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The share market surrendered early gains as surging bond yields dampened the outlook for tonight’s US trade.

The S&P/ASX 200 faded to a loss of 8.5 points or 0.11 per cent. Gains in select mining stocks were outweighed by declines in healthcare and banking stocks.

Rio Tinto and Redbubble fell after trading updates. JB Hi-Fi advanced after sales withstood Covid lockdowns better than expected.

What moved the market

The ASX put on as much as 28 points in morning trade before caution set in ahead of the resumption of US trade tonight following the Martin Luther King Jr public holiday. Sentiment soured as US equity futures reacted to a jump in long -term borrowing costs.  

The yield on ten-year US treasuries rallied five basis points this afternoon to a level last seen in January 2020. Yields have risen sharply this year in anticipation of up to three increases in official rates as the Federal Reserve tries to cool rampant inflationary pressures.

US equity futures wilted in the face of higher borrowing costs. S&P 500 futures slumped 24.5 points or 0.53 per cent. Futures for the rate-sensitive Nasdaq skidded 158 points or 1.02 per cent.

The deteriorating futures outlook overshadowed broadly positive overnight leads. The pan-European Stoxx 600 rallied 0.7 per cent. The German benchmark edged up 0.32 per cent. Britain’s FTSE 100 advanced 0.91 per cent.

This afternoon’s action reflected doubts about the near-term outlook for equities as markets adapt to rising inflation and higher rates. Global markets have struggled for traction since the turn of the year. Wall Street and the ASX have yet to log a weekly gain for 2022. The Nasdaq Composite will resume trade tonight on a three-week losing streak.

Adding to pressures back home, a weekly survey showed confidence in the economic outlook collapsed last week as Covid case numbers surged The ANZ-Roy Morgan consumer sentiment index dived 7.6 per cent to 97.9, the lowest reading since October.  

“Sentiment has slumped due to the rapid spread of the highly contagious Covid-19 Omicron virus variant over the summer as Aussies adjust to ‘living with the virus’,” CommSec senior economist Ryan Felsman said.

“Covid-19 isolation requirements are having a huge impact on the Aussie economy, and in particular, the labour force and supply chains. CBA Group economists estimate that close to one million people nationally are likely to be in isolation due to being a close contact or being infected,” he added.

Winners’ circle

A 62.6 per cent year-on-year increase in first-half online sales helped offset a 1.6 per cent dip in total sales at JB Hi-Fi. The retailer reported “strong” sales momentum through the half as consumers bought electronics and home appliances. Online sales grew to 22.7 per cent of total sales during lockdowns in eastern States. Shares in the company gained 6.86 per cent.  

A fourth-quarter bump in margins helped lift Ampol 2.39 per cent. The fuel refiner said the Lytton Refiner Margin almost doubled to US$11.24 a barrel from US$6.76 in the third quarter. Refinery production increased to 1,585 ML from 1,565 ML the previous quarter.

In the tech space, Novonix put on 6.02 per cent, Life360 3.58 per cent and Appen 2.44 per cent. HotCopper favourite BrainChip sealed a record close with a surge of 25.68 per cent. Shares in the company have almost tripled this year.

A strong session for lithium miners saw Liontown Resources add 6.33 per cent, Allkem 2.2 per cent and Pilbara Minerals 2.66 per cent.

A profit upgrade lifted cloud computing firm Data#3 14.46 per cent. The tech firm said first-half net profit before tax was expected to be “slightly ahead” of the top end of guidance provided in October. The audited result will be released next month.

At the speculative end of the market, Zuleika Gold jumped 75 per cent after raising $3 million from prominent WA investor Mark Creasy at a 50 per cent premium to its last closing price.

Explorer Charger Metals flew up 25.52 per cent to an all-time high. Recently-listed Larvotto Resources also hit a record, rising 24.32 per cent.

Doghouse

Rio Tinto faded 0.35 per cent after shipping less iron ore last year. The miner reported a 3 per cent decline in Pilbara shipments versus 2020. The company attributed the setback to above-average rainfall, cultural heritage management and delays in bringing new production on-line.

Bauxite, aluminium and copper production also fell. The miner hopes to maintain or increase output this financial year. Iron ore guidance indicated an increase of up to 4 per cent in shipments.

Online marketplace Redbubble tumbled 22.41 per cent after reporting a pandemic sales bump from mask sales faded last year. First-half Marketplace revenues declined 18 per cent year-on-year to $288 million, according to unaudited preliminary figures. Excluding masks, revenues declined 5 per cent.

Gross profit contracted 25 per cent to $108 million. The company expects full-year revenues to be “slightly below” last year’s result.

Home food delivery service Marley Spoon appeared to suffer collateral damage, falling 9.38 per cent as traders extrapolated Redbubble’s outlook to other pandemic winners.

CIMIC dipped 0.29 per cent after announcing two contract wins. A subsidiary was selected to deliver the next stage of the Augusta Highway Duplication in South Australia and to help with BHP’s port debottlenecking project at Port Hedland. The projects will generate approximately $232 million in revenue.

Bond proxies such as health stocks fell out of favour as the session advanced. CSL faded 1.57 per cent, Ansell 2.65 per cent and Cochlear 1.61 per cent.

Three of the big four banks eased with a morning drop in long-term lending rates and did not respond to the afternoon rally. CBA dipped 0.37 per cent, NAB 0.14 per cent and Westpac 0.28 per cent. ANZ gained 0.1 per cent.

Other markets

Oil surged late in the session to its highest level since 2014. Brent crude rallied 82 US cents or 0.95 per cent to US$87.30 a barrel.

Gold remained in a holding pattern, lately flat at US$1,816.50 an ounce.

The dollar fell 0.26 per cent to 71.92 US cents as risk appetite dwindled.

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