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Aussie shares extended last week’s decline after rising Covid cases in Europe and the US rekindled fears of a global slowdown.   

The S&P/ASX 200 trimmed a sharp early fall of almost 60 points to 35 points or 0.48 per cent by mid-session.

Seven of eleven sectors retreated, led by falls in energy and tech stocks. Mining and select defensive stocks edged higher.

What’s driving the market

Fears of a fresh wave of pandemic restrictions were stoked by a lockdown in Austria and tougher regulations in Germany, the Netherlands. Slovakia, the Czech Republic and Belgium. Covid-19 cases have increased sharply over the last few weeks in Europe and the US as a fourth wave sweeps the northern hemisphere.

“Sentiment was weaker on Friday on news of rising Covid cases in Europe. Austria announced a fresh lockdown and there are concerns that other countries will do the same. European shares were weaker, bond yields fell and oil prices moved lower,” CommSec senior economist Kristina Clifton said.

US stocks finished mixed on Friday as investors abandoned “reopening stocks” for the tech giants that fared best at the height of the pandemic. The Nasdaq Composite rallied 0.4 per cent to a new closing high. The S&P 500 dipped 0.14 per cent. The industrial-heavy Dow slid 0.75 per cent.

US futures rallied ahead of a week dominated by the appointment of a new Federal Reserve Chair and the looming Thanksgiving holiday. S&P 500 futures rose 11 points or 0.23 per cent.

Here, Commonwealth Bank sounded a warning for house buyers. The bank’s economists expect prices to top out next year and slide 10 per cent in 2023. The team predict prices will increase a national average of 22 per cent by the end of this year and 7 per cent this year before rising rates put a halt to the bull market.

Gareth Aird, head of the bank’s economics and market research unit, predicted “an orderly correction in home prices of around 10 per cent in 2023 as the RBA takes the cash rate to 1.25 per cent by Q3 2023”.

Going up

AMP gained 2.64 per cent after opting to keep management of its wholesale office fund in-house. The Trustee Board decided AMP Capital should continue as trustee and manager of the fund as the pick of three management proposals from a shortlist assessed by the board.

A rebound in iron ore and industrial metals on Friday supported the miners. Bulk metal prices rallied amid signs of progress in stabilising China’s troubled property sector. Under-siege Evergrande resumed work on several stalled projects.

Nickel Mines climbed 7.56 per cent, Orocobre 4.28 per cent, Pilbara Minerals 4.03 per cent, Fortescue Metals 1.39 per cent and Rio Tinto 1.3 per cent. BHP slipped 0.12 per cent.

Treasury Wine Estates rose 1.92 per cent to its highest in five weeks following last week’s move to buy a Californian wine maker.  

Defensive stocks gained momentum as the morning advanced. CSL put on 0.49 per cent, Woolworths 0.47 per cent and Coles 0.5 per cent.   

Going down

Travel and tourism stocks joined a global retreat from reopening plays. Flight Centre shed 5.16 per cent, Webjet 2.37 per cent, Corporate Travel Management 3.8 per cent and Qantas 3.01 per cent.

Energy stocks followed crude lower. Brent crude hit a seven-week low on Friday and continued to fall this morning amid concerns about the demand implications of renewed lockdowns. The international benchmark slid 12 US cents or 0.15 per cent to US$78.77 a barrel.

Beach Energy dropped 4.02 per cent, Oil Search 2.5 per cent, Woodside 2.35 per cent and Santos 2.23 per cent.

Lenders declined as a retreat to the haven of government bonds pressured long-term interest rates. CBA fell 1.57 per cent to a six-month low. ANZ shed 1.76 per cent, NAB 1.3 per cent and Westpac 2.08 per cent.

Biopharmaceutical firm Mesoblast eased 1.45 per cent after securing fresh financing to pay down existing debt and help launch its first product in the US. US fund manager Oaktree Capital will provide up to US$90 million through a five-year debt facility.

Coronado sank 3.48 per cent following the death of an employee at the miner’s Curragh coal operation in Queensland. Operations at the mine have been suspended while authorities investigate.

Other markets

A mixed session on Asian markets saw the Asia Dow fall 0.34 per cent, Hong Kong’s Hang Seng 0.08 per cent and Japan’s Nikkei 0.31 per cent. China’s Shanghai Composite gained 0.43 per cent.

Gold faded US$6 or 0.3 per cent to US$1,845.60 an ounce.

The dollar climbed 0.14 per cent to 72.4 US cents.

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