Shares fell almost 1 per cent as the threat of fresh impeachment proceedings against President Donald Trump drove US futures sharply lower.
The S&P/ASX 200 sank 61 points or 0.9 per cent after House Speaker Nancy Pelosi said the House of Representatives will take the first step tonight towards impeachment. S&P 500 futures tanked 26 points or 0.6 per cent.
What moved the market
Local investors took to the sidelines as US futures signalled possible trouble ahead. Pelosi indicated House Democrats could vote to impeach Trump for a second time as soon as tomorrow night if Vice President Mike Pence does not invoke the 25th amendment and remove the president. Pelosi outlined a series of steps commencing tonight that could potentially result in the president’s removal and at the very least injects unwelcome uncertainty into the week ahead.
Financial markets saw typical risk-off moves. US futures and crude oil fell. The US dollar rallied. Bitcoin and other cryptocurrrencies saw double-digit losses. Gold trimmed sharp earlier falls.
The ASX 200 retreated from its highest level in nearly 11 months. A 2.6 per cent surge last week left it vulnerable to profit taking.
Investors were unmoved by news Greater Brisbane will end its lockdown on schedule tonight after three days. New South Wales reported three new locally-acquired cases. Victoria recorded a fifth straight day of no locally-acquired new cases.
Retail sales surged in November as Melbourne emerged from lockdown and shoppers bought up big during Black Friday promotions. Sales increased a seasonally-adjusted 7.1 per cent from the previous month.
“The rise is led by Victoria (22.4 per cent) as Melbourne retail stores were able to trade for a full month in November,” ABS Director of Quarterly Economy Wide Surveys, Ben James, said. “Excluding Victoria, turnover rose 2.6 per cent.”
Energy was the only sector to make a significant gain, rising 0.7 per cent. Oil ended last week at its highest level since February after Saudi Arabia pledged to reduce production by a million barrels a day to support prices. Woodside Petroleum climbed 2.6 per cent to its highest level since March. Santos gained almost 3.2 per cent.
Besides Woodside, the only other rises on the ASX 20 index of market behemoths were Westpac and ANZ, which both gained less than 0.1 per cent. CBA and NAB shed 0.6 per cent.
On the wider market, Mesoblast surged 14.3 per cent (more below) and ResMed added 3.3 per cent. Insurer IAG gained 3.2 per cent and Whitehaven Coal 2.9 per cent.
Splitit jumped 8.9 per cent on news it will be the Google Store’s first BNPL partner in Japan. Shaver Shop surged 11.3 per cent to an all-time high on news first-half sales increased by around 75-85 per cent.
Gold stocks bore the brunt of the selling following the yellow metal’s worst session since November. Gold for February delivery skidded $78.20 or 4.1 per cent on Friday to US$1,835.40 an ounce as US bond yields passed 1.1 per cent. A brief rebound this morning gave way to further losses. Gold was last down another $2.30 or 0.1 per cent to US$1,833.10. Westgold plunged 8.7 per cent and Perseus Mining 8.1 per cent.
Newcrest was the worst performer on the ASX 20, falling 3.5 per cent. Bond proxies struggled as the yield on US treasuries hit a 10-month peak. Transurban fell 1.9 per cent and Goodman Group 1.7 per cent. Supermarkets Woolworths and Coles lost 1.6 and 1.7 per cent, respectively.
Mining heavyweight Rio Tinto slid 1.3 per cent, Fortescue Metals 0.5 per cent and BHP 0.4 per cent.
Tech stocks unwound Friday’s rebound gains. Afterpay sank 2.7 per cent, Nearmap 7 per cent and Xero 4.7 per cent.
A mixed day on Asian markets saw Hong Kong’s Hang Seng rise 0.9 per cent and China’s Shanghai Composite lose 0.2 per cent. Markets in Japan were closed for a bank holiday.
Oil trimmed last week’s gains. Brent crude slid 65 cents or 1.2 per cent to $US55.34 a barrel.
The dollar dropped 0.3 per cent to 76.96 US cents.
The session brought welcome relief for investors in biopharmaceutical company Mesoblast (ASX:MSB). Shares rebounded 14.3 per cent today on news the firm’s experimental treatment for patients with chronic heart failure resulted in “substantial and durable reductions in heart attacks, strokes, and cardiac deaths”. The company said it will now seek approval for the treatment from the US Food and Drug Administration. Disappointing Covid-19 trial results last month cost the company more than half of its market capitalisation.