” ING’s regional head of research for Asia-Pacific, Robert Carnell, and chief economist for Greater China, Iris Pang, wrote.
Iron ore dropped 1.4 per cent this afternoon on the Dalian Commodity Exchange. Oil added to last week’s 8.7 per cent decline. Brent crude retreated 86 US cents or 1 per cent to US$86.76 a barrel.
Hong Kong’s main index, the Hang Seng, fell 2.09 per cent. On the mainland, the Shanghai Composite shed 0.81 per cent. The Asia Dow gave up 0.84 per cent.
The China news overshadowed positive leads from the US, where the S&P 500 advanced 0.48 per cent on Friday. Trading volumes are expected to dwindle this week as the US winds down for Thanksgiving and the soccer World Cup gets underway in Qatar.
Winners’ circle
Select lithium producers mounted a tentative rebound from last week’s sell-off. Liontown Resources climbed 3.05 per cent, Core Lithium 0.36 per cent and Allkem 2 per cent.
In the utilities space, AGL Energy put on 4.23 per cent, APA 2 per cent and Origin 0.8 per cent. Toll road operators Atlas Arteria and Transurban added 3.76 and 2.01 per cent, respectively.
Stockland, HomeCo and HomeCo Daily Needs were the pick of the REITs, gaining between 1.39 and 1.91 per cent.
Copper miner Sandfire rallied 1.47 per cent after raising $147 million from institutional investors. A retail entitlement offer opens on Friday.
Among the heavyweights, Westpac added 1.48 per cent, Coles 1.18 per cent and ANZ 1.06 per cent. Woolworths firmed 0.98 per cent.
Junior explorer Iceni Gold more than doubled in value after finding gold nuggets at its Guyer project in WA. The miner said the discovery of two ounces of high-purity nuggets confirmed the prospectivity of target areas.
“The shape and composition of the nuggets suggest primary sources are nearby. The results of the air core program at Guyer that covers the same area will help to confirm if there is mineralisation in that area,” the miner’s technical director, David Nixon, said.
Shares in the miner soared from 6.4 cents to 15 cents, a gain of 134.38 per cent.
Shares in app-maker Life360 were placed in a trading halt pending an announcement about a capital raising.
Doghouse
The major ore producers backed off multi-month highs as tightening Covid restrictions in China dampened optimism about stimulus measures for China’s property sector.
Fortescue Metals dropped 3.76 per cent. Rio Tinto fell 2.3 per cent. BHP shed 2.25 per cent.
Energy producers tracked crude prices lower. Woodside Energy gave up 1.4 per cent, Santos 0.95 per cent and Beach Energy 1.45 per cent.
Developer Lake Resources faded 0.95 per cent after resolving a contract dispute with Lilac Solutions. The companies agreed to amend the timeline for developing the Kachi project in Argentina.
Medical diagnostics provider Healius slumped 4.22 per cent to a 28-month low after declining to address speculation it will sell its day hospital business to Queensland Investment Corporation. The firm noted an article published by The Australian but said it “does not comment on media speculation”.
Doubts over full-year earnings dragged QBE down 0.56 per cent. The insurer said “higher than expected catastrophe costs” posed a risk to its full-year outlook. Growth in gross written premiums would help offset a likely blowout in catastrophe costs.
PEXA dropped 3.03 per cent to $13.75 after Link Group sold 10 per cent of its 42.77 per cent holding in the property settlements platform at $13.50 per share.
Link will use the proceeds to pay down debt. The company intends to distribute the rest of its holding to Link Group shareholders. Link shares eased 1.16 per cent.
Nanosonics slumped 12.23 per cent after Friday’s trading update prompted a broker downgrade from Canaccord.
Other markets
US futures tracked Asian markets lower. S&P 500 futures were down 12 points or 0.31 per cent at the Australian market close..
Gold dropped US$7.60 or 0.4 per cent to US$1,746.80 an ounce.
The dollar slipped 0.57 per cent to 64.45 US cents.
