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Travel and tourism stocks helped pull the ASX into the red as Sydney’s expanding Covid cluster overshadowed positive overseas leads.

The S&P/ASX 200 declined seven points or 0.1 per cent by mid-session.

Qantas, Sydney Airport, shopping centres and travel agents declined after Greater Sydney and Darwin went into lockdown. E-tailers and supermarkets were among the morning’s winners.

What’s driving the market

The share market fell for the third time in four sessions since the scale of Sydney’s Covid breakout became apparent. Over the weekend, the NSW state government sent Greater Sydney into a two-week lockdown. Darwin announced a snap 48-hour lockdown.

NSW health authorities this morning announced 18 new locally-acquired Covid-19 cases in the 24 hours to 8 pm last night. The total number of cases in the current breakout increased to 130. Queensland recorded two new cases.

The deteriorating domestic outlook overshadowed a positive end to Wall Street’s best week since February. The S&P 500 rose 0.33 per cent on Friday to a record close and a weekly tally of 2.74 per cent.

“Progress or otherwise in covid infection containment amid the two-week stay-at-home orders for Greater Sydney will be dominating the headlines locally this week,” NAB Head of FX Strategy Ray Attrill said. “The outbreak has postponed an event that the RBA Governor was due to present at on Wednesday, meaning we won’t hear from the RBA again until the 6 July Board Meeting.”

The morning’s action underlined the gulf between winners and losers from pandemic lockdowns. Online retailer Kogan climbed 4.1 per cent, Temple & Webster 8.04 per cent and Redbubble 7.58 per cent. Supermarkets Woolworths and Coles rose 2.64 and 0.3 per cent, respectively.

Qantas sank 4.33 per cent to a six-week low. Sydney Airport shed 0.85 per cent. Travel agents Flight Centre and Webjet lost 1.53 and 3.36 per cent, respectively.

Shopping centre operators also declined. Unibail-Rodamco-Westfield shed 3.22 per cent, Scentre Group 2.85 per cent and Vicinity Centres 2.58 per cent.

Going up

Consumer staples was the morning’s best performer amid reports of panic buying as Sydneysiders prepared to stay home. The newly-listed Endeavour Group (Dan Murphy’s and BWS) jumped 3.44 per cent.

Metcash rallied 1.78 per cent as a shift in shopping habits helped the operator of the IGA network lift full-year underlying profit 27.1 per cent to $252.7 million. Charge-through sales exceeded $16 billion for the first time. CEO Jeff Adams said greater competitiveness helped the group’s retailers gain customers.

“This, together with the continuation of an increased preference for local neighbourhood shopping and the migration from cities to regional areas, has driven strong sales growth across our independent retail networks, significantly improving their overall health,” Mr Adams said.

Healthcare was the session’s other leader, reflecting the defensive tone to the day’s trade. Sonic climbed 1.51 per cent, Fisher & Paykel 1.54 per cent and CSL 1.49 per cent.

The major miners were mixed but mostly higher following upticks in iron ore and precious metals on Friday. BHP added 0.96 per cent, Rio Tinto 0.54 per cent and Fortescue 0.26 per cent. Newcrest dipped 0.99 per cent.

Going down

Westpac eased 0.5 per cent after announcing the sale of its car dealer finance and leasing business to non-bank finance firm Angle Finance. The sale will generate an accounting gain on completion. The bank is in the process of reducing costs and exiting non-core businesses.

ANZ shed 0.55 per cent and NAB 0.53 per cent. CBA edged up 0.15 per cent.

A production miss sent Gold Road Resources down 7.92 per cent. The miner said disruptions at the Gruyere mine this quarter would drag calendar-year production towards the lower end of previous guidance. Problems at the mill included a torn mill feed conveyer belt and a failed coupling on the ball mill.

Afterpay dived 7 per cent as a rally in bond yields weighed on technology and other sectors whose future earnings depend heavily on borrowing to fund growth. Z1P Co sank 4.98 per cent, Nearmap 3.82 per cent, EML Payments 2.96 per cent and Nuix 2.24 per cent.  

Buy-now-pay-later operator Splitit dipped 0.87 per cent after announcing its entry in the Middle East market. Splitit will partner with regional BNPL player tabby to integrate Splitit’s instalment payment solution as a white-label component of tabby’s platform. Splitit says tabby is the leading BNPL provider in Saudi Arabia and the United Arab Emirates.

Nine Entertainment announced it had secured the broadcast rights to some of Europe’s blue-riband soccer events. The UEFA Champions League, Europa League and Europa Conference League will be exclusive to Stan for three years. The share price eased 0.67 per cent.

Other markets

Asian markets were mixed. The Asia Dow advanced 0.76 per cent. Japan’s Nikkei eased 0.17 per cent. China’s Shanghai Composite inched up 0.02 per cent. The start of trade in Hong Kong was delayed this morning by the threat of severe weather.

US futures edged higher. S&P 500 futures gained a point or 0.03 per cent.

Gold retreated $4 or 0.22 per cent to US$1,773.80 an ounce. Brent crude declined six cents or 0.08 per cent to US$75.32 a barrel.

The dollar faded 0.13 per cent to 75.85 US cents.

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