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The ASX retreated for the third time in four sessions as soft US leads and the threat of a New South Wales Covid-19 lockdown depressed buying interest.

The S&P/ASX 200 declined 15 points or 0.21 per cent by the halfway mark.

The index hits its low after NSW reported 11 locally-acquired coronavirus cases since yesterday’s update.

Woolworths, CSL and the big banks steered the market lower. Afterpay and the miners were the pick of the heavyweights.

What’s driving the market

Buying interest has seeped from the market over the last two sessions as the NSW Covid cluster expanded. NSW health authorities this morning announced the state recorded 18 locally-acquired cases in the 24 hours to 8pm last night (including 13 reported yesterday), plus an additional six cases overnight.

“In total there have been 11 new cases since we last updated the community,” NSW Premier Gladys Berejiklian said. “I do want to stress that all but one of those cases are linked… Since the pandemic has started this is perhaps the scariest period that New South Wales is going through.”  

The state is managing 51 cases in total, including 36 from the Bondi cluster. Current restrictions would remain in place.

Niggling worries about looming rate rises have also sapped interest. Commonwealth Bank and Westpac yesterday declared they expected the RBA to move either late next year (CBA) or early 2023 (Westpac).

NAB has been more cautious. This morning the bank reiterated its conviction the bank was more likely to hold off until 2024.

“NAB’s view is that while we can see a probability of the RBA moving in H2 2023 and markets should price in this risk, given the high bar the RBA has given itself on wages growth being sustained at 3% plus, we currently pencil in 2024 as being more likely,” Tapas Strickland, NAB Director, Economics, wrote.

US stocks finished mixed, but little changed overnight. The Dow and S&P 500 shed between 0.1 and 0.2 per cent. The Nasdaq Composite gained 0.13 per cent.

“A very quiet overnight with no real news or top tier data to drive,” Mr Strickland said.

US futures firmed ahead of tonight’s weekly unemployment benefits report. S&P 500 futures climbed 11 points or 0.25 per cent.

Going up

Afterpay hit its highest level since early March, rising for a sixth session as inflation worries continued to abate. The buy now pay later leader was the most prominent victim of this year’s inflation tantrum, losing almost half its value between February and May. A 7.25 per cent rise this morning extended its bounce since the May low to around 60 per cent.

Other tech gainers included WiseTech +3.21 per cent, Appen +1.55 per cent and EML Payments +1.35 per cent.

The big three miners have risen steadily, supported by improving commodity prices since a rally in the US dollar peaked on Monday. Fortescue Metals rose 1.42 per cent, Rio Tinto 1.13 per cent and BHP 0.91 per cent.  

Coles gained 1.18 per cent. Online retailer Kogan climbed 5.43 per cent.

Cimic edged up 0.15 per cent on news some of its subsidiaries had been chosen by the Victorian government as part of a consortium to build the North East Link in Melbourne.  The company expects revenue of around $4 billion over the construction and operations phase.

Medical software firm Pro Medicus reversed yesterday’s dump, bouncing 6.9 per cent. Other standouts included Seven West Media +3.41 per cent, Healius +3.41 per cent and Incitec Pivot +3.4 per cent.

Going down

Woolworths dived 11.5 per cent as it divested the Endeavour drinks business that owns Dan Murphy’s and other brands. Endeavour shares debuted at $6.60 but soon fell to $5.70.  

Westpac eased 0.98 per cent after announcing it will hold onto its New Zealand operations after exploring a demerger.  

Westpac Group Chief Executive Officer, Peter King, said, “After a detailed review, we believe a demerger of the WNZL business would not be in the best interests of shareholders. Our review identified opportunities to improve service for customers and value across the WNZL business and we will progress these with the WNZL Board and management team.”

CBA gave up 0.81 per cent, ANZ 0.71 per cent and NAB 0.99 per cent. Other major drags included CSL -1.38 per cent, Newcrest -0.84 per cent and Woodside -0.53 per cent.

Wearable sports tech firm Catapult dropped 8.49 per cent after completing a $35 million institutional placement to fund its purchase of sports software video provider SBG Sports Software.

Other markets

Asian markets advanced. The Asia Dow gained 0.24 per cent, Hong Kong’s Hang Seng 0.37 per cent, Japan’s Nikkei 0.16 per cent and China’s Shanghai Composite 0.01 per cent.

Gold unwound last night’s advance, falling $8 or 0.45 per cent to US$1,775.40 an ounce. The Brent crude continuous contract dipped two cents or 0.03 per cent to US$74.48 a barrel.

The dollar inched up 0.04 per cent to 75.76 US cents.

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