A strong week for Australian shares faded towards a downbeat conclusion as Asian markets were rattled by China scrapping its 2020 growth target.
The S&P/ASX 200 eased to a mid-session loss of 29 points or 0.5 per cent as investors fretted about China’s economic prospects after the National People’s Congress abandoned its Gross Domestic Product target, citing global uncertainties.
The Shanghai Composite slumped 0.9 per cent. Hong Kong’s Hang Seng took the brunt of the selling, tumbling 3.5 per cent after China proposed new security laws to clamp down on protestors. Japan’s Nikkei slipped 0.4 per cent.
Despite today’s fall, Australian stocks remained on course for their eighth winning week in nine since the market bottomed in late March. A close around these levels would deliver a weekly return of about 116 points or 2 per cent for the S&P/ASX 200, thanks to solid gains at the start of the week.
US index futures turned negative after rising earlier when a voter poll showed President Donald Trump leading Democratic Party challenger Joe Biden in key marginal states. S&P 500 index futures climbed roughly 0.4 per cent before reversing to a loss of seven points or 0.3 per cent. The poll conducted by CNN showed Biden leading Trump nationally by 51 per cent to 46 per cent, but behind in 15 of the key battleground states that may decide the November presidential election. Trump is seen as Wall Street’s preferred candidate due to his market-friendly approach to cutting taxes and red tape.
US stocks fell overnight after the White House broadened its criticism of China and threatened sanctions if China proceeds with new security laws in Hong Kong. The S&P 500 declined 23 points or 0.78 per cent.
The Australian market struggled for direction as gains in retail and technology stocks were outweighed by declines in health, consumer staples and energy. Retail conglomerate Wesfarmers edged up 0.2 per cent after announcing plans to close up to 75 Target stores and convert others to Kmarts. The changes are intended to “accelerate the growth of Kmart and address the unsustainable performance of Target”. The broader consumer discretionary sector was boosted by gains in IDP Education +5.8 per cent, Flight Centre +3 per cent and Tabcorp +2.3 per cent.
Defensive health stocks and supermarkets weighed. CSL sank 2.4 per cent, Mayne Pharma 2.3 per cent, Woolworths 1.5 per cent and Coles 0.5 per cent.
Graphite miner Syrah Resources rose 3.5 per cent after CEO Shaun Verner told today’s virtual AGM the long-term prospects for the Balama mine in Mozambique were strong despite the temporary suspension of operations due to COVID-19. The index’s best performers were Nearmap, up 8.4 per cent, Smartgroup, up 7.4 per cent, and Corporate Travel, up 6.2 per cent.
Sydney Airport ticked up 2 per cent after using today’s virtual AGM to rule out an equity raising and confirm that the company is compliant with its debt covenants. No interim dividend will be issued as management concentrate on conserving cash.
BHP was the best of the mining majors, falling 0.3 per cent following news yesterday that China will introduce new customs procedures for iron ore landed at its ports. Rio Tinto eased 1.5 per cent and Fortescue 0.8 per cent. Newcrest dipped 0.2 per cent. The big four banks traded close to neutral.
Oil fell back from ten-week highs with other risk assets. Brent crude was last down 79 cents or 2.2 per cent at $US35.27 a barrel. Gold bounced $3.70 or 0.2 per cent to $US1,725.60 an ounce.
The dollar eased 0.24 per cent to 65.48 US cents.
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Drugmaker Antisense Therapeutics (ASX:ANP) surged to a five-month high after announcing success for its treatment for Duchenne Muscular Dystrophy (DMD) in a phase II trial. Antisense’s ATL1102 therapy met its primary endpoints for safety and patient tolerance, clearing the way for the drug to advance to a Phase IIb trial in Europe. DMD is a genetic disorder typified by muscle degeneration and weakness. ANP’s share price almost doubled before paring its gain to 45.8 per cent at 7 cents.