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A ratings cut for the major banks helped drag the ASX lower for a second day before the market mounted a partial rebound.

The S&P/ASX 200 reached mid-session 37 points or 0.7 per cent in the red at 5216 after earlier falling as low as 5122.

While eight out of eleven sectors lost ground, the heavyweight financial sector accounted for much of the weakness – and the partial rebound – after credit ratings agency Fitch downgraded the big four banks to A+ with a negative outlook from AA-. The agency cited the effects of the Covid-19 pandemic and government restrictions as reasons for the change. All four banks traded at their lowest levels in more than a week before paring their falls. CBA was last off 2.7 per cent, ANZ 2.8 per cent, NAB 3.6 per cent and Westpac 4.1 per cent. Bank of Queensland shed 3.3 per cent after deferring its interim dividend.

The market came under early pressure from weak US index futures following a losing night on Wall Street. The Dow finished 26 points or 0.12 per cent in the red overnight after rising almost 1,000 points in early action. Dow futures dropped more than 200 points this morning before trimming their loss to 16 points or less than 0.1 per cent amid speculation that a global rebound over the last two weeks has outpaced the economic outlook as lockdowns continue around the world. Overnight, Goldman Sachs equity strategist David Kostin said the risk to the downside from current levels was greater than the risk to the upside.

The S&P/ASX 200 has bounced 640 points or more than 12 per cent in a little over two weeks from a seven-year closing low on March 23. The S&P 500 in the US has risen 15.9 per cent off its bear market low on the same day.

Consumer stocks were back in vogue, with the discretionary and staples sectors both making headway. Winemaker Treasury Wine Estates rallied 2.8 per cent after announcing plans to consider spinning out its Penfolds brand into a separate company. Auto specialist Super Retail Group climbed 4.9 per cent, casino group Star Entertainment 2.8 per cent, conglomerate Wesfarmers 3.2 per cent and supermarket Coles 1.5 per cent.

Buy-now-pay-later providers came in for particularly harsh treatment. Afterpay fell 4.7 per cent, Z1P Co 5.1 per cent, Splitit 4.1 per cent, Flexigroup 2.5 per cent and Sezzle 4.6 per cent.

The energy sector was weighed down by 3.8 per cent decline in Oil Search after the company raised more than $1 billion at a 23 per cent discount to its last price. The rest of the sector was mixed. Woodside fell 0.5 per cent and Beach Energy 2.7 per cent. Santos gained 1.8 per cent.

The morning’s worst performers included internet lottery business Jumbo Interactive, down 9.5 per cent, and property group SCA, down 6.6 per cent after completing a placement.  At the other end of the index, European shopping centre group Unibail-Roda-Westfield surged 11.8 per cent and UK banking group Virgin UK 9 per cent.

China’s Shanghai Composite dipped 0.3 per cent after the government lifted travel restrictions in Wuhan, the epicentre of the Covid-19 outbreak. Hong Kong’s Hang Seng shed 0.7 per cent. Japan’s Nikkei gained 0.5 per cent.

Brent crude bounced 68 cents or 2.1 per cent this morning to $US32.55 a barrel. Gold eased 30 cents or less than 0.1 per cent to $US1,683.40 an ounce.

The dollar dropped 0.4 per cent to 61.42 US cents after Standard & Poor’s placed Australia’s AAA credit rating on negative watch.

What’s hot today and what’s not:

Hot today: Shares in a thinly-traded software developer briefly surged more than 400 per cent after it revealed it had developed an add-on that can provide real estate agents with virtual property tours. AssetOwl (ASX:AO1) fast-tracked the add-on to its inspector360 property management platform in response to “an unprecedented level of inbound enquiries regarding its services”. The add-on, due to be released later this month, offers struggling agents a way to market properties while Covid-19 restrictions are in place. AssetOwl’s previously moribund share price shot from four-tenths of a cent to 2.1 cents before easing to 1.5 cents, still a rise of 280 per cent.

Not today: Navigator Global Investments (ASX:NGI), the listed Australian holding company for US-based investment manager Lighthouse, tumbled more than 20 per cent after releasing disappointing performance stats. While the company’s global long/short fund lost a mere 3.25 per cent to the end of March, the Lighthouse Diversified Fund shed a hefty 17.94 per cent. The company blamed a lack of liquidity in key markets hampering risk reduction strategies. The share price tumbled 22.3 per cent after the company withdrew its financial-year earnings guidance.

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