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The stock market faded to a 12-week low as slender gains in health and energy shares were outweighed by declines in miners, property trusts and banks.
Weak leads from Wall Street depressed buying interest as investors await evidence a tech-led US retreat has bottomed out.
The S&P/ASX 200 held firm for an hour and a half before waning to a mid-session loss of 40 points or 0.7 per cent as US index futures gave up initial gains. The slump pulled the index to its lowest point since June 29.
What’s driving the market
Any optimism about the start of a new trading week was dampened by uncertainty over whether the US tech correction has further to run after three weeks of declines. On Friday, US stocks closed at their lowest level of the month as the market leaders continued to lose altitude. The S&P 500 dropped 1.12 per cent to a weekly loss of 0.7 per cent. The Nasdaq gave up 1.07 per cent.
US index futures briefly edged higher this morning, then flattened. S&P 500 index futures were recently ahead two points or less than 0.1 per cent. Dow futures eased six points or less than 0.1 per cent.
The ASX 200 narrowly avoided a fifth straight losing week on Friday by finishing five points above the previous week’s 10-week closing low. The slide resumed this morning, led by gold stocks, real estate investment trusts, miners and banks. The healthcare sector and oil companies cushioned the market from a deeper loss.
Going up
Health major CSL was the best of the index heavyweights, rallying 0.5 per cent. Gains of 3.2 per cent for Sonic Healthcare and 0.3 per cent for Ramsay helped offset a drop of 2.5 per cent for Fisher & Paykel.
Retailers rallied after Harvey Norman revealed a 30.6 per cent surge in sales revenue between the start of the financial year and September 17. Harvey Norman rose 2.6 per cent, Super Retail Group 1 per cent, Kathmandu 1.3 per cent and JB Hi-Fi 0.3 per cent.
A mixed morning for energy stocks after oil’s best weekly performance since June saw gains in Woodside (+0.4 per cent), Origin Energy (+0.2 per cent) and Whitehaven Coal (+7.1 per cent) outweigh a decline in Santos (-0.5 per cent).
Going down
Gold miner Newcrest led a resources retreat, falling 1.7 per cent. Fortescue Metals shed 1.1 per cent, BHP 1 per cent and Rio Tinto 0.9 per cent.
REITs were among the biggest decliners on the index. European shopping centre operator Unibail-Rodamco-Westfield sank 7.1 per cent after several European countries announced new restrictions to curb Covid-19 outbreaks. Dexus and Scentre Group slumped 3.3 per cent and Vicinity Centres 2.6 per cent.
Insurer IAG eased 0.2 per cent on news Nick Hawkins will succeed Peter Harmer as Managing Director and CEO. Mr Hawkins has spent 19 years with the insurer, most recently as Deputy CEO.
Westpac and CBA shed 0.9 per cent, ANZ 1.3 per cent and NAB 1.2 per cent.
Other markets
Asian markets declined after Hong Kong banking giants HSBC and Standard Chartered were among several global lenders named in US government documents as allowing the flow of suspicious funds. Hong Kong’s Hang Seng dropped 0.7 per cent and China’s Shanghai Composite 0.3 per cent. Trade in Japan was suspended for a public holiday.
Oil shook off early weakness to extend last week’s strong gains. Brent crude rose 12 cents or 0.3 per cent to $US43.27 a barrel. Gold dipped $2.10 or 0.1 per cent to $US1,960 an ounce.
The dollar rose 0.32 per cent to 73.15 US cents.
What’s hot today and what’s not
Hot today: There was good news for the hard-pressed domestic IT sector this morning in the form of overseas buying interest. Outsourcing and services firm DWS (ASX:DWS) announced it had accepted a buyout offer from the local subsidiary of Indian multinational HCL Technologies. HCL Australia Services will pay $1.20 per share in cash, plus a three cent divided, to acquire 100 per cent of DWS. The DWS share price shot up 30.6 per cent from 90 cents on Friday to $1.17 this morning. The value of the domestic IT sector more than doubled since March, but has come under pressure in recent weeks as the Nasdaq entered a technical correction.
Not today: Byron Energy (ASX:BYE) lost a third of its market value after its latest offshore US well proved a duster. Following a brief pause for Hurricane Sally, drilling reached final total depth on South Marsh Island Block 58 G2 in the Gulf of Mexico without logging commercial hydrocarbons. The well will be plugged before sidetracking to another prospect. Byron’s share price slumped 33.3 per cent to 19 cents.
