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Shares retreated for a second day following soft leads from Wall Street and commodity markets and as three of the nation’s largest companies prepared to pay out hefty dividend payments.

The S&P/ASX 200 touched a two-week low before trimming its fall to 76 points or 1 per cent.

BHP, CSL and Woolworths accounted for much of the weakness as their shares traded without the right to a dividend. BHP dived almost 7 per cent. Three-quarters of the heavyweights of the ASX 20 declined.

What’s driving the market

The conclusion of the full-year earnings season marks the start of dividend season. The rivers of gold pouring into shareholders’ accounts will be a significant drain on the index this month.

Two of the ASX 200’s three largest companies by market capitalisation went ex-dividend today. BHP tumbled 6.88 per cent or $3.12 as the stock traded without the right to payment of $2.74. CSL dropped 2.05 per cent. Between them, the companies accounted for more than half of this morning’s decline. Woolworths – another top twenty company – shed 1.27 per cent.

Further down the food chain, NIB gave up 3.39 per cent, Deterra 5.04 per cent and Platinum Asset Management 4.9 per cent. A well-received profit result helped InvoCare shrug off the dividend payout with a rise of 0.64 per cent.

Broader weakness across the market followed a mixed finish on Wall Street and sharp declines in iron ore and copper. The most balanced of the major US indices, the S&P 500, edged up 0.03 per cent. The Dow dipped 0.14 per cent. The Nasdaq added 0.33 per cent. Iron ore slumped 5.9 per cent and copper 2.1 per cent

“Base metals came under pressure following disappointing economic data in China,” commodity strategist Daniel Hynes of Hynes Commodities said. “Manufacturing activity contracted for the first time since April, with the Caixin manufacturing PMI dropping to 49.2 last month from July’s 50.3.

“The weakness was exacerbated by further releases of inventory from China’s strategic reserves. The National Food and Strategic Reserves Administration released a third batch of metals, including 150k tonnes of copper, aluminium and zinc,” he added.

“Signs of slowing manufacturing activity in China also weighed on the iron ore market. Futures also fell sharply as curtailed steel operations in China weighed on demand for the steel marking raw material. Following curbs in Gaungxi, environmental inspections have forced some mills in Sichuan to halt operations.”

Going up

Havens were scarce during a session when eight of eleven sectors declined and the biggest up-move – energy – was 0.15 per cent.  

Fallen stars ranked amongst the index’s best gainers. Biotech Mesoblast bounced 2.55 per cent from a two-day post-earnings bloodbath. Beleaguered tech firm Nuix gained 1.68 per cent.

Polynovo, whose shares traded above $4 in December, rose 3.55 per cent to $2.18. Altium edged up 2.64 per cent.

One of reporting season’s biggest winners, biopharma Clinuvel, climbed 2.87 per cent despite going ex-dividend.  

Most of the banks turned positive late morning despite pressure on lending rates. The yield on ten-year Australian government bonds retreated four basis points. CBA edged up 0.3 per cent, NAB 0.11 per cent and ANZ 0.04 per cent. Westpac was unchanged.

Macquarie Bank put on 0.47 per cent, Aristocrat Leisure 0.66 per cent and Goodman 0.26 per cent.

The speculative end of the market outperformed. The S&P/ASX Emerging Companies index climbed 0.86 per cent to a new high. The index has risen for seven of the last nine sessions.

Going down

Graincorp spin-off United Malt dropped 6.48 per cent after announcing it will take a provision of $20-$22 million relating to a bad debt and the collapse of a contractor. The company also warned lockdowns, increased shipping costs and supply chain issues were affecting consumption in Asia and Australia.

Flight Centre dipped 0.06 per cent as the travel agent continued its push into the Asian corporate market. The company has struck a deal with Tokyo-based NSF Engagement Corporation to launch Flight Centre’s FCM travel management business in Japan.

“As the world’s fourth largest business travel market, Japan will undoubtedly provide exciting growth opportunities for FCM both in terms of enhancing our offering to existing FCM customers throughout the world and attracting new customers in Japan,” FCM Asia managing director Bertrand Saillet said.

Rio Tinto fell for a third session, shedding 1.22 per cent. Fortescue Metals eased 0.02 per cent. Chalice Mining lost 3.45 per cent, Gold Road Resources 3.47 per cent and Newcrest 1.37 per cent.

Other markets

Asian markets were mixed but mostly higher. China’s Shanghai Composite gained 0.32 per cent, Hong Kong’s Hang Seng 0.88 per cent and Japan’s Nikkei 0.14 per cent. The Asia Dow shed 0.43 per cent.

S&P 500 futures were broadly steady, down two points or 0.05 per cent.

Oil retreated in the wake of last night’s OPEC+ decision to continue increasing production each month. Brent crude fell 48 US cents or 0.67 per cent to US$71.11 a barrel.

Gold dipped 30 US cents or 0.02 per cent to US$1,815.70 an ounce.

The dollar held onto overnight gains, trading steady at 73.63 US cents.

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