Fresh border closures and a record increase in Victorian coronavirus cases helped send the share market lower following a hesitant session on Wall Street.
The S&P/ASX 200 fell 42 points or 0.7 per cent by mid-session, erasing more than a third of yesterday's 112-point advance.
Bank stocks led the retreat as the economic outlook dimmed on news Queensland will reclose its borders to NSW and the ACT this weekend to stop the spread of COVID-19. Victoria today announced 725 new cases, surpassing last Thursday's single-day record of 723 cases. New South Wales recorded 12 new confirmed cases.
Deputy Chief Medical Officer Michael Kidd warned that it could be days before Victoria sees a drop in infections from the move to Stage 4 restrictions in Melbourne and Stage 3 across the rest of the state.
"The figures we're seeing today reflect infections that occurred a week or two ago," he told ANS News Breakfast. "So it may be a week or two before we start to see the number of infections start to fall... But I'm very sure that we're going to see significant reductions in numbers as a result of the restrictions of movement around Melbourne that we're seeing right now."
The heavily-weighted financial sector dropped 1.6 per cent towards a two-month low as investors shied away from lenders exposed to business collapses and bad debts. Macquarie analysts this morning warned the market was underestimating the hit to profits from bad debts. NAB declined 2.3 per cent, Westpac 1.7 per cent, ANZ 1.3 per cent and Commonwealth Bank 1 per cent.
Just three stocks on the S&P/ASX 20 index of market giants resisted the downtrend. Gold miner Newcrest surged 2.9 per cent after the precious metal finished above US$2,000 an ounce for the first time. Property group Goodman gained 1.2 per cent and retail conglomerate Wesfarmers 0.1 per cent..
Gold miners filled most of the slots at the top of the ASX 200 as the run on the precious metal continued this morning. Gold for December delivery was last up $11.60 or 0.6 per cent at US$2,032.60. St Barbara put on 4.7 per cent, Silver Lake Resources 4 per cent and Northern Star 3.7 per cent.
Newcrest's rally kept the materials sector narrowly positive. Fortescue edged up 0.9 per cent, BHP shed 0.3 per cent, Woodside 1 per cent and Rio Tinto 1.4 per cent.
The health sector trimmed two days of solid gains, falling 0.9 per cent as the top nine companies by market value declined. Cochlear shed 3.1 per cent, Ramsay Health Care 1.9 per cent and CSL 0.6 per cent.
US index futures drifted lower this morning following a late stock market rally overnight. S&P 500 index futures were recently down three points or 0.1 per cent. Last night, the S&P 500 scratched out a rise of 0.36 per cent in the final hour of trade as investors awaited progress towards a new coronavirus relief package.
Most Asian markets declined as a gauge of Chinese services sector activity missed expectations. Caixin's services purchasing managers' index fell to 54.3 last month from 58.4 in June. Economists had predicted a reading around the 58 level. China's Shanghai Composite fell 0.4 per cent and Japan's Nikkei 0.6 per cent. Hong Kong's Hang Seng overcame initial losses to rise 0.1 per cent
Oil retreated ahead of tonight's US inventory update. Brent crude eased eight cents or 0.2 per cent to $US44.35 a barrel.
The dollar advanced 0.35 per cent to 71.85 US cents.
What's hot today and what's not:
Hot today: The real estate investment trust sector bucked the market downtrend after the largest pure play listed office REIT Centuria (ASX:COF) announced it expected a distribution yield of around 9 per cent this year. Fund Manager Grant Nichols said the trust's office properties enjoyed a 98.1 per cent occupancy rate, due in part to a heavy tilt towards government tenants. Statutory net profit for last financial year was $23.1 million, down from $53.6 million in FY2019. Centuria shares jumped 9 per cent.
Not today: News of the departure of CEO and Managing Director Bradley Gerdis sent shares in Kiwi payments provider Smartpay Holdings (ASX:SMP) to a five-week low. COO Marty Pomeroy will step into the CEO/MD role after seven years with the company. The share price sank to 55 cents before bouncing to 60 cents, a loss of 3.2 per cent.