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The share market failed to hold early gains for a second day as an uptick in Queensland coronavirus cases and a wobbly night on Wall Street outweighed upbeat consumer sentiment data.

The S&P/ASX 200 faded to a mid-session loss of 30 points or 0.44 per cent after earlier rising as much as 37 points. Gains in Telstra, industrials and Afterpay were overshadowed by falls in the big banks and miners.

What's driving the market

The ASX briefly reversed yesterday's 25-point setback before fading as the banks joined the miners in the red.

Jitters set in after Queensland reported eight new locally-acquired Covid-19 cases, sharpening fears a longer lockdown may be need to contain the outbreak. AMP Head of Investment Strategy Shane Oliver said the increase created "a high risk that the snap Brisbane lockdown will continue through Easter".

The S&P 500 dropped 0.09 per cent overnight but finished off its low as investors downplayed the likely fallout from forced selling due to the collapse of a private hedge fund. The Nasdaq Composite shed 0.6 per cent. The Dow reversed to a gain of 0.3 per cent.

“A significant U.S.-based hedge fund defaulted on margin calls made last week by Credit Suisse and certain other banks,” Credit Suisse announced. “Following the failure of the fund to meet these margin commitments, Credit Suisse and a number of other banks are in the process of exiting these positions.”

Shares in the Swiss bank sank 11.5 per cent. Japanese investment bank Nomura fell 14.1 per cent after admitting it faced a "significant loss".

In economic news, the ANZ-Roy Morgan Weekly Consumer Sentiment Index improved 1.7 per cent from 110.4 to 112.3, its highest level since October 2019.

"Consumer sentiment ticks up to remain at a solidly positive level," economist Stephen Koukoulas tweeted. "Looks like rising house prices, solid stock market, slight improvement in labour market are helping."

Going up

Telstra's proposed restructure continued to reap rewards. The share price rose 1.3 per cent to a seven-month peak. The telecom giant has advanced on ten of the last 13 sessions.

Industrial giants Brambles and Transurban gained 0.8 and 1.9 per cent, respectively. Property heavyweight Goodman added 0.8 per cent and Woolworths 0.1 per cent.  

A bright session for tech stocks saw Xero add 3.6 per cent, Megaport 3.2 per cent, WiseTech 2.8 per cent and Afterpay 0.6 per cent.

Going down

A rebound in iron ore failed to give the big three producers a lift amid ongoing worries about the impact of Chinese pollution controls. Rio Tinto sank 2.3 per cent, Fortescue 1.8 per cent and BHP 1.4 per cent.

"Traders are fretting over the prospect of further production cuts in the top steelmaking city of Tangshan in the wake of a shift towards a carbon-neutral economy," Kalkine Group CEO Kunal Sawhney said. "Tangshan government’s notice circulating in the steel industry reflects potential output curbs during the remaining year amid tightening environmental regulations. This is given the fact that Tangshan accounts for nearly 14% of China's total crude steel output."

The big four banks deteriorated as the morning wore on. NAB declined 1.3 per cent, ANZ 0.4 per cent, Westpac 0.2 per cent and CBA 0.2 per cent.

A three-week low in gold weighed on precious metals miners. Resolute eased 5 per cent, Silver Lake Resources 4.8 per cent and Newcrest 1.1 per cent. Nickel Mines dropped 5.3 per cent after raising US$175 million through unsecured notes.

Utilities was briefly the best-performing sector after energy giant AGL outlined plans to split the business in two. "New AGL" will contain the retail division, while "PrimeCo" will hold the electricity generating assets. If approved by regulators and shareholders, the restructure will proceed before the end of the financial year. AGL's share price reversed from a gain of more than 3 per cent to a loss of 1.6 per cent after the company later announced the Victorian government had knocked back the firm's proposed gas import jetty at Crib Point.

Santos fell 1 per cent after deciding to proceed with a US$3.6 billion gas project off the coast of the Northern Territory. The company said the investment would be the largest in Australia's oil and gas sector since 2012. The project will create 600 jobs during construction and secure 350 jobs during 20 years of production.

Several companies fell as they traded without the rights to a dividend. Cromwell Property Group shed 3.6 per cent, Atlas Arteria 3.1 per cent and Charter Hall Long Wale 2 per cent.

A profit warning cost medical device manufacturer CleanSpace more than half of its market value. The share price plunged 53.7 per cent after the company warned of lower sales and demand volatility.

Other markets

US futures turned negative as most Asian markets retreated. S&P 500 futures eased four points or 0.1 per cent. The Asia Dow shed 0.47 per cent. China's Shanghai Composite gave up 0.08 per cent and Japan's Nikkei 0.13 per cent.

Oil retreated in choppy trade. Brent crude fell 25 cents or 0.35 per cent to US$64.67 a barrel. Gold eased $3.40 or 0.2 per cent to US$1,708.80 an ounce.

The dollar dipped 0.08 per cent to 76.32 US cents.

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