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The share market fell short of its longest winning run of the year as a snap lockdown in Brisbane, falling US futures and rising bond yields sapped risk appetite.
The S&P/ASX 200 finished 25 points or 0.36 per cent weaker after failing to sustain an early 35-point surge.
The retreat brought an end to a three-session winning run that lifted the index this morning to its highest point since March 2. Today’s loss tripled in the closing auction as institutional traders rebalanced ahead of the end of the quarter.
What moved the market
Strong Friday leads from Wall Street were quickly overwhelmed by a string of market-unfriendly developments. The Queensland government announced a three-day lockdown in Greater Brisbane to contain a Covid-19 outbreak. US futures retreated sharply following Friday’s record close. Australian bond yields rose. Oil prices slumped after the container ship blocking the Suez Canal was refloated.
Greater Brisbane will enter a three-day lockdown from 5pm this afternoon after Queensland health authorities reported ten new cases. Schools will close and people within the lockdown zone must stay home unless they have essential reasons for travel.
Wall Street entered the weekend on a high, but the euphoria wore off in Sunday night trading. S&P 500 futures dropped 21 points or 0.5 per cent amid questions about a series of huge block trades executed by Goldman Sachs on Friday. The US financial heavyweight reportedly liquidated around US$10.5 billion of shares in Viacom and Chinese tech giants on behalf of unidentified sellers.
The mystery trades took the shine off an otherwise strong end to the US trading week. The S&P 500 and Dow closed at all-time highs.
Back home, tech stocks and bond proxies declined as bond yields jumped. The ten-year Australian yield was lately up three basis points but off its session peak.
Energy stocks gave up gains as oil responded to news the ship blocking the Suez Canal had been freed. Brent crude dived $1.05 or 1.6 per cent to US$63.38 a barrel.
“We do stand out as a laggard in the region today,” ThinkMarkets analyst Carl Capolingua said. “One has to conclude then that the Brisbane situation is holding us back from what would otherwise have been a winning session.”
Winners’ circle
The big three iron ore producers filled the three top slots in the ASX 20 index of market heavyweights following rallies in metals and iron ore. Miners and raw materials bounced on Friday amid optimism over US infrastructure spending plans. President Joe Biden is expected to release details this week. BHP and Rio Tinto climbed 1.75 per cent. Fortescue Metals gained 2.1 per cent.
Transurban was next in line with a rise of 1.7 per cent followed by Brambles +0.5 per cent and Newcrest +0.2 per cent.
Miners also filled most of the top slots on the broader ASX 200. Iluka Resources added 6.9 per cent and South32 3.3 per cent. Metals recycler Sims gained 3.9 per cent and steelmaker Bluescope 3.3 per cent.
Mortgage Choice surged 62.6 per cent after real estate listings business REA Group pitched a $244 million takeover offer. The offer has the unanimous support of the Mortgage Choice board. Shares in REA slipped 1.9 per cent.
Doghouse
The market lost altitude as tech stocks retreated and the latest lockdown weighed on consumer stocks. A jump in bond yields sapped alternative investments. In the tech space, Megaport fell 6 per cent, Appen 4.2 per cent, Altium 3.5 per cent and Xero 3.4 per cent.
A tough session for BNPL players saw Splitit dive 9.8 per cent, Z1p Co 4.5 per cent and Afterpay 4.2 per cent. Wesfarmers shed 0.7 per cent, JB Hi-Fi 3.6 per cent and Premier Investments 1 per cent. Travel agents Flight Centre and Webjet dropped 3 and 2.8 per cent, respectively.
Energy companies reversed or trimmed gains following success in freeing the Ever Given. Woodside shed 0.5 per cent and Oil Search 0.7 per cent. Santos cut its gain to 0.7 per cent.
The banks faded as the session wore on. NAB lost 0.2 per cent, CBA 0.5 per cent. and ANZ 0.6 per cent. Westpac ended unchanged.
Tabcorp eased 2.7 per cent after rejecting a $3 billion bid for its Wagering & Media business. The wagering group said instead it would undertake a strategic review of assets to maximise their value to shareholders.
AMP fell 3.4 per cent after a 30-day exclusivity period passed without a deal with Area Management for AMP’s private markets business. AMP said it would continue to pursue a transaction.
The unexpected departure of CEO Jim Leighton for personal reasons helped pull poultry group Inghams down 4.7 per cent. Director Andrew Reeves will take over as CEO and Managing Director.
Dairy group Synlait slumped 4.6 per cent to a four-year low after reporting a 76 per cent dive in half year-net profit to $6.4 million. The result was affected by a slump in infant formula, shipping delays and exposure to A2 Milk Company’s loss of custom.
Confirmation of Chinese tariffs of 175.6 per cent helped pull Treasury Wine Estates down 1.4 per cent. China’s Ministry of Commerce issued a final determination imposing the tariff for five years following an investigation into alleged wine dumping.
Other markets
Asian markets seemed oblivious to the US down-pressure. The Asia Dow advanced 0.29 per cent as China’s Shanghai Composite gained 0.79 per cent, Japan’s Nikkei 1.13 per cent and Hong Kong’s Hang Seng 0.33 per cent.
Gold retreated $6 or 0.35 per cent to US$1,726.30 an ounce.
The dollar dropped 0.09 per cent to 76.3 US cents.
