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The share market’s end-of-year winning run ended at six as investors closed the books on a strong year for equities.

A late sell-off on Wall Street weighed during a holiday-shortened session. The S&P/ASX 200 slipped 69 points or 0.92 per cent to its first loss since December 20.  

The ASX closed two hours earlier than usual ahead of a three-day break for New Year. Slender gains in Afterpay and some of the miners were outweighed by declines in banking and consumer stocks.

What moved the market

The global “Santa rally” started to fray overnight ahead of year-end. The S&P 500 and Dow set early records before succumbing to selling pressure. The S&P 500 gave up  0.3 per cent. The Dow fell 0.25 per cent to its first loss in seven sessions.

With Wall Street set to trade twice before the ASX reopens on Tuesday, Australian investors chose to pre-empt any looming weakness. The ASX 200 had put on 221 points or almost 3 per cent in the countdown to the new year.

Today’s truncated session drew the curtain on a positive year for investors. The ASX 200 tacked on 13 per cent in 2021 despite a second-half wobble as border closures and lockdowns dented the economy.

“When we compare this year with the unprecedented 2020, I would say that there was significant improvement, marketwise, but there was plenty of volatility along the way,” Kalkine Group CEO Kunal Sawhney said.

“I think that there were a few themes that dominated the markets this year: COVID-19 and associated developments, inflationary pressures, decarbonisation, the Metaverse and of course, China. Overall, it has been a wild ride!”

The index hit an all-time high at 7628.9 on August 13 before the Delta outbreak triggered renewed restrictions. The index closed at 7444.6 this afternoon, thanks to a late run of gains across the festive period. This year was the strongest since a 23 per cent return in 2019.

“The tenacity of the stock markets has been quite commendable. Gains did pour in, despite economic challenges, including rising inflation, global supply chain interruptions and outbreaks of additional contagious variants of the COVID-19 virus,” Sawhney added.

Wall Street has fared even better, supported by pandemic-proof global giants such as Apple, Amazon, Meta (Facebook) and Alphabet (Google). With a session left to trade, the S&P 500 was up more than 27 per cent for 2021. The Dow gained 19.2 per cent.

So what can investors expect next year? Kalkine’s Sawhney said there is no escaping the long cloud cast by the pandemic.

“The market path for 2022 will ultimately be decided by the degree of impact of the COVID-19 pandemic, particularly after the recent spike in cases and uncertainty caused by the new omicron variant,” he said. 

“To this regard and others, governments and central banks will be dominant forces shaping the market’s trajectory in 2022. Investors can also expect more rumour about a market correction this year as at least in the first few months, it’s likely that the spell of volatility might continue.”

Winners’ circle

Gold miners provided some of the session’s best gains after the yellow metal firmed above US$1,800 an ounce. Regis Resources put on 4.56 per cent, St Barbara 3.9 per cent and Ramelius 3.63 per cent. Uranium miner Paladin was another standout, rising 6.02 per cent.

Mesoblast climbed 3.68 per cent on progress with the US regulator regarding the firm’s experimental treatment for children with severe inflammations caused by bone marrow transplants. The company met with a division of the Food & Drug Administration to discuss outstanding items necessary to obtain approval for the treatment.  

Bega Cheese advanced 3.09 per cent a day after Andrew Forrest’s investment vehicle emerged as a substantial holder on the share register.

The party continued at the speculative end of the market. The S&P/ASX Emerging Companies Index rallied 1.33 per cent to a six-week high.

Microcaps have significantly outperformed the big end of town this year. The Emerging Companies Index has put on almost 42 per cent, versus a 12.1 increase in the S&P/ASX 20 index of market behemoths.

The best of the heavyweights today were Newcrest +0.95 per cent, Afterpay +0.62 per cent, Rio Tinto +0.57 per cent and Fortescue Metals +0.37 per cent.

Doghouse

All 11 sectors declined. The heavyweight financial sector was among the biggest weights, falling 1.23 per cent from yesterday’s six-week peak. CBA retreated 1.24 per cent, ANZ 1.11 per cent, NAB 1.64 per cent and Westpac 0.7 per cent.

Other heavyweight drags included Goodman Group -1.71 per cent, Woolworths -1.32 per cent and Wesfarmers -1.3 per cent. CSL dipped 0.61 per cent, Telstra 0.48 per cent and Coles 0.55 per cent.

A week-long rally in Covid testers continued to fade. Healius dropped 1.68 per cent. Sonic Healthcare shed 0.17 per cent. Australian Clinical Labs bucked the trend, rising 2.65 per cent. All three hit record levels in recent days.

Other markets

US futures declined despite improvements on most Asian markets. S&P 500 futures slid nine points or almost 0.2 per cent.

The Asia Dow put on 0.4 per cent, China’s Shanghai Composite 0.44 per cent and Hong Kong’s Hang Seng 1.68 per cent. Japan’s Nikkei reversed 0.4 per cent.

Oil skidded for the first time in eight sessions. Brent crude fell 72 US cents or 0.9 per cent to US$78.81 a barrel.

Gold extended overnight gains, rising US$3.50 or 0.2 per cent to US$1,817.60 an ounce.

The end-of-year recovery in the dollar continued with a rise of 0.1 per cent this afternoon to 72.56 US cents.

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