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The share market fell for the fourth time in five sessions but finished well off its low as investors rotated into defensive plays.

The S&P/ASX 200 skidded 89 points to an eight-month low before a partial rebound. The benchmark more than halved its loss to 36 points or 0.5 per cent after US equity futures rallied and China injected fresh liquidity into its financial markets.

Supermarkets and property stocks led the rebound as traders favoured traditional havens in times of market volatility. Speculative stocks fell heavily for a second day.

What moved the market

Wall Street’s worst week since the initial pandemic sell-off left the ASX nowhere to go but lower. The ASX 200 slumped to its weakest since late May in the opening 15 minutes of trade.

A bounce in US equity futures, crude oil and other “risk assets” helped fuel a partial recovery, but the tone of trade remained defensive. REITs, consumer staples and telecommunications were the session’s best performers.

Hopes for a positive start to a potentially explosive US trading week were sharpened by a Sunday night rally in US futures. S&P 500 futures firmed 31 points or 0.7 per cent. Dow futures rose more than 220 points or 0.66 per cent.

Also helping sentiment was the latest in a series of recent Chinese manoeuvres to stimulate the economy. The People’s Bank of China this morning lowered the funding cost of 14-day reverse repos by ten basis points.

The market hit its early low following heavy US falls on Friday. The Nasdaq Composite sank 2.72 per cent to extend its decline from last year’s peak to 14 per cent. The broader S&P 500 shed 1.89 per cent.

A potentially momentous week ahead brings earnings updates from market behemoths Apple, Tesla and Microsoft, as well as a Federal Reserve rates policy update. In Australia, inflation figures tomorrow could increase pressure on the RBA to join a global shift towards raising rates. However, the bank also has to deal with a collapse in economic activity as the Omicron wave hit.

The scale of the Covid-induced economic crunch was underlined by a collapse in private-sector activity to a five-month low. Markit’s Australia Composite Output Index slumped to 45.3 this month from 54.9 in December.

“The Australian economy had slipped from a state of strong recovery in end-2021 to being affected by the surge in COVID-19 infections at the start of 2022,” Jingyi Pan, Economics Associate Director at IHS Markit, said.

“Supply issues meanwhile remained prevalent, with lengthening of lead times, reports of supply shortages and labour constraints persisting and made worse by the latest surge in COVID-19 cases,” he added.

Winners’ circle

Defensive sectors have suffered this year as a surge in bond yields made their returns less appealing. REITs, consumer staples and telecoms led today’s revival as multi-month sector lows attracted buyers.

Industrial property giant Goodman Group firmed 3.54 per cent. Supermarkets Coles and Woolworths gained 1.18 and 0.78 per cent, respectively. Vicinity Centres put on 2.45 per cent, Abacus Property 1.45 per cent and SCA Property 1.44 per cent.

Uniti Group jumped 9.28 per cent on news of buying interest from potential suitors. The telecom services provider said it had received approaches from “more than one party” interested in acquiring the company.

The session’s other best performers were Corporate Travel Management +3.07 per cent, online property ad group REA +2.85 per cent, explosives specialist Orica +2.69 per cent and Domino’s Pizza +2.51 per cent.

Gold miner Alkane Resources edged up 0.58 per cent after warning production costs will rise due to heavy rainfall and the impact of Covid on labour.   

At the speculative end of the market, Greenstone Resources climbed 17.24 per cent before its shares entered a trading halt, pending a response to a price query from the market operator. Nickel miner Estrella Resources added 8.82 per cent after intersecting massive sulphides at its Carr Boyd Mine.

Virdis Mining and Minerals doubled its value upon listing today, rising 100 per cent. The Perth-based gold explorer intends to drill in Canada’s far north.

Rox Resources gained another 17.35 per cent following last week’s resource upgrade. Cooper Metals gained 13.21 per cent after commencing survey work at its Mt Isa copper-gold project.

Doghouse

Fortescue Metals continued its move towards greener production with the acquisition of the UK’s Williams Advanced Engineering. If the purchase passes UK regulators, Fortescue will pay private equity firm EMK Capital and Williams Grand Prix Engineering US$223 million for the business.

WAE will be integrated into Fortescue’s diversified resources and green energy business with the task of developing electric trucks for mining. Fortescue shares eased 2.01 per cent.

A mixed quarterly dragged diversified miner South32 down 3.67 per cent. Increased nickel, zinc and alumina production was offset by declines in coal, manganese, silver, aluminium and lead.

A production downgrade pushed Regis Resources down 14.29 per cent. Guidance for the Duketon gold operation was revised to 300-340,000 ounces from previous guidance of 340-380,000 ounces. The miner attributed the setback to a wall slip and other operational challenges.

Shares in Adairs dived 21.52 per cent after the online furniture retailer warned first-half sales were expected to be flat. Unaudited group sales were $242 million, $1 million below the equivalent period last financial year. The retailer warned margins had been impacted by increased delivery and marketing costs, and supply chain issues.

The speculative end of the market resisted the initial market retreat for much of last week, but has played catch-up over the last two sessions. The S&P/ASX Emerging Companies Index skidded 3.46 per cent today.

Other markets

Asian markets came off their lows in afternoon trade. The Asia Dow trimmed its loss to 0.72 per cent and Hong Kong’s Hang Seng to 0.92 per cent. Japan’s Nikkei turned neutral. China’s Shanghai Composite rallied 0.2 per cent.

Oil opened the week on the rebound from two days of losses. Brent crude bounced 77 US cents or 0.9 per cent to US$88.66 a barrel.

Gold crept up US$5.90 or 0.3 per cent to US$1,837.60 an ounce.

The dollar eased 0.15 per cent to 71.76 US cents.

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