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Australian shares shook off early losses as Victoria announced a new lockdown and trading activity subsided ahead of a US long weekend.

The S&P/ASX 200 climbed 16 points or 0.22 per cent by mid-session following a tight, range-bound morning.

A rebound in the major iron ore miners was largely offset by declines in Newcrest, CSL, Wesfarmers and the supermarkets. The big banks were mixed but little changed.

What’s driving the market

Victorians this morning got the news they had been dreading: the state will enter a seven-day lockdown from midnight to contain a growing Covid-19 outbreak in Melbourne’s northern suburbs. The decision to close down until midnight June 3 followed of 11 new local cases overnight. The new cases expanded the outbreak to 26 cases.

Acting Premier James Merlino said, “In the last day, we’ve seen more evidence that we’re dealing with a highly infectious strain of the virus, a variant of concern which is running faster than we have ever recorded.

“Unless something drastic happens, this will becoming increasingly uncontrollable,” he added.

Travel and tourism stocks reacted negatively to past lockdowns, but have become increasingly inured to outbreaks. Qantas dipped 0.21 per cent. Corporate Travel Management eased 0.05 per cent. Flight Centre rose 2.01 per cent. Webjet added 0.2 per cent.

US futures declined as most Asian markets retreated. S&P 500 futures dropped nine points or 0.22 per cent ahead of a slab of potentially market-moving data tonight.

The Asia Dow slid 0.53 per cent. Hong Kong’s Hang Seng shed 0.33 per cent and Japan’s Nikkei 0.66 per cent. China’s Shanghai Composite gained 0.08 per cent.

Overnight, US stocks edged higher on diminished volume ahead of the Memorial Day long weekend. The S&P 500 gained 0.19 per cent.

“Equity markets are quiet as investors continue to anticipate the Fed’s next move,” Mark Hackett, chief of investment research at Nationwide, said. “Low volatility and low trading volume are a frequent occurrence in the week leading into a holiday.”

Going up

Fortescue Metals led a rebound in the iron ore majors, rising 3.18 per cent after prices stabilised yesterday. BHP climbed 1.21 per cent. Rio Tinto added 1.28 per cent.  

A record quarter lifted ASX 200 newcomer Champion Iron 4.26 per cent. The ore miner announced record fourth-quarter earnings, income and annual production.

Aristocrat Leisure had a record close within reach, advancing 0.79 per cent. Commonwealth Bank also had a new high in its sights, rising 0.11 per cent. ANZ inched up 0.26 per cent and Westpac 0.11 per cent. NAB faded 0.11 per cent. Macquarie Group sank 0.4 per cent.

AMP shrugged off news of civil proceedings alleging the wealth manager charged thousands of dead customers for insurance and financial advice. The company said it reported the matter to the regulator in 2018, remedied its processes and remediated all affected customer accounts. The share price climbed 6.34 per cent.

Going down

Costa Group briefly lost a quarter of its market capitalisation after warning currency headwinds and labour shortages will negatively impact this year’s result. The higher Australian dollar would weigh on the fruit and veg grower’s international earnings, while a lack of seasonal workers would impact domestic operations. The share price tumbled 22.07 per cent.

Fisher & Paykel Healthcare declined 7.23 per cent as investors worried that a Covid-fuelled earnings bump will fade. The company said an 82 per cent jump in full-year net profit to $524 million was driven by products used to treat Covid patients. The rollout of vaccines will reduce hospitalisations requiring respiratory support, casting a cloud over the earnings outlook.  

Gold miner Newcrest was the worst of the heavyweight drags, falling 1.98 per cent. Transurban declined 0.83 per cent, Wesfarmers 0.72 per cent and CSL 0.36 per cent. Supermarkets Coles and Woolworths shed 0.84 and 0.37 per cent, respectively.

Other markets

Oil retreated with US futures. Brent crude slid 53 cents or 0.77 per cent to US$68.20 a barrel.

Gold lost its grip on US$1,900, falling $5.70 or 0.3 per cent to US$1,895.50 an ounce.

The dollar eased 0.03 per cent to 77.37 US cents.

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