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Australian shares fell for the fourth time in five sessions as a profit warning from Kathmandu underlined the impact on retailers of creeping coronavirus lockdowns.

The S&P/ASX 200 finished six points or 0.08 per cent in the red after earlier falling as much as 66 points as Brisbane and Perth joined Sydney and Darwin in lockdown.

The market trimmed its loss as most of the big banks joined Afterpay, Wesfarmers and the supermarkets in positive territory. Utilities and property stocks were among the biggest drags as several companies traded without the right to a dividend.

What moved the market

The Queensland government announced a three-day lockdown for the heavily-populated south-east of the state, Townsville, Magnetic Island and Palm Island after health authorities reported two new locally-acquired cases. Overnight, WA ordered a four-day lockdown after a local breakout seeded by the Sydney cluster expanded to three cases.

Today’s announcements mean more than 10 million Australians or two-fifths of the country will be in lockdown by 6pm tonight. New South Wales health authorities reported 19 new local Covid cases in the 24 hours to 8 pm last night. Northern Territory recorded two more positives. Victoria and SA reported zero new local cases.

“Despite Australia’s relatively good performance in containing COVID to date, our high urbanisation rate and low vaccination rate has now left us increasingly vulnerable to COVID compared to our international peers – especially with the emergence of new more highly contagious variants,” David Bassanese, chief economist at BetaShares, said.   

The damage to retailers from repeated lockdowns was underscored by a profit warning from Kathmandu. The adventure clothing specialist slashed its sales and earnings outlook, citing the impact of lockdowns this year in Melbourne, Sydney and Perth. The share price fell 4.05 per cent.

“The impact of the New South Wales and recent Victorian lockdowns and associated movement restrictions is estimated to be c.$13 million on [earnings before interest and tax],” the company reported. “Uncertainty remains due to the evolving COVID-19 situation in Australia, and this expectation is subject to change.”

The muddy domestic outlook once again overshadowed positive overseas leads. The S&P 500 and Nasdaq Composite both closed at records overnight as tech stocks and high-yield bond proxies rallied. The S&P 500 put on 0.23 per cent. The Nasdaq added 0.98 per cent.

A dip in US futures added to the downbeat mood. S&P 500 futures dropped three points or 0.08 per cent.

Back home, consumer confidence eased a modest 0.2 per cent last week as Sydney’s slide towards lockdown was largely offset by a rebound in the mood in Melbourne. Confidence in Sydney fell 4.6 per cent, according to the ANZ-Roy Morgan weekly survey. Regional NSW fell 6.63 per cent.

“Recent experience suggests sentiment will respond to case numbers and lockdown measures in the coming weeks: if case numbers remain high, confidence is likely to deteriorate, but if they come back under control quickly and restrictions look likely to be short-lived sentiment is likely to rebound,” ANZ senior economist Felicity Emmett said.

Winners’ circle

Tech stocks tried to build on positive US leads, but struggled against the broader market headwind. Nuix gained 4.96 per cent, Technology One 1.87 per cent and WiseTech 1.46 per cent. BNPL players Z1p Co and Afterpay added 0.52 and 0.98 per cent, respectively.

IGA operator Metcash climbed another 5.69 per cent on the back of yesterday’s well-received full-year earnings report. Coles gained 0.53 per cent and Woolworths 0.4 per cent.

A steep decline in bond yields weighed on lenders for much of the session before a late recovery. The yield on ten-year Australian government bonds dropped more than six basis points following a similar move in the US. CBA reversed to a rise of 0.61 per cent, ANZ 0.18 per cent and Westpac 0.15 per cent. NAB lost 0.04 per cent.

Other index heavyweights to make headway included Brambles +1.07 per cent, Wesfarmers +0.72 per cent and Aristocrat Leisure +0.4 per cent.

Medibank Private inched up 0.32 per cent on news it will return to customers $105 million the health insurer saved as the pandemic suppressed claims. Around two million policies will be eligible for premium relief.

“We said right from the start of the pandemic that we would not profit from COVID-19, and that we were committed to returning any COVID-19 savings back to our customers because it is the right thing to do,” CEO David Koczkar said.

Doghouse

REITs sank as much of the sector traded without the right to a dividend. Abacus Property Group dropped 3.07 per cent, Growthpoint 4.25 per cent and Vicinity Centres 3.42 per cent. Waypoint shed 2.59 per cent, Charter Hall Retail 2.33 per cent and SCA Property 2.31 per cent.

Toll road operator Transurban also went ex-dividend, falling 1.66 per cent. Utility APA Group touched a 15-month low, losing 2.91 per cent.

Miners mostly declined amid a general retreat from cyclical stocks overnight as rising Covid rates in Asia raised questions about demand for raw materials. BHP fell 0.7 per cent, Rio Tinto 0.83 per cent and Newcrest 0.58 per cent. Fortescue Metals rallied 0.39 per cent.

African gold explorer Polymetals Resources made an uninspiring debut on the boards, falling 15 per cent to 17 cents. A broker downgrade sent Bega Cheese down 4.07 per cent.

Other markets

Asian markets retreated. The Asia Dow gave up 0.56 per cent, China’s Shanghai Composite 0.74 per cent, Hong Kong’s Hang Seng 0.84 per cent and Japan’s Nikkei 0.84 per cent.

Oil continued to probe one-week lows ahead of Thursday’s OPEC+ meeting. Brent crude eased 14 cents or 0.2 per cent to US$74 a barrel.

Gold slid US$2 or 0.11 per cent to US$1,778.70 an ounce.

The dollar declined 0.09 per cent to 75.62 US cents.

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