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Aussie shares retreated from 13-month highs as declines in miners and supermarkets outweighed advances in tech and property stocks.

The S&P/ASX 200 dropped 20 points or 0.28 per cent by mid-session. A negative close this afternoon would end a five-session winning streak, the longest in four months.

What’s driving the market

Traders locked in profits from the ASX’s best week since early February. The ASX 200 had put on 170 points in three sessions coming into today, closing yesterday at the strongest level since the early days of the pandemic.

News last night of a further setback in the government’s troubled vaccine program handed investors a reason to take some money off the table. Prime Minister Scott Morrison declared the AstraZeneca vaccine would not be made available to Australians under 50 due to possible risks associated with blood clotting. The policy change seemed certain to delay the inoculation program.

“The move away from the AstraZeneca vaccine in Australia will further slow the vaccine rollout given the heavy reliance on it which in turn poses a downside risk to the recovery but overall we see the risk as small and not enough to justify any changes to forecasts,” AMP Chief Economist Shane Oliver said.

The most visible victim of the AstraZeneca vaccine setback was local manufacturer CSL. The Australian giant was contracted to make 51 million doses for the federal government. Shares in the company fell 1 per cent.

“The faltering inoculation effort can trigger investors’ shift away from cyclical plays towards defensive stocks. The classic defensive plays, including IT and fast-moving consumer goods, are expected to gain prominence in the short run amid fainted economic recovery hopes,” Kalkine Group CEO Kunal Sawhney said.  

“However, investors’ moves will be interesting to gauge in the long run when the vaccine rollout concerns are anticipated to average out, brightening economic revival prospects and stimulating demand for cyclicals.”

The market retreated despite a positive night in the US. The S&P 500 rallied 0.42 per cent to a second straight record close. The Nasdaq Composite put on 1.03 per cent.

“Make no mistake this is a global equity market that is turning exceptionally comfortable with growth driving up yields supported by a Fed that is in absolutely no hurry to tap the brakes,” Stephen Innes, Chief Global Market Strategist at Axi, said.

“The question is, does it get better than this, or are we nearing peak optimism? Or will US stocks remain in ‘kids in a candy store mode’ while gliding on a sugar rush tailwind from a once in a generation type stimulus effect?”

Going up

Gold miners filled most of the slots at the top of the index on the back of a six-week high in the yellow metal. Silver Lake Resources gained 5.6 per cent, Westgold 4.4 per cent, Resolute 3.2 per cent and Ramelius 3.1 per cent.

Online retailer Kogan and litigation financier Omni Bridgeway denied the miners a clean sweep at the top. Kogan rose 6 per cent and Omni 3.9 per cent. Gold giant Newcrest added 0.4 per cent.

Technology was the best-performing sector in the US overnight. Here, Afterpay hit a five-week high before trimming its gain to 1.8 per cent. Xero gained 2.1 per cent, NextDC 1.6 per cent and Nearmap 0.9 per cent.

REITs were another sector to benefit from a temporary retreat in bond yields. The ten-year Australian yield eased three basis points this morning to 1.66 per cent, before reversing higher. Cromwell Property rose 1.2 per cent, Goodman Group 1.1 per cent and Charter Hall Retail 1 per cent.

Mining services firm Perenti Global advanced 1.6 per cent after booking $80 million from its exit from twin contracts in Africa.

Going down

The materials sector retreated from yesterday’s five-week peak as falling iron ore producers outweighed advances in gold miners. BHP dropped 1.2 per cent, Rio Tinto 0.7 per cent and Fortescue 0.4 per cent.

The financial sector gave up a pandemic-era high as a 0.5 per cent rise in Macquarie Group and gains of 0.2 per cent for NAB and Westpac were blunted by falls of 0.3 per cent for CBA and 0.1 per cent for ANZ.   

Supermarkets Woolworths and Coles declined 1.6 and 0.3 per cent, respectively. Energy giant Woodside shed 1 per cent, Telstra 0.2 per cent and Transurban 0.1 per cent.  

Other markets

US futures trimmed initial gains as most Asian markets retreated. The Asia Dow shed 0.18 per cent. China’s Shanghai Composite lost 0.69 per cent and Hong Kong’s Hang Seng 0.5 per cent. Japan’s Nikkei gained 0.35 per cent.

S&P 500 futures slashed their advance to four points or 0.1 per cent. Nasdaq futures gained 0.3 per cent.

Gold eased off six-week highs, falling $3.30 or 0.2 per cent to US$1,754.90 an ounce. Brent crude inched up two cents or less than 0.1 per cent to US$63.22 a barrel.

The dollar faded 0.22 per cent to 76.39 US cents.

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