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Australian sharemarket slips despite better than expected GDP figures, Coles and Woolworths big drags

The Australian sharemarket slumped, after GDP figures showed east coast Delta lockdowns had a massively negative economic impact, but managed to claw back much of the losses in afternoon trade.

The benchmark S&P/ASX200 index closed 0.28 per cent lower at 7235.9, while the All Ordinaries Index slipped 0.39 per cent to 7557.8.

CommSec analyst Tom Piotrowski said the local bourse conspicuously outperformed markets in Europe and Wall Street overnight at open, but that was soon over.

“The market fell away – at its worst levels it was down about 1 per cent, but I suppose the one thing that stands out is there has been an absence of accelerated selling,” Mr Piotrowski said.

“And considering the inputs that we’ve seen over the course of the last day – the discussion around vaccine efficacy, the prospect of the US Federal Reserve unwinding its support sooner rather than later – these are all pretty significant issues that could reasonably unhinge the markets.

“But together we’ve actually seen a pretty measured response. Certainly sellers have had the better of the situation.”

The GDP numbers showed a 1.9 per cent contraction – the second biggest in 47 years.

“That compared to expectations on average of around 2.7 per cent, so a far better result than was anticipated,” Mr Piotrowski said.

OMG chief executive Ivan Tchourilov said it was interesting the market faltered after the GDP figures were announced, but staged a late recovery on what were relatively promising numbers.

“Household savings are also on the rise, with cashed-up consumers expected to be emptying their accounts somewhat over the silly season,” Mr Tchourilov said.

“It’s important to note that lockdowns were in place when these figures were taken, which has set the stage for a strong recovery in GDP.”

He said equity markets had quickly recovered from Omicron fears, but the oil price wasn’t given any respite and continued to fall.

OANDA’s senior market analyst for Asia Pacific, Jeffrey Halley, said oil prices were “perhaps the most schizophrenic market out there at the moment”.

“And we haven’t even got to OPEC+ yet,” he said.

Oil and gas producers were mixed, however, with Beach Energy declining 0.84 per cent to $1.17, Oil Search rising 1.3 per cent to $3.86, Origin Energy retreating 0.42 per cent to $4.78, Santos backtracking 0.94 per cent to $6.32 and Woodside firming 0.33 per cent to $21.50.

Exposure Site
Camera IconWoolworths and Coles were a major drag on the ASX. Tara Croser Credit: News Corp Australia

But consumer staples were the biggest weight, with Coles shedding 1.55 per cent to $17.74 and Woolworths slumping 2.4 per cent to $39.84.

“They had a pretty good November – they were up by about 7 per cent – but there are concerns about how they might run into the early part of December,” Mr Piotrowski said.

Budget retailer Best & Less was a strong performer, leaping 8.44 per cent to $3.47 for no glaringly obvious reason.

The miners helped to limit the losses.

South32 jumped 3.97 per cent to $3.67, Rio Tinto rose 2.42 per cent to $95.76, BHP lifted 1.35 per cent to $39.90, Fortescue Metals added 1.53 per cent to $17.27 but Chalice Mining gave up 5.92 per cent to $9.38.

Liontown Resources was steady at $1.92 after announcing a huge $490m capital raising to pay for development of its Kathleen Valley lithium project in Western Australia.

Gold miner Northern Star also didn’t budge from $9.44 after revealing it was expanding into Canada.

Commonwealth Bank lifted 0.75 per cent to $93.88, National Australia Bank gained 0.29 per cent to $27.38 and Westpac improved 0.49 per cent to $20.62.

ANZ faces a class action over credit card contracts. Dominic Elsome
Camera IconANZ faces a class action over credit card contracts. Dominic Elsome Credit: News Regional Media

ANZ dipped 0.23 per cent to $26.64 after acknowledging class action proceedings had been filed against it in the Federal Court of Australia, alleging credit card contracts were unfair from mid-2010 to the start of 2019.

Biotech behemoth and market heavyweight CSL put on 0.78 per cent to $309.19.

Embattled casino operator Crown Resorts slid 0.73 per cent to $10.94 after announcing former telco supremo Ziggy Switkowski had officially taken on the chairman’s role after regulatory approvals were received.

Afterpay dropped 2.16 per cent to $106.50, while smaller buy-now-pay-later rival Zip gave up 2.32 per cent to $5.05.

Mr Piotrowski said Afterpay’s fortunes were tied to the performance of its American acquirer Square.

The Aussie dollar was fetching 71.69 US cents, 53.79 British pence and 63.24 Euro cents in afternoon trade.

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