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The share market declined for a second day as the curtain fell on a financial year that delivered a record high for Australian stocks, followed by a sharp technical correction.

The S&P/ASX 200 fell 132 points or 1.97 per cent this afternoon. Heavy selling in the final closing auction of the financial year extended the benchmark’s loss for FY22 to 10.2 per cent.

The index sank 12.4 per cent this quarter after retesting last year’s all-time high in mid-April. This month alone stripped 8.9 per cent off the index.

Today’s session saw early gains in traditional defensive havens fade by the close. Losses among the heavily-weighted financial and materials sectors were joined by declines in utilities and property stocks. Roughly a third of today’s loss came in the closing auction.

What moved the market

A financial year that began in exuberance ended in gloom and uncertainty as soaring inflation, rising interest rates and a grinding war in Ukraine muddied the outlook.

The ASX 200 was still on its way up this time last year, cantering towards a mid-August peak of 7632.8. The index closed today at 6568.1. A return to lockdowns in parts of the country took the steam out of the post-pandemic boom. The market then trended sideways for the rest of 2021.

Russia’s invasion of Ukraine rocked financial markets in January and unleashed a surge in prices that central banks have been unable to contain. China’s stubborn pursuit of zero-Covid added to pricing pressures by clogging the arteries of the global supply chain.

Australian stocks slumped through late April/early May, steadied for several weeks, then fell away again this month. Wall Street’s main indices, inflated by ambitious valuations and easy monetary policy, have had it worse. The S&P 500 is down around 20 per cent for the year and on track for its worst first half since 1970.

Overnight, US stocks steadied in muted trade. The main indices ended mixed, but little changed as GDP data confirmed a slowdown in the economy as the Federal Reserve tightens monetary policy.

A slump in US equity futures this afternoon ensured the ASX 200 added to its loss for the financial year. S&P 500 futures faded 27 points or 0.7 per cent. The decline came as Bitcoin fell back under US$20,000.

Winners’ circle

A dump in the closing auction left no sector unscathed. By the close, just two out of 200 stocks had gained more than 1 per cent. Gaming group PointsBet surged 10.74 per cent as tax loss selling ended. Online retailer City Chic Collective was next best with a rise of 1.1 per cent.

Bond proxies – stocks offering similar safe, reliable returns – provided most of the rest of the advances as Australian yields fell to a three-week low. Domino’s Pizza firmed 0.97 per cent, GrainCorp 0.96 per cent and Sonic Healthcare 0.55 per cent.

Outside the ASX 200, laboratory testing business HRL Holdings climbed 6.67 per cent after the board backed a takeover offer from industry giant ALS. The directors, which own or control 18.59 per cent of shares on issue, said they will accept the offer in the absence of a better deal. ALS shares dipped 1.93 per cent.

Theme park operator Ardent Leisure rose 3.7 per cent after completing the sale of its US cinema business to Dave & Buster’s Entertainment. Ardent will return $455.7 million of the proceeds to shareholders through a capital return and special dividend.

Doghouse

China-facing resource stocks struggled after Beijing reaffirmed its commitment to its zero-Covid policy. President Xi Jinping yesterday said the policy was the most “economic and effective” for China, despite the impact on global trade.

Fortescue Metals dropped 4.73 per cent, BHP 3.53 per cent and Rio Tinto 3.32 per cent.

Energy stocks pared three days of gains after Brent crude broke a three-session win run. Beach Energy eased 3.63 per cent. Woodside dipped 2.99 per cent. Santos shed 1.59 per cent.

The major banks weakened as a decline in long-term borrowing costs crimped margin opportunities. CBA shed 2.82 per cent, ANZ 2.65 per cent, NAB 2.42 per cent and Westpac 2.21 per cent. Fund manager Janus Henderson fell 5.72 per cent.

A plan to buy back up to $100 million shares on-market helped limit CSR‘s fall to 1.46 per cent following a broker downgrade. Shares in the building products manufacturer have lost around a third of their value since the start of May. The company reaffirmed its full-year outlook, which runs to March 31 2023.

AGL Energy faded 1.67 per cent despite news Canadian asset manager Brookfield built a 2.56 per cent stake in the company. Brookfield was part of a consortium that pitched a takeover offer earlier this year with Atlassian co-founder Mike Cannon-Brookes.

Shares in Collection House were suspended after the struggling debt collector appointed administrators. The firm said exhaustive attempts to restructure the business and raise additional funding had failed.

Other markets

A mixed afternoon on Asian markets saw Chinese mainland stocks outperform. The Shanghai Composite gained 1.33 per cent. The Hang Seng index eased 0.21 per cent, the Asia Dow 0847 per cent and Japan’s Nikkei 1.66 per cent.

Oil rose for the fourth time in five sessions. Brent crude firmed 25 US cents or 0.2 per cent to US$112.70 a barrel.

Gold faded US$1.40 or 0.1 per cent to US$1,816.10 an ounce.

The dollar recouped much of its overnight loss, bouncing 0.25 per cent to 68.95 US cents.

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