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The share market shed its gains for the week as negative leads from Wall Street ensured a recent run of daily reversals continued.
The S&P/ASX 200 dived 59 points or 1 per cent to 6036, erasing the remnants of Tuesday’s 155-point rally.
Today’s setback extended a stop-start streak that has seen the market reverse direction each session since July 8. The sharp snapback from the March pandemic low peaked in early June. While the overall market trend remains positive, the angle of recovery has grown shallower and day-to-day moves choppier.
Wall Street set the scene for today’s setback with its heaviest downturn in four weeks. The S&P 500 dropped 1.23 per cent after an increase in jobless benefit claims sharpened concerns that the economic rebound has stalled with unemployment still stubbornly high.
The volatile tech sector once again spearheaded the Australian decline following a 2.29 per cent tumble on the Nasdaq as traders bailed out of the market-leading Big Tech group of stocks. Megaport fell 5.6 per cent, Afterpay 3.1 per cent and Nearmap 3.1 per cent.
Utilities provided a haven, edging up 0.4 per cent as AGL gained 0.8 per cent, AusNet +1.4 per cent and sector heavyweight APA Group 0.2 per cent.
A record high in gold proved no security blanket for our miners, with traders apparently viewing last night’s rally as a potential top. Evolution Mining led the retreat, falling 6.7 per cent a day after hitting an all-time high. Gold Road Resoures shed 3.6 per cent, Northern Star 3.2 per cent and Newcrest 1.2 per cent. Gold eased $3.90 or 0.2 per cent in electronic trade to $US1,886.10 an ounce.
A warning from Bank of Queensland of rising arrears added to headwinds for the financial sector. BOQ shares dropped 2.6 per cent after it reported a $112 million increase in loans more than 90 days behind on repayments. CBA declined 1 per cent, Westpac and ANZ 1.3 per cent and NAB 0.7 per cent.
The morning’s best performers were a mixed bunch: nickel miner IGO +6.3 per cent, agribusiness Elders +3.4 per cent and biotech Avita Therapeutics +3.4 per cent. Outside the top 200 companies, infrastructure specialist Cardno jumped 68.9 per cent and battery minerals supplier Magnis Energy 29.4 per cent.
Business activity accelerated this month, according to preliminary findings from CBA’s purchasing managers’ index. The composite index jumped to 57.9 from 52.7 in June, indicating activity grew at the fastest pace since April 2017. The result was boosted by a sharp improvement in the services sector.
A negative session on Asian markets saw China’s Shanghai Composite shed 1.2 per cent and Hong Kong’s Hang Seng 1 per cent. Japanese markets were closed for a second day of public holidays. S&P 500 index futures edged up three points or 0.1 per cent.
Oil rebounded this morning. Brent crude bounced 19 cents or 0.4 per cent to $US43.50 a barrel after losing 98 cents overnight.
The dollar rose 0.2 per cent to 71.11 US cents.
What’s hot today and what’s not:
Hot today: New stock market listings have dried up as the economic outlook soured, but there was plenty of interest in Kiwi newcomer Aroa Biosurgery (ASX:ARX). Shares in the soft tissue regeneration company that listed at 75 cents traded at more than twice that price, boosting the company’s market cap from $225 million towards $500 million. Buying interest was helped by the fact the company made a profit before it hit the boards, generating revenue of NZ$22 million last financial year and a gross profit of NS$18.7 million. The share price was lately up 86 per cent at $1.39.
Not today: Mum and dad favourite Insurance Australian Group (ASX:IAG) fell to its lowest level since March on news the insurer will not pay a final dividend following “an immensely challenging second half”. The company reports full-year earnings next month, but warned cash earnings had plunged 70 per cent from $931 million in FY2019 to $279 million. Managing Director and CEO Peter Harmer said the result had been dented by payouts for natural disasters, disruption due to COVID-19 and turmoil in financial markets. The share price dropped 6.7 per cent.
