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The ASX sagged towards its fourth loss in five sessions as Perth and Brisbane joined Sydney and Darwin in lockdown, and an earnings downgrade from Kathmandu sounded an alarm for retailers.

The S&P/ASX 200 dropped 49 points or 0.67 per cent by mid-session. The index earlier touched its lowest level in more than a week.

Slender gains for Coles, CSL and Brambles were outweighed by declines in the heavyweight banks and miners. Property stocks were among the biggest drags as several market-leaders went ex-dividend.

What’s driving the market

The market mood continued to sour after Perth and Peel joined Greater Sydney and Greater Darwin in lockdown, along with swathes of Queensland. The WA government ordered a hard four-day lockdown after a local breakout seeded by the Sydney cluster expanded to three cases.

Two new community cases in Queensland then prompted the state government to announce a three-day lockdown covering the densely-populated southeast of the state, Townsville, Palm Island and Magnetic Island from 6pm tonight

New South Wales health authorities this morning reported 19 new local Covid cases in the 24 hours to 8 pm last night. Northern Territory recorded two more positives. Victoria reported zero new local cases.

A sales downgrade from Kathmandu underlined damage to the retail industry from repeated lockdowns. The outdoor clothing specialist said 40 stores in NSW had closed for at least two weeks and 26 stores in WA for a minimum of four days. The retailer’s share price sank 3.38 per cent.

“This follows the two-week lockdown in Victoria which impacted 62 stores in early June,” the firm’s ASX announcement noted.

The muddy domestic outlook once again overshadowed positive overseas leads. The S&P 500 and Nasdaq Composite both closed at records overnight as tech stocks and high-yield bond proxies rallied. The S&P 500 put on 0.23 per cent. The Nasdaq added 0.98 per cent.

A slide in US futures added to the downbeat mood here. S&P 500 futures dropped eight points or 0.18 per cent.

Back home, consumer confidence eased a modest 0.2 per cent last week as Sydney’s slide towards lockdown was largely offset by a rebound in the mood in Melbourne. Confidence in Sydney fell 4.6 per cent, according to the ANZ-Roy Morgan weekly survey. Regional NSW fell 6.63 per cent.

“Recent experience suggests sentiment will respond to case numbers and lockdown measures in the coming weeks: if case numbers remain high, confidence is likely to deteriorate, but if they come back under control quickly and restrictions look likely to be short-lived sentiment is likely to rebound,” ANZ senior economist Felicity Emmett said.

Going up

Tech stocks tried to build on positive US leads, but struggled against the broader market headwind. Nuix gained 3.72 per cent, Technology One 1.65 per cent and Appen 0.99 per cent. BNPL players Z1p Co and Afterpay added 0.65 and 0.64 per cent, respectively.

IGA operator Metcash climbed another 2.71 per cent on the back of yesterday’s well-received full-year earnings report. Coles gained 0.3 per cent. Woolworths eased 0.53 per cent.

Medibank Private inched up 0.16 per cent on news it will return to customers $105 million the health insurer saved as the pandemic suppressed claims. Around two million policies will be eligible for premium relief.

“We said right from the start of the pandemic that we would not profit from COVID-19, and that we were committed to returning any COVID-19 savings back to our customers because it is the right thing to do,” CEO David Koczkar said.

Going down

REITs sank 1.12 per cent as much of the sector traded without the right to a dividend. Abacus Property Group dropped 3.83 per cent, Growthpoint 3.77 per cent and Vicinity Centres 3.57 per cent. Waypoint shed 3.15 per cent, Charter Hall Retail 2.97 per cent and SCA Property 2.88 per cent.

Toll road operator Transurban also went ex-dividend falling 1.87 per cent. Utility APA Group touched a 15-month low, falling 2.96 per cent.

Miners declined amid a general retreat from cyclical stocks overnight as rising Covid rates in Asia raised questions about demand for raw materials. BHP fell 1.26 per cent, Rio Tinto 0.7 per cent and Fortescue Metals 0.11 per cent.

A steep decline in bond yields weighed on lenders. The yield on ten-year Australian government bonds dropped more than six basis points following a similar move in the US. CBA shed 0.28 per cent, ANZ 0.64 per cent, NAB 0.98 per cent and Westpac 0.58 per cent.

African gold explorer Polymetals Resources made an uninspiring debut on the boards, falling 22.5 per cent to 15.5 cents.

Other markets

Asian markets retreated. The Asia Dow gave up 0.62 per cent, China’s Shanghai Composite 0.58 per cent, Hong Kong’s Hang Seng 0.31 per cent and Japan’s Nikkei 0.86 per cent.

Oil continued to probe one-week lows ahead of Thursday’s OPEC+ meeting. Brent crude retreated 31 cents or 0.42 per cent to US$73.83 a barrel.

Gold slid $4.70 or 0.26 per cent to US$1,776 an ounce.

The dollar declined 0.15 per cent to 75.57 US cents.

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