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The financial year finished with a whimper as a 69-point rally faded to a skinny 12 points in the closing auction.

The S&P/ASX 200 slashed a strong early advance to 0.16 per cent at the close. The rally broke a two-session losing streak, but continued a run of lacklustre finishes as Covid lockdowns depress buying interest.

Gains in Telstra and the major miners helped secure a winning week and wrap up a ninth straight winning month. The advance was enough for a weekly gain of five points or less than 0.1 per cent. For the month, the index tallied 151 points or 2.1 per cent.

Aside from a fleeting setback in September, the market has risen in a straight line since the pandemic market collapse bottomed out in March 2020. The post-pandemic recovery was already well underway by the start of the financial year, but accelerated to a hefty 12-month bounty of 1,415 points or 24 per cent.

Add in dividends and investors have had a year to remember – the best in the ASX 200’s 20-year history, according to Nine media. The broader All Ordinaries index climbed 26.4 per cent – its best return in 34 years.

What moved the market

The end of the financial year provided a temporary circuit-breaker following a run of downbeat sessions since investors awoke to the threat from the Bondi coronavirus cluster. The last session of the year is traditionally turbo-charged by fund managers “window dressing” portfolios in preparation for reporting to investors.

“While the Australian share market was initially in a tight corner this week due to virus woes, the market seems to be gradually rebounding amid the end of the financial year, a rush of positive corporate news and overnight gains in Wall Street,” Kalkine Group CEO Kunal Sawhney said.

“At a time when Australia is caught between a painfully slow vaccination program and the search for effective COVID-19 eradication strategies, it will be interesting to see how the ASX retains its resilience in the new financial year.”

News today that Alice Springs will join Sydney, Perth, Brisbane and Darwin in lockdown encouraged speculation about the best place to direct funds in the new year.

“The recently imposed COVID-19 restrictions are building a strong case for growth-oriented technology and other stay at home stocks, which topped the gainers’ list in 2020,” Mr Sawhney said.

“The behavioural shift to a digital-first world seems inevitable in the stay-at-home trend,  spurring the demand for ecommerce, Buy Now Pay Later (BNPL) and online services. Consumer staple stocks are also expected to retain strength in virus-induced restrictions amid consumers’ shift towards essential commodities.

“On the flip side, shares of companies engaged in the brick-and-mortar retail, travel and retail sectors may bear the repercussions of fresh lockdowns.”

Today’s session mirrored overnight events in the US, where stocks mostly ended well shy of their highs. The Dow cut a 100+ point rally to nine points or 0.03 per cent. The S&P 500 also finished with a meagre gain of 0.03 per cent. The Nasdaq retained more of its advance, adding 0.19 per cent.

Winners’ circle

Telstra hit its highest level since the start of the pandemic. The share price rose 4.44 per cent on news the telecom sold 49 per cent of its mobile towers business for $2.8 billion. A consortium comprising the Future Fund, Commonwealth Superannuation Corporation and Sunsuper bought the stake in Telstra InfraCo Towers.

“Telstra’s objective in seeking a strategic partner has been to maximise overall value for our shareholders, maintain control of the assets and agree terms that secure Telstra’s mobile network leadership and competitive differentiation into the future. I am pleased that we have been able to achieve that ahead of schedule through this transaction announced today,” CEO Andrew Penn said.

Rio Tinto rose 1.31 per cent as buyers brushed off news the company halted operations at its Richards Bay mineral sands mine in South Africa and declared force majeure on customer contracts. The mine has been blighted by violence apparently triggered by disputes over the employment of locals.

Iluka Resources was the index’s best performer, jumping 11.72 per cent to a nine-year high. The mineral sands miner is seen as one of the prime beneficiaries of Rio’s decision to halt mining at Richards Bay.

BHP climbed 1.06 per cent and Fortescue Metals 0.86 per cent. Other heavyweight advancers included Coles +0.41 per cent, Woolworths +0.34 per cent, Wesfarmers +0.32 per cent and Transurban +0.14 per cent.

Doghouse

Nuix‘s woes continued as the data analytics firm sank 12.99 per cent to a new low. The slump followed confirmation the company is under investigation by the Australian Securities and Investments Commission (ASIC).

The corporate regulator is investigating the firm’s former CFO, Stephen Doyle, as well as possible breaches of the Corporations Act. Nuix said it had not received formal notification of the nature of the twin investigations, but would cooperate.

A downbeat earnings outlook overshadowed a demerger announcement from AGL Energy. The company will split into two publicly-listed businesses. One will contain its power stations, the other its retail businesses. Shareholders seemed more concerned by news this year’s earnings will be at the lower end of guidance and expected to fall again next year. The share price dropped 9.99 per cent.

“For FY22, AGL Energy continues to anticipate a material step-down in earnings as a result of the lower wholesale electricity prices of the past two years now being realised through forward sold positions, as well as… increases to wholesale gas supply costs,” the company said.

Most of the big four banks retreated. ANZ shed 0.32 per cent, Westpac 0.19 per cent and CBA 0.61 per cent. NAB added 0.41 per cent

Gold stocks were pressured by the yellow metal’s decline to its weakest level since mid-April. Newcrest dipped 1.6 per cent, Silver Lake Resources 3.49 per cent and Ramelius 2.59 per cent.

At the pointy end of the market, Afterpay slipped 1.91 per cent, CSL 1.61 per cent, Goodman 0.42 per cent and Woodside 0.31 per cent.

Vicinity Centres fell 0.64 per cent following the resignation of CFO Nick Schiffer.

Other markets

A subdued session in Asia left most major markets little changed. The Asia Dow eased 0.19 per cent. Hong Kong’s Hang Seng shed 0.24 per cent. China’s Shanghai Composite gained 0.32 per cent. Japan’s Nikkei added 0.12 per cent.

S&P 500 futures firmed four points or 0.1 per cent.

Oil added to overnight gains. Brent crude improved 31 cents or 0.42 per cent to US$74.59 a barrel.

Gold faded US$6 or 0.34 per cent to US$1,757.60 an ounce.

The dollar bounced 0.08 per cent to 75.19 US cents.

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