Australian stocks made a late market recovery on Tuesday, ending broadly flat after shaking off the volatility sparked by US election runoffs and a new coronavirus lockdown in Britain.
The benchmark S&P/ASX 200 index dipped slightly by 2.3 points, or 0.04 per cent to 6681.9 at the end of the session, while the broader All Ordinaries index was able to add 2 points, or 0.03 per cent to a position of 6955.7.
At the close of Tuesday, the Australian dollar was fetching 77.02 US cents, up 0.5 per cent.
At the beginning of the day, local stocks were quick to mimic falls felt on Wall Street, which sustained sell-offs from market jitters over the election run-offs in the US state of Georgia that could see the Senate tip in favour of the Democrats.
Head of global quantitative and derivatives strategy at JP Morgan Nikolaos Panigirtzoglou said vulnerability in risk markets remains elevated while the run-offs continue.
“There is a risk that market focus could shift toward the near-term risk of tax rises in the event that Democrats win both run-offs, inducing a rise in volatility,” Mr Panigirtzoglou said.
NAB’s head of FX strategy, Ray Attrill also noted the US market sell-off showed “tax, regulatory and bond market concerns evidently won out over the prospect of higher stimulus-driven growth”.
Australia’s materials sector was the key winner of Tuesday with Newcrest Mining, Silver Lake Resources and Lynas Rare Earths benefiting from strong gold prices. At 4.30pm (AEDT), the spot gold price was $US1939.89 per ounce.
Silver Lake Resources experienced the largest share price surge on Tuesday, rising 6.8 per cent to $2.04 per share, while buy now, pay later provider Zip felt the largest slump and fell 5 per cent to $5.31 per share.
Senior Market Strategist at IG Jingyi Pan said the “bullish” momentum of gold prices may be supported in the near term while the Georgia run-offs in the US play out.
“Despite the slight revival of USD strength overnight, gold prices remained largely supported into Tuesday,” Ms Pan said in an investor note.
“A risk-off tone in the equity space coupled with imminent Georgia run-offs could keep prices supported in the short-term.”
All four major banks ended the session lower, Commonwealth Bank’s share price fell 0.6 per cent to $83.23 each, while Westpac also dipped 0.6 per cent to $19.52 per share.
ANZ dropped 0.3 per cent to $22.97 per share while the other Melbourne-based bank NAB closed the day down 1.05 per cent to $22.69 per share.
Stock in jewellery retailer Lovisa tumbled 4 per cent to $11.15 a share, following an update all its 42 stores in Britain would be forced to close due to new lockdown measures imposed to curb the spread of a new and more infectious strain of COVID-19.
A first half of 2021 financial year profit upgrade of 100 per cent to $40.5m compared to the prior corresponding period prompted a jump in furniture retailer Nick Scali, which saw its share price surge 6.3 per cent to $10.51 each.
Major miner Rio Tinto ended the trading day higher, rising 2.1 per cent to $117.79 per share, while its main rival BHP jumped 2.9 per cent to $44.30 per share. Fortescue Metals rose 1.6 per cent to $15.62 per share.
Qantas shares fell 1.4 per cent to $4.84 each despite the airline flagging it had reopened international travel bookings for the middle of the year.
Flight Centre dropped 2.4 per cent to $15.62 per share and Webjet shares were 2.3 per cent lower to $5.05 each at the close.
Telstra finished the session up 1 per cent to $3.04 per share, while Woolworths rose 0.4 per cent to $40.17 per share. Wesfarmers ended the session 0.5 per cent lower to $51.25 per share.