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Fears of a second shutdown in the US helped send Australian shares down almost two per cent.

The S&P/ASX 200 reached mid-session 105 points or 1.8 per cent lower after a mid-morning recovery ran out of steam. At its weakest point, the index was off more than 2 per cent.

The market slumped to its weakest level in seven sessions after a resurgence of COVID-19 infections sent Wall Street sharply lower. The S&P 500 shed 2.59 per cent after the US recorded its second-biggest daily increase in new cases since the start of the pandemic. The Dow slumped 710 points or 2.72 per cent amid reports some states were considering reimposing restrictions to slow the virus’s spread.

Travel and tourism stocks led the rout after Qantas announced plans to cut its 29,000-strong workforce by 6,000 and raise $1.6 billion at a substantial discount to its last traded share price. With Qantas’s stock in a trading halt, Air New Zealand fell 6.1 per cent, Flight Centre 10 per cent, Webjet 8.9 per cent, Helloworld 8.4 per cent, Corporate Travel Management 7.4 per cent and Sydney Airport 5.3 per cent. The falls mirrored heavy declines in US travel and tourism stocks overnight.

Defensive health was the only sector to resist the cold wind blowing across the Pacific. CSL rallied 0.7 per cent after buying the rights to a promising therapy for haemophilia B. ResMed inched up 0.3 per cent. A flat morning for supermarkets Woolworths and Coles made the consumer staples sector the second-best performer with a fall of 0.4 per cent.

The big miners opened weak, halved their falls then fell away again. BHP was last down 1.8 per cent, Fortescue 1.6 per cent and. Rio Tinto 1.4 per cent. Newcrest shed 3 per cent.

The big four banks slumped at the open and stayed there. CBA was last down 1.6 per cent, ANZ 1.9 per cent, NAB 2.5 per cent and Westpac 2.3 per cent.

A 5.3 per cent slide in oil overnight dragged the energy sector down 2.6 per cent despite a modest rebound in crude this morning. Oil Search declined 6.4 per cent, Beach Energy 5.6 per cent, Woodside 3.2 per cent and Santos 2.6 per cent. Brent crude fell another 27 cents or 0.7 per cent this morning to $US40.04 a barrel.

The Commonwealth Bank this morning upgraded its economic outlook, citing evidence the worst of the hit from the pandemic has passed. The bank’s economists now expect gross domestic product to contract 3.2 per cent this year, an improvement on the 4.2 per cent previously quoted.

“As the economy is reopened it is clear to us that we are past the low point in economic activity,” the bank said in a note to clients.

Japan’s Nikkei dropped 1.3 per cent. Markets in China and Hong Kong were closed for a public holiday. S&P 500 index futures declined 19 points or 0.6 per cent.

Gold retreated $4.70 or 0.3 per cent this morning to $US1,770.40 an ounce.

The dollar dipped 0.2 per cent to 68.59 US cents.

What’s hot today and what’s not:

Hot today: Manhattan Corporation (ASX:MHC) and Metalcity (ASX:MCT) picked the right day to release strong gold drilling results. In times of market turmoil, traders look to defensive gold stocks. MHC shares bolted 42.9 per cent to a 22-month high on news of a new shallow high-grade gold discovery 250 metres west of known mineralisation at the New Bendigo Main Zone in north-west NSW. MCT fared better still, surging  71.4 per cent after releasing “spectacular” assays from the first 11 holes of 44 planned at its Kookynie gold project in WA.

Not today: Electronic payment companies that have enjoyed spectacular gains since the March pandemic lows suffered a setback this morning. Flexigroup (ASX:FXL) retreated 7.6 per cent, EML Payments (ASX:EML) 6.7 per cent, Z1P (ASX:Z1P) 5.8 per cent, Afterpay (ASX:APT) 3.7 per cent and Sezzle (ASX:SZL) 0.7 per cent. The declines came as a surging in coronavirus cases in the US raised doubts about the outlook for the global economy.

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