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ASX's three-day winning run grinds to halt

Steven Deare
·4-min read

Investors' run of three days of gains on the Australian share market has ended, and an analyst cited inflation expectations as hampering results.

The S&P/ASX200 benchmark index closed lower by 59.1 points, or 0.87 per cent, to 6765.5 on Thursday.

The All Ordinaries closed lower by 53 points, or 0.75 per cent, at 7037.9.

All sectors were lower. Property had the biggest drop, 2.38 per cent, after climbing 2.56 per cent on Wednesday.

Utilities lost two per cent. There were losses of more than one per cent for health, industrials, energy and consumer discretionaries.

Most Asian markets closed lower, after a mixed performance from Wall Street.

Deep Data Analytics chief executive Mathan Somasundaram said expectations of inflation in the US were affecting shares.

"Look at what bonds are doing," he said.

"We are getting reflation in the US. That's driving the bond market to take profits."

Reflation is the stimulating of the economy, which governments in the US and Australia, as well as elsewhere, have done soon after the pandemic began.

Mr Somasundaram noted Australian bond yields jumped 10 basis points in the two days after the Reserve Bank decisions on Tuesday.

"That's a decent move, and that's telling you inflation is coming," he said.

"When the cost of borrowing rises, the market has to pull back."

Meanwhile, US President Joe Biden's Democrats are preparing to push his $US1.9 trillion coronavirus relief package through without Republican votes if necessary.

In Australia, health authorities in Melbourne are testing contacts of a man who may have a more virulent variant of coronavirus.

The infected man was working at a quarantine hotel where tennis players were staying before the Australian Open.

The development comes as many West Australians continue a week of lockdown following a quarantine worker contracting coronavirus.

On the ASX, furniture retailer Nick Scali is courting controversy with no plans to repay $3.5 million in JobKeeper assistance, despite a bumper profit.

The company reported first-half net profit rose by almost 90 per cent to $40.6 million for the six months to December 31.

Helping Nick Scali's earnings was more than $3.5 million in JobKeeper wage subsidies from the federal government.

Shareholders will benefit. They will receive a fully franked dividend of 40 cents per share. That is better than the interim 2020 payout of 25 cents per share, fully franked.

Shares closed lower by 0.85 per cent to $10.51.

Charter flight provider Alliance surged by 9.44 per cent to $4.29 after it said it would lease aircraft to Qantas.

Alliance will provide planes which carry 94 passengers, and will fly mostly between Adelaide and Darwin.

Three planes will be provided, but Qantas can ask for 11 more, depending on demand.

Alliance said the deal was worth more than five per cent of sales.

Origin Energy slipped 6.85 per cent to $4.62 after giving lower earnings guidance for its energy and liquefied natural gas operations.

Energy markets underlying earnings were expected to be between $1 billion and $1.1 billion, down from a previous forecast of between $1.1 billion and $1.3 billion.

Guidance for liquefied natural gas was between $US24 and $US28 per barrel, down from the previous range of $US25 to $US29.

In banking, the big four lost less than one per cent.

In mining, BHP lost 0.5 per cent to $43.91, Fortescue gained 1.81 per cent to $23.07 and Rio Tinto climbed 0.46 per cent to $114.28.

The Aussie dollar was buying 76.25 US cents at 1718 AEDT, higher from 76.17 US cents at Wednesday's close.

ON THE ASX

* The S&P/ASX200 benchmark index closed lower by 59.1 points, or 0.87 per cent, to 6765.5 on Thursday.

* The All Ordinaries closed lower by 53 points, or 0.75 per cent, at 7037.9.

* At 1718 AEDT, the SPI200 futures index was higher by five points, or 0.07 per cent, at 6702 points.

CURRENCY SNAPSHOT

One Australian dollar buys:

* 76.25 US cents, from 76.17 cents on Wednesday

* 80.21 Japanese yen, from 79.92 yen

* 63.50 Euro cents, from 63.20 cents

* 56.09 British pence, from 55.74 pence

* 106.00 NZ cents, from 105.46 cents.