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Aussie shares fell for a second day as a coronavirus outbreak in Queensland and soft leads from Wall Street sapped risk appetite.

The S&P/ASX 200 sank 61 points or 0.9 per cent to extend its two-day loss to 86 points. Skinny gains in Telstra, ANZ and Westpac were outweighed by declines in the miners, CBA, NAB and CSL.

What moved the market

For the second day running, the market opened strongly but quickly lost altitude. Selling accelerated after Queensland Health reported eight new locally-acquired cases of Covid-19. The increase raised fears the state government will be forced to extend a three-day lockdown in Greater Brisbane due to end on Thursday.

“New Covid-19 cases remaining low in Australia – but another 8 local cases today in Qld => a high risk that the snap Brisbane lockdown will continue through Easter,” tweeted AMP Head of Investment Strategy Shane Oliver.

The ASX retained its losses despite partial rebounds in Asian equities and US futures. The Asia Dow cut its deficit to 0.12 per cent as the Shanghai Composite rose 0.59 per cent, Hong Kong’s Hang Seng 1.18 per cent and Japan’s Nikkei 0.06 per cent. S&P 500 futures edged up five points or 0.1 per cent.

Overnight, US stocks closed mixed but broadly lower amid contagion fears following the collapse of a private hedge fund. The S&P 500 eased 0.09 per cent and the Nasdaq 0.6 per cent. The Dow gained 0.3 per cent.

A 16-month high in consumer confidence did little to stem selling here. The ANZ-Roy Morgan Consumer Sentiment Index climbed 1.7 per cent to 112.3, the strongest reading since October 2019.

“Consumer confidence recovered with a gain of 1.7% as the weather improved along the east coast, after heavy rainfall and floods wreaked havoc,” ANZ Head of Australian Economics, David Plank, said. “The rise in overall confidence to almost its long-run average is encouraging and points to the end of JobKeeper being successfully navigated overall, if not without some difficult individual circumstances.”

Winners’ circle

A broker upgrade and optimism over a proposed restructure helped drive Telstra to a seven-month high. The share price rose 1.2 per cent after Morgan Stanley raised its rating from underweight to overweight. The telecom giant has advanced on ten of the last 13 sessions.

A broadly positive session for tech stocks saw Megaport add 2.9 per cent, Xero 2.2 per cent and WiseTech 2 per cent. Afterpay fell 0.5 per cent.

“Interestingly, the technology space has recuperated a bit that was under pressure when bond yields were rising steeply,” Kalkine Group CEO Kunal Sawhney said. “Falling yields on 10-year U.S. Treasury notes from a 14-month high and repeated reassuring comments from the Fed over inflation concerns are giving a leg up to the sector.”

Industrial giant Transurban gained 0.2 per cent. A mixed session for the banks saw ANZ add 0.4 per cent and Westpac 0.1 per cent, while CBA shed 0.2 per cent and NAB 0.8 per cent.  

Doghouse

A rebound in iron ore failed to give the big three producers a lift amid ongoing worries about the impact of Chinese pollution controls. Rio Tinto sank 2.4 per cent, Fortescue 2.3 per cent and BHP 2.1 per cent.

A three-week low in gold weighed on precious metals miners. Resolute eased 7.7 per cent, Silver Lake Resources 5.6 per cent and Newcrest 1.3 per cent. Nickel Mines dropped 5.3 per cent after raising US$175 million through unsecured notes.

“Aussie gold stocks seem to be under pressure as well, driven by dipping gold prices amid a rally in the US dollar to a two-week peak.” Kalkine’s Sawhney said.

Utilities was briefly the best-performing sector after energy giant AGL outlined plans to split the business in two. “New AGL” will contain the retail division, while “PrimeCo” will hold the electricity generating assets. If approved by regulators and shareholders, the restructure will proceed before the end of the financial year. AGL’s share price reversed from a gain of more than 3 per cent to a loss of 3.5 per cent after the company later announced the Victorian government had knocked back the firm’s proposed gas import jetty at Crib Point.

Santos fell 1.1 per cent after deciding to proceed with a US$3.6 billion gas project off the coast of the Northern Territory. The company said the investment would be the largest in Australia’s oil and gas sector since 2012. The project will create 600 jobs during construction and secure 350 jobs during 20 years of production.

Several companies fell as they traded without the rights to a dividend. Cromwell Property Group shed 3.6 per cent, Atlas Arteria 3.9 per cent and Charter Hall Long Wale 2.1 per cent.

A profit warning cost medical device manufacturer CleanSpace more than half of its market value. The share price plunged 55.2 per cent after the company warned of lower sales and demand volatility.

Other markets

Oil inched higher in choppy trade. Brent crude rose nine cents or 0.1 per cent to US$65.03 a barrel. Gold eased $7 or 0.4 per cent to US$1,705.20 an ounce.

The dollar rose 0.19 per cent to 76.52 US cents.

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