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ASX snaps three-day winning streak, fails to recover from early stumble

The ASX could not recover from an early stumble on the back of a negative US lead, weighed down by resources sector giants.

The Australian sharemarket was unable to fully recover from an early stumble following a negative lead from Wall Street, with blue chip stocks among those in the red.

The benchmark S&P/ASX200 index closed 0.27 per cent lower at 7417 while the All Ordinaries Index fell 0.22 per cent to 7723.2.

CommSec senior economist Ryan Felsman is forecasting the S&P/ASX 200 finishes the year around 7450 points, just shy of existing levels.

He said investors had begun to reassess company valuations, taking into account rising economic risks including the reduction in central bank stimulus, building inflationary pressures and record Delta infections.

The local bourse had a weak start and was down 55 points at its worst on Wednesday.

“Following in the footsteps of the US markets, the ASX stumbled early, and without the help of the blue chips it couldn’t find its feet again,” OMG chief executive Ivan Tchourilov said.

CommSec market analyst James Tao said the energy sector – Tuesday’s big winner – was the worst performer.

“Oil prices are still around six-week highs but we’ve seen a pull back for some of our oil and gas producers,” he said.

AGL slumped 7.44 per cent to $5.85, Beach Energy dropped 4.04 per cent to $1.07, Santos declined 3.54 per cent to $6.26, Oil Search retreated 3.05 per cent to $3.82, Origin backtracked 3.49 per cent to $4.42 and Woodside eased 1.35 per cent to $20.53.

Rio Tinto weakened 1.9 per cent to $104.63, BHP erased 3.52 per cent to $40.26 and Fortescue back-pedalled 1.44 per cent to $17.82.

Mr Tchourilov said his company’s clients saw the opportunity to snap up some of the miners, with materials by far the most sought after sector.

“The price of gold is continuing to rise and bond yields are dipping as the market tentatively seeks firmer ground, even as US inflation came in slightly below forecast,” he said.

“Adding fuel to the fire was the OECD, which reminded us that even pre-pandemic our economy left a lot to be desired, and called for a review of monetary and fiscal policy.

“Overall, it’s a mixed bag, which is likely what the rest of September will be.”

Lithium miners remained in favour, with Pilbara Minerals rocketing 8.4 per cent to $2.45 after revealing the results of its second spodumene concentrate digital auction.

Pilbara Minerals said it naturally intended to accept the highest bid of $US2240 per dry metric tonne, free-on-board, which leaves the shipping cost to the buyer, and said the high margins it was achieving on the platform would prompt it to conduct more sales of the electric car battery commodity in future.

Another lithium miner, Orocobre, put on 2.3 per cent to $9.78.

Financials were a weight, with ANZ giving up 0.36 per cent to $27.61, Commonwealth Bank dipping 0.17 per cent to $101.41 and National Australia Bank sliding 0.32 per cent to $28.14 but Westpac added 0.27 per cent to $25.79.

Retail property giant Stockland was a solid performer, rising 2.86 per cent to $4.67.

Vitamins giant Blackmores dropped 2.24 per cent to $90.04.

“The slowing Chinese economy, whose market they have been relying on this year, could be one reason for the sell-off,” Mr Tchourilov said.

In local economic news, the Westpac-Melbourne Institute Index of Consumer Sentiment rose by two per cent to 106.2 in September.

“Aussies remain resilient, despite extended lockdowns in our biggest cities and rising new Covid-19 Delta case numbers,” Mr Felsman said.

“The quickening of the vaccine rollout and jump in supply of Pfizer and Moderna vaccines – especially to younger Australians – appears to have boosted morale.”

Meanwhile, the NAB Cashless Retail Sales Index for August forecasted an expected drop in retail Australian sales generally.

“Keeping cost margins low and holding on until the world opens back up is the only option they (retailers) have at the moment, but they’ve managed this quite well so far if you look at their results for the year,” Mr Tchourilov said.

Among retailers, the footware company behind brands including The Athlete’s Foot and Skechers, Accent Group, soared 10.73 per cent to $2.27.

Flight Centre eased 0.76 per cent to $18.20 after delivering an investor presentation saying the broader use of home quarantine to replace hotel quarantine, with a trial currently underway in South Australia, would “remove one of the major impediments to travel – customers’ fears of being forced into expensive hotel quarantine”.

The company also said the added complexity of passports and paperwork in a pandemic-ravaged world played to its strengths, reinforcing the value of leisure agents and corporate travel managers.

The Aussie dollar was fetching 73.23 US cents, 52.91 British pence and 62 Euro cents in afternoon trade.

Originally published as Australian sharemarket pulls back, fails to recover from early stumble, with blue chips a major weight

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