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The ASX 200 mounted a tentative fightback after its two-session loss briefly blew out to six per cent following Wall Street’s worst night in three months.

The benchmark index plunged more than 200 points in early action after the prospect of a resurgence of COVID-19 sparked panic selling on US markets. By mid-session, the fall had been trimmed to 112 points or 1.9 per cent as traders once again “bought the dip”.

The Dow swooned 1,862 points or 6.9 per cent overnight, its heaviest fall since March 16 during the early days of the pandemic sell-off.  The broader S&P 500 shed 188 points or 5.89 per cent.

The trigger was a growing fear that stock prices have far outpaced the evidence for an economic rebound. Federal Reserve Chair Jerome Powell warned this week that the recovery will be long and hard. There is also growing evidence that the worst of the pandemic may not have passed in the US. The seven-day average of new cases rose yesterday in more than 20 states.

The local market edged off its lows as US index futures hinted at potential for a rebound tonight. S&P 500 index futures were recently up 32 points or 1.1 per cent.

At this morning’s nadir, the Australian benchmark had given up almost 400 points in two brutal sessions. Yet recent gains have been so strong that the carnage merely brought the index back near where it finished last month. The S&P/ASX 200 has put on more than 1,200 points since the March low.

This morning’s carnage left few hiding places. Less than a tenth of the 200 components of the benchmark index resisted the savage downturn. Seven Group was the pick with a rise of 2.4 per cent. Spark Infrastructure gained 1.4 per cent, agibusiness Elders 1.1 per cent and property group Mirvac 1 per cent.

A long list of losers was topped by fund manager Platinum Asset, down 9.3 per cent, shopping centre operator Unibail-Rodamco-Westfield, down 8.8 per cent, and Estia Health, down 8.7 per cent. Travel agents Webjet and Flight Centre shed 6 per cent and 5 per cent, respectively.

All 11 sectors declined. Defensive sectors fared best: consumer staples dipped 0.1 per cent and healthcare 0.4 per cent. The energy sector took the biggest blow, falling 3.7 per cent as the recent rally in crude continued to unravel this morning. Brent crude was lately down another 56 cents or 1.5 per cent to $US37.99 a barrel, extending an overnight loss of 7.6 per cent. Woodside skidded 5.1 per cent, Oil Search 5 per cent and Santos 2.7 per cent.

Among index heavyweights, BHP shed 1.7 per cent and Rio Tinto 1.2 per cent. Gold miner Newcrest gained 0.3 per cent. Losses among the big four banks ranged from 1.7 per cent for CBA to 3.8 per cent for Westpac. ANZ shed 2.8 per cent and NAB 2.4 per cent.

The damage at the smaller end of the market was more substantial. The Small Ords tumbled 2.4 per cent.

Asian markets followed Wall Street into the red. China’s Shanghai Composite gave up 0.8 per cent, Hong Kong’s Hang Seng 1.2 per cent and Japan’s Nikkei 1.5 per cent.

Gold trimmed its 1.1 per cent overnight gain, easing $6.50 or 0.4 per cent to $US1,733.30 an ounce.

The dollar continued to crater, declining another 0.4 per cent to 68.25 US cents.

What’s hot today and what’s not:

Hot today: Health tech business Mach7 (ASX:M7T) was one of the morning’s few significant winners after announcing it had raised $23.4 million from institutional investors to buy Canadian company Client Outlook. Mach7 reported strong demand for the new issue at 68 cents, a 13.9 per cent discount to the company’s last traded price. The cash will go towards the $40.8 million purchase of Client Outlook, which specialises in enterprise viewing technology. The M7T share price rose 10 per cent to 84.5 cents against a falling tide.  

Not today: There is never a good day to learn you are being kicked out of the S&P/ASX 200, but today would rank among the worst. S&P Dow Jones Indices periodically rebalances its indices to reflect the changing fortunes of their components. Among those given their marching orders this morning, Estia Health fell 8.1 per cent, HUB24 5.2 per cent, Jumbo Interactive 3.5 per cent, Mayne Pharma 5.7 per cent, Pilbara Minerals 9 per cent and Pinnacle Investment Management 6.6 per cent.  

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