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Travel and tourism companies fell as potential delays to Australia’s vaccination program cast a shadow over an otherwise bright week for shares.
The S&P/ASX 200 trimmed its best week since early February by four points or less than 0.1 per cent.
Today’s loss ended a five-session winning run, the index’s longest of the year. Despite the setback, the index gained 167 points or around 2.4 per cent during a holiday-shortened week, yesterday touching its highest level since February 2020.
What moved the market
So-called “reopening plays” retreated after the federal government announced it no longer recommended the use of AstraZeneca’s vaccine for Australians under 50. While the government later announced it had secured 20 million doses of a rival Pfizer vaccine, the policy change seemed certain to further delay the inoculation program. New South Wales temporarily suspended its vaccine program this morning.
Shares in CSL, which was contracted to manufacture 51 million doses of the AstraZeneca vaccine, fell almost 1 per cent. Travel companies also retreated. Corporate Travel Management dropped 3 per cent, Flight Centre 2.7 per cent and Webjet 2.5 per cent. Qantas shrugged off the news, rising 0.6 per cent.
AMP Chief Economist Shane Oliver downplayed the likely economic impact of the policy change. He said the change was unlikely to affect the reopening of international borders, “which we had assumed was at least a year” away.
“The move away from the AstraZeneca vaccine in Australia will further slow the vaccine rollout given the heavy reliance on it which in turn poses a downside risk to the recovery but overall we see the risk as small and not enough to justify any changes to forecasts,” he said.
Kalkine Group CEO Kunal Sawhney said the delay might fuel a temporary shift from cyclical stocks to defensive assets, but the move was unlikely to last.
“Classic defensive plays, including IT and fast-moving consumer goods, are expected to gain prominence in the short run amid fainted economic recovery hopes,” he said. “However, investors’ moves will be interesting to gauge in the long run when the vaccine rollout concerns are anticipated to average out, brightening economic revival prospects and stimulating demand for cyclicals.”
The market fell as low as 6965.5 before trimming its fall as US futures briefly rallied. S&P futures were seven points or 0.2 per cent ahead mid-afternoon, but faded to a single point or less than 0.1 per cent as the Australian market closed. Overnight, the S&P 500 rallied 0.42 per cent to a fresh record high.
Winners’ circle
Gold miners filled most of the slots at the top of the index on the back of a six-week high in the yellow metal. Silver Lake Resources gained 6.1 per cent, Westgold 6 per cent, Ramelius 4.3 per cent and Regis 2.6 per cent.
Online retailer Kogan and litigation financier Omni Bridgeway denied the miners a clean sweep at the top. Kogan rose 5.9 per cent and Omni 5.5 per cent. Gold giant Newcrest added 1.1 per cent.
Technology was the best-performing sector in the US overnight. Here, Afterpay hit a five-week high before trimming its gain to 1.2 per cent. NextDC gained 1.6 per cent, Xero 1.5 per cent and Technology One 0.6 per cent.
REITs were another sector to benefit from a temporary retreat in bond yields. The ten-year Australian yield eased three basis points this morning to 1.66 per cent, before reversing higher. Cromwell Property rose 1.2 per cent, Goodman Group 1.6 per cent and Charter Hall Retail 1.5 per cent.
The financial sector reversed early losses. Macquarie Group gained 0.8 per cent, NAB 0.3 per cent and Westpac 0.2 per cent. CBA and ANZ finished flat.
Mining services firm Perenti Global advanced 1.8 per cent after booking $80 million from its exit from twin contracts in Africa.
Doghouse
The materials sector retreated from yesterday’s five-week peak as falling iron ore producers outweighed advances in gold miners. BHP dropped 0.8 per cent, Rio Tinto 0.3 per cent and Fortescue 0.5 per cent.
Supermarkets Woolworths and Coles declined 1.3 and 0.1 per cent, respectively. Metcash sank 3.2 per cent. Energy giant Woodside shed 0.6 per cent.
Other markets
Asian markets deepened losses in the afternoon. The Asia Dow lost 0.53 per cent. China’s Shanghai Composite gave up 1.11 per cent and Hong Kong’s Hang Seng 1.27 per cent. Japan’s Nikkei gained 0.38 per cent.
Gold backed off six-week highs as the US dollar rallied. The yellow metal fell $7.50 or 0.4 per cent to US$1,750.70 an ounce. Brent crude sagged 23 cents or 0.4 per cent to US$62.97 a barrel.
The dollar faded 0.56 per cent to 76.13 US cents.
