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Commodity producers steered the share market lower following fresh Covid restrictions in parts of China.
The S&P/ASX 200 eased 12 points or 0.17 per cent by mid-session. The reversal put the index on track for its first loss in three sessions.
Energy and mining stocks provided much of the down-pressure. Strength in defensive sectors helped cushion the index from a deeper loss. Property stocks, supermarkets and utilities were among the morning’s best performers.
What’s driving the market
Investors turned to traditional havens this morning, mirroring similar trends in the US on Friday after the Federal Reserve warned a smaller interest rate hike next month was no certainty. Fed official Susan Collins said the market should not discount the possibility of a fifth straight 75 basis points increase.
“75 still is on the table, I think it’s important to say that,” she said.
Recent market pricing suggested investors were betting on a 50 bp increase following recent signs inflation may have peaked. The S&P 500 overcame a mid-session wobble to advance 0.48 per cent.
Trading volumes were expected to dwindle this week as the US winds down for Thanksgiving and the soccer World Cup gets underway in Qatar.
“It’s relatively quiet with the US out for Thanksgiving on Thursday (equity and bond markets close), while markets also close early on Friday with many likely taking a long weekend too, not to mention the World Cup,” NAB’s head of market economics, Tapas Strickland, said.
Bulk metal miners and energy producers fell after Chinese authorities locked down part of the manufacturing hub of Guangzhou for five days. Elsewhere, authorities in Shijiazhuang, the capital of Hebei province, advised all residents to stay home.
Case numbers in China have risen sevenfold in the last two weeks, according to The Wall Street Journal. The growing outbreak prompted the State Council to warn cities late last week against “irresponsible loosening” of restrictions.
Iron ore dropped 0.9 per cent this morning on the Dalian Commodity Exchange. Oil added to last week’s 8.7 per cent decline. Brent crude retreated 93 US cents or almost 1.1 per cent to US$86.66 a barrel.
Hong Kong’s main index, the Hang Seng, fell 3.33 per cent. On the mainland, the Shanghai Composite shed 0.67 per cent. The Asia Dow gave up 0.58 per cent and Japan’s Nikkei 0.06 per cent.
Going up
Lithium producers mounted a tentative rebound from last week’s sell-off. Liontown Resources climbed 3.55 per cent, Core Lithium 0.36 per cent and Allkem 0.86 per cent.
Developer Lake Resources rose 1.19 per cent after resolving a contract dispute with Lilac Solutions. The companies agreed to amend the timeline for developing the Kachi project in Argentina.
In the utilities space, AGL Energy put on 2.78 per cent, APA 1.18 per cent and Origin 0.73 per cent.
Stockland, HomeCo and SCA Property Group were the pick of the REITs, gaining between 1.14 and 1.36 per cent.
Among the heavyweights, Transurban added 1.44 per cent, Westpac 1.1 per cent and Coles 1.48 per cent. Woolworths put on 1.02 per cent.
Junior explorer Iceni Gold more than doubled in value after finding gold nuggets at its Guyer project in WA. The miner said the discovery of two ounces of high-purity nuggets confirmed the prospectivity of target areas.
“The shape and composition of the nuggets suggest primary sources are nearby. The results of the air core program at Guyer that covers the same area will help to confirm if there is mineralisation in that area,” the miner’s technical director, David Nixon, said.
Shares in the miner soared from 6.4 cents to 15.5 cents, a gain of 142.19 per cent.
Shares in app-maker Life360 were placed in a trading halt pending an announcement about a capital raising.
Going down
The major ore producers backed off multi-month highs as tightening Covid restrictions in China dampened optimism about stimulus measures for China’s property sector.
Fortescue Metals dropped 3.71 per cent. Rio Tinto fell 2.07 per cent. BHP shed 1.82 per cent.
Energy producers tracked crude prices lower. Woodside Energy gave up 1.48 per cent, Santos 0.54 per cent and Beach Energy 1.74 per cent.
Medical diagnostics provider Healius slumped 5.42 per cent to a 28-month low after refusing to address speculation it will sell its day hospital business to Queensland Investment Corporation. The firm noted an article published by The Australian but said it “does not comment on media speculation”.
Doubts over full-year earnings dragged QBE down 0.89 per cent. The insurer said “higher than expected catastrophe costs” posed a risk to its full-year outlook. Growth in gross written premiums would help offset a likely blowout in catastrophe costs.
Copper miner Sandfire eased 0.32 per cent after raising $147 million from institutional investors. A retail entitlement offer opens on Friday.
PEXA dropped 3.53 per cent to $13.68 after Link Group sold 10 per cent of its 42.77 per cent holding in the property settlements platform at $13.50 per share.
Link will use the proceeds to pay down debt. The company intends to distribute the rest of its holding to Link Group shareholders. Link shares eased 1.01 per cent.
Nanosonics slumped 12.01 per cent after Friday’s trading update prompted a broker downgrade from Canaccord.
Other markets
US futures tracked Asian markets lower. S&P 500 futures were recently down 13 points or 0.33 per cent.
Gold dropped US$7.60 or 0.4 per cent to US$1,746.80 an ounce.
The dollar slipped 0.37 per cent to 64.58 US cents.
