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Aussie shares looked set to start the week in retreat following a risk-off session in the US after pandemic restrictions tightened in parts of Europe.

US stocks ended mixed on Friday as traders rotated out of cyclical sectors into lockdown-resistant Big Tech. Oil sank to a seven-week low.

ASX futures fell 45 points or 0.61 per cent, signalling continuing pressure following two weeks of declines. The new week brings annual general meetings for household names such as Harvey Norman, Hills and Kogan. Trading volumes are likely to slow later in the week as Wall Street closes for Thanksgiving.  

Wall Street

Growth stocks rallied and cyclical stocks sold off after Austria announced a full lockdown and Germany tightened Covid-19 restrictions. The market underwent a sharp rotation as traders adjusted for the possibility of a global economic slowdown if other European countries follow suit to contain a fourth wave sweeping the continent.  

The Nasdaq Composite closed at an all-time high. The Dow finished lower for the fourth time in five sessions.

The Nasdaq Composite advanced 64 points or 0.4 per cent, closing above 16,000 for the first time. The Dow Jones Industrial Average shed 269 points or 0.75 per cent. The broadest of the major indices, the S&P 500, eased seven points or 0.14 per cent.

Airlines, energy stocks and tourism companies slumped after Austria‘s decision to reimpose a full lockdown revived memories of last year’s freeze in global economic activity. The Austrian government announced the shutdown as infections hit a new record. Chancellor Angela Merkel announced tighter restrictions for unvaccinated Germans. The Netherlands was already in partial lockdown.

“Suddenly markets are paying attention perhaps because policy responses are beginning to emerge,” economists at Scotiabank said.

Travel and tourism stocks bore the brunt of the rotation. The S&P 1500 airlines index fell 2.32 per cent. Aircraft-maker Boeing sank 5.77 per cent. The major cruise lines each lost at least 2 per cent. Airbnb shed 3.87 per cent.

Energy stocks sagged almost 4 per cent as oil skidded to a seven-week low. Brent crude settled US$2.35 or 2.9 per cent lower at US$78.89 a barrel. The US benchmark fell 3.2 per cent to US$75.94.

“Sentiment has turned bearish in Europe as Austria reimposing lockdowns has reminded investors that COVID waves can still disrupt the world economy,” Colin Cieszynski, chief market strategist at SIA Wealth Management, said. 

The ‘stay at home’ group of tech leaders that outperformed last year once more provided a haven. Netflix, Meta (Facebook) and Apple all advanced.  

Australian outlook

A soft start coming up, with Australia’s export-driven economy seen as vulnerable to any slowdown if lockdowns spread in Europe. While the US has a cushion in its heavily-weighted tech sector, Australian tech accounts for barely 5 per cent of the domestic market – not enough to compensate for a likely sell-off in cyclicals.

US financials dropped 1.11 per cent as a rotation into safe-haven bonds lowered yields. Cyclical industrials and materials shed 0.53 and 0.16 per cent, respectively. Bond proxies were mixed: utilities up, the rest down.

The global money-go-around is set to slow this week as Wall Street winds down towards (and then closes for) Thursday’s Thanksgiving holiday. Trading volumes historically decline on Wednesday as traders head home for the holidays. Many do not return for a truncated session on Black Friday, when the NYSE and Nasdaq close at 1 pm.

Back home, AGM season will provide much of the week’s excitement. Most of the big names have held meetings, but there are plenty of ASX 200 companies still to come. The week kicks off with meetings for shareholders in Spark Infrastructure and Growthpoint Properties, as well as Lovisa and McMillan Shakespeare.

Tuesday’s highlights include Pro Medicus, Link Administration, Monadelphous, Mayne Pharma, Brickworks and APN Industria. Wednesday: Harvey Norman, Ramsay Health Care, Hills, Ridley, Shopping Centres Australasia, Liontown Resources, Rhythm Biosciences and Integrated Research. Thursday: Kogan, Evolution Mining, Regis Resources, Ramelius, IOOF Holdings, NRW Holdings and Arena REIT. Friday: Sandfire Resources, Uniti Group, Centuria Capital and Westgold.

On the economic calendar, preliminary manufacturing and services-sector figures for this month are due tomorrow, quarterly construction data on Wednesday, private capital expenditure on Thursday and retail sales on Friday.

IPOs: a slightly lighter week ahead. There is at least one new listing currently on the schedule each day, but that will likely change. Nimy Resources is slated to list today at 12.30 pm AEDT. The explorer aims to develop a nickel sulphide project in WA.

The rest of the week looks like this: RAS Technology (Tuesday); EBR Systems (Wednesday); Radiopharm Theranostics, Winsome Resources (Thursday); and Artrya and Parabellum Resources (Friday).  

The dollar bounced 0.65 per cent this morning to 72.45 US cents.

Commodities

BHP and Rio Tinto resisted overseas pressure on mining stocks after iron ore bounced off an 18-month low. The spot price for ore landed in China rebounded US$4.10 or 4.7 per cent to US$91.30 a tonne as traders seized on good news from China’s struggling property sector. Evergrande Group recommenced work on several projects. Another developer was able to strengthen its balance sheet by raising funds from shareholders.

“There’s been a swarm of positive news from Chinese property developers. This is sentiment-driven, nothing has actually changed,” Atilla Widnell, managing director at Navigate Commodities, told Reuters.

BHP‘s US-listed stock inched up 0.11 per cent after its UK-listed stock gained 0.85 per cent. Rio Tinto advanced 1.35 per cent in the US and 1.82 per cent in the UK.

Industrial metals also improved. Benchmark copper on the London Metal Exchange rallied 2.6 per cent to US$9,753 a tonne. Aluminium and nickel put on 2.1 per cent, lead 0.4 per cent and zinc 2.7 per cent. Tin dipped 0.3 per cent.

Gold retreated as the US dollar tested 16-month highs. Gold for December delivery settled US$9.80 or 0.5 per cent lower at US$1,851.60 an ounce. The NYSE Arca Gold Bugs Index gave up 1.89 per cent.

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