An early ASX rise soon lost momentum on Monday as Covid-19 concerns and unexpectedly strong inflation data out of China cast a lengthening shadow over regional sharemarkets.
The Australian benchmark began the week strongly as traders piled in to value-orientated banking, mining and energy names, but the release of Chinese data late in the morning triggered an about-face.
Further stoking uncertainty was China’s escalating virus outbreak, which has resulted in the wider and extended lockdown of major urban centres and seriously crimped the nation’s economic activity.
Sliding iron ore futures subsequently took the wind out of the sails of BHP and Rio Tinto, while Twiggy Forrest’s Fortescue Metals was another heavy loser in the first session of the week.
The big banks managed to keep the ASX 200 narrowly in front at the close, with the market finishing just 7.2 points or 0.1 per cent higher at 7,485.2.
The bourse had earlier climbed by as much as 0.6 per cent and back above 7500 points before the Chinese data dump.
Elsewhere, the broader All ordinaries ended Monday’s trade pretty much flat – just 1.2 points higher – at 7773.2.
The Aussie dollar softened to 74.31 US cents at the local close.
OANDA Asia-Pacific senior analyst Jeffrey Halley said China’s Covid situation was “making Asia nervous”, and had added to a litany of economic concerns, ranging from developer sector debt and hotter-than-expected inflation.
“With China’s government doggedly sticking to its Covid-zero policy, fears are increasing that an extended lockdown in China, which may spread to other major industrial cities, will darken an already cloudy outlook for China‘s growth,” Mr Halley said.
One silver lining, Mr Halley said, was that a slowdown in China had taken some heat out of the commodities market, particularly oil.
However: “Don’t get wedded to lower oil prices or a sustained “the worst is over” FOMO bounce in equity markets,” he said.
“Staying more heavily weighted in cash, or perhaps some precious metals, buying a Kevlar helmet, and settling in to watch the whole mess develop from the sidelines may be no bad thing.”
US markets were mixed over the weekend with technology stocks particularly volatile as bond yields ramp to multi-year highs.
In the local tech space, Afterpay owner Block Inc dropped another 2.3 per cent to $164.48 and is now 16 per cent off its high of $196, hit on March 30.
There was also a 2.7 per cent fall for Appen, a 1.3 per cent drop for Altium, a 3.9 per cent fall for Tyro Payments, and a 0.6 per cent decline for Xero to $101.51.
BHP started well but eventually closed 0.5 per cent down at $51.68.
Rio Tinto lost 1.2 per cent to end at $117.50, Fortescue Metals was 2.9 per cent down at $21.19 and Champion Iron dropped 1.4 per cent to $7.58.
Gold miners Newcrest, Northern Star and Evolution all shone brightly as the precious metal edged up towards $US1950 an ounce, but the lithium cohort was badly bruised.
Vulcan Energy dropped 4.8 per cent to $9.01, Pilbara Minerals fell 3.8 per cent to $3.08, Mineral Resources shed 3.3 per cent to $59.29 and Allkem ended 0.2 per cent lower at $13.06.
Woolworths rose 1 per cent to $38.22 and Coles was up 1.1 per cent to $18.44, but Wesfarmers sagged 1.2 per cent to $48.45 and Aristocrat Leisure ended 1.4 per cent down at $32.93.
NAB was the strongest of the Big Four, rising 1.5 per cent to $32.96, followed by Commonwealth Bank, which added 1.4 per cent to $106.88.
Westpac rose 0.6 per cent to $24.24, ANZ gained 0.7 per cent to $27.70, but Macquarie Group ended 0.9 per cent lower at $201xjmtzyw.91.
