A historic month for Australian investors ended on a sour note as escalating tensions between China and the west weighed on financial markets on both sides of the Pacific.
The S&P/ASX 200 skidded 83 points or 1.3 per cent to a third straight loss. The decline trimmed the index's November gain to just under 10 per cent.
What moved the market
End-of-month profit-taking was compounded by separate flashpoints with China here and in the US. Australia's relations with its biggest trading partner took another turn for the worse after China's foreign ministry tweeted a doctored image of an Australian soldier holding a knife to the throat of an Afghan child. Prime Minister Scott Morrison demanded an apology.
"The Chinese government should be totally ashamed of this post. It diminishes them in the world's eyes," he said."Australia is seeking an apology from the Ministry of Foreign Affairs and we are seeking it be removed from Twitter."
US index futures declined following reports the White House was considering extending its blacklist of Chinese companies to include PC chipmaker SMIC and oil and gas company CNOOC. S&P 500 futures sank 17 points or almost 0.5 per cent. Dow futures slid 191 points or more than 0.6 per cent.
Despite today's setback, Australia's major indices recorded their best returns in decades. The ASX 200 gained just under 10 per cent, the biggest return in its 20-year history. A 9.9 per cent rise in the All Ordinaries was the older index's best tally since March 1988. Financial markets around the world surged as a US election passed without major incident, governments announced lockdowns and stimulus measures and the outlook for next year was boosted by positive vaccine news.
"It's been a wild month," ThinkMarkets Market Analyst Carl Capolingua said. "I can't recall a month where this much has happened.
"I feel November will prove to be a watershed month for the Australian share market though. I believe that investor thinking shifted this month. We're are now expecting things will get better before they may eventually get worse, and not the other way around. It's a subtle shift in sentiment, but it's an important one."
Advancers were scarce by the time the session ended. Just two stocks on the ASX 20 index of heavyweights resisted the downtrend. Macquarie Group rose 0.9 per cent. Property group Goodman added 0.4 per cent.
Technology was the only sector to advance, bolstered by further evidence on Friday of a rotation from US cyclicals back into winners from the pandemic. Four of the five WAAAX group of sector leaders advanced. WiseTech gained 3.2 per cent, Afterpay 0.3 per cent, Altium 1.3 per cent and Appen 1.5 per cent. Xero slid 0.9 per cent.
Broker upgrades helped lift Fisher & Paykel Healthcare 5.1 per cent. EML Payments rose 4.5 per cent and Polynovo 3.9 per cent to complete the top three performers on the index.
Risk appetite remained strong at the speculative end of the market. The Emerging Companies Index surged 1.3 per cent to its highest level in nine years.
Flexigroup rose 2 per cent after rebranding as humm. Rival Z1p Co ended flat after announcing its Covid-delayed launch in the UK. Chair Philip Crutchfield told shareholders at today's virtual AGM the BNPL player was live with more than 150 UK merchants.
Shares in The Market Herald were steady after shareholders listening in to today's virtual AGM were updated about the financial news platform's progress. Profit before tax and acquisition costs soared 2,384 per cent last financial year to $3.5 million as revenues jumped 357 per cent.
A day that started with solid gains and positive leads ended with most of the index heavyweights firmly in the red. ANZ and CBA gave up 2 per cent, NAB 1.8 per cent and Westpac 1.5 per cent.
A six-year peak in iron ore prices and seven-year high in copper helped the mining majors only briefly. By the finish, Fortescue Metals was down 1.8 per cent, BHP 1.7 per cent and Rio Tinto 0.6 per cent.
Gold stocks retreated after the precious metal broke through critical support. Newcrest shed 0.6 per cent, Perseus Mining 4.7 per cent and Regis Resources 4.2 per cent.
Adventure sports retailer Kathmandu sank 5.3 per cent after CEO Xavier Simonet resigned after five and a half years. Health food specialist Select Harvests dropped 5.2 per cent on news full-year net profit more than halved from $53 million last year to $25 million this year.
Asian markets were mixed. China's Shanghai Composite jumped 1.1 per cent. Hong Kong's Hang Seng dropped 0.5 per cent and Japan's Nikkei shed almost 0.7 per cent.
Oil declined ahead of tonight's OPEC+ meeting. Brent crude dropped 54 cents or 1.1 per cent to $US47.71 a barrel.
Friday's sell-off in gold gathered pace. The yellow metal skidded $14.50 or 0.8 per cent today to $US1,773.70 an ounce.
The dollar hit a two-month high above 74 US cents before succumbing to a broad rotation out of risk assets. The Aussie was last down 0.14 per cent at 73.91 US cents.
Hot today and not today
Hot today: The majority shareholder in ASX-listed advertising and PR company WPP AUNZ (ASX:WPP) hopes to take advantage of the company's Covid-depressed share price. Shares in the Australian operation jumped 35.4 per cent to 55.5 cents after London-based WPP offered minority shareholders 55 cents per share. The British multinational already owns 61.5 per cent of the Australian listed entity. The board of WPP AUNZ advised shareholders to take no action until independent directors assess the offer.
Not today: Penfolds winemaker Treasury Wine Estates (ASX:TWE) tumbled a hefty 11 per cent at today's open before paring its fall to 6.9 per cent. The company warned it expects Chinese demand to be "extremely limited" after Beijing slapped temporary tariffs of 169.3 per cent on the company's products. Treasury outlined plans to slash costs and redirect its wine to alternative markets. The share price dived 11.25 per cent on Friday when the news first broke.