Australian sharemarket a sea of red, with resources, banks and travel stocks among the losers

The ASX fell as the worsening Delta outbreak weighed on travel stocks, while the resources and banking sectors were the biggest losers.

The Australian sharemarket was dragged lower by resources stocks and the big banks, while the travel sector was again hit hard by the worsening Delta outbreak in NSW and Victoria.

The S&P/ASX200 closed 0.85 per cent lower at 7286 while the All Ordinaries Index fell 0.93 per cent to 7559.7.

CommSec analyst James Tao said it wasn’t a great start to the week, not helped by a weak lead from Wall Street and ongoing Covid-19 outbreaks in Australia’s two most populous states.

The loss follows the ASX gaining 1 per cent last week – its best week in seven weeks.

Among the miners, Rio Tinto shed 2.12 per cent to $127.83, BHP slid 2.64 per cent to $50.50 and Fortescue dropped 1.4 per cent to $25.42.

Battery technology company Novonix plunged 10 per cent to $2.61.

OceanaGold lost 4.2 per cent to $2.51 after releasing its preliminary June quarter operational results, reporting record production at its Haile mine in the US, but its Macraes project in New Zealand disappointed, with RBC Capital Markets saying the mine’s recent performance put the company’s full-year output guidance at risk.

Evolution Mining plunged 8.74 per cent to $4.28 after broker downgrades, with Morgan Stanley reducing its price target to $4 following the gold producer’s quarterly update last week.

“It did miss its output guidance, so that certainly has hurt the company’s outlook at the moment,” Mr Tao said.

Energy stocks fell after OPEC and its allies agreed to increase oil supply. Picture: Frederic J. Brown / AFP

In the energy sector, Carnarvon Petroleum slumped 9.09 per cent to 25 cents, Santos declined 2.7 per cent to $6.83, Woodside gave up 1.89 per cent to $22.33 and Oil Search dropped 5.17 per cent to $3.67.

Oil Search boss Keiran Wulff quit after less than 18 months at the helm of the PNG-focused oil and gas producer, with the board citing his long-term medical condition but also saying he had behaved in an “unacceptable” manner.

CommSec senior economist Ryan Felsman said mid-afternoon that global oil prices had fallen by more than 1.1 per cent in Asian trade after OPEC and its allies agreed on Sunday to increase crude production by 400,000 barrels a day from August.

“It is going to be a volatile week for oil-exposed ASX-listed companies as investors, analysts and traders digest the OPEC announcement,” Mr Felsman said.

“Also, Iran is expected to recommence crude exports shortly after a lifting of sanctions, potentially complicating the supply outlook.

“Of course, concerns about the resurgence in global coronavirus cases persist, with restrictions being reintroduced in Asia.

“That said, analysts still expect a tightening in the oil market over the coming months as vaccination rates lift, increasing driver mobility.”

Travel stocks fell as the Delta outbreak worsened in NSW and Victoria, with Sydney recording its fifth death. Picture: Bianca De Marchi / NCA NewsWire

Banks were also a big drag, with ANZ slipping 1.02 per cent to $27.15, Commonwealth Bank easing 0.52 per cent to $97.68, National Australia Bank backtracking 1.19 per cent to $25.65 and Westpac retreating 0.88 per cent to $24.69.

OMG chief executive Ivan Tchourilov said travel stocks were hit hard after Victorian Premier Dan Andrews announced the state’s lockdown would be extended.

“Travel stocks can’t catch a break and are continuously in the ‘too hard basket’ as these lockdowns cripple the travel industry they are obviously highly leveraged to,” Mr Tchourilov said.

Webjet gave up 3.26 per cent to $4.75, Flight Centre weakened 2.42 per cent to $14.50 and Qantas softened 1.48 per cent to $4.65.

Furniture retailer Nick Scali responded to press speculation it was in talks with Greenlit Brands, which owns Freedom, Fantastic Furniture and Snooze, to potentially buy Plush sofas, saying it actively considered acquisitive growth opportunities from time-to-time and there was no certainty the discussions would result in a binding transaction.

But if they did, Nick Scali would expect to be able to pay for the deal with a combination of cash on hand and debt.

Shares in the company jumped 4.17 per cent to $11.50.

Nick Scali is in talks to potentially buy Plush sofas, owned by the company behind Freedom and Fantastic Furniture. Picture: Attila Csaszar / News Corp

Other strong performers included Domino’s Pizza, up 2.16 per cent at $120.13, sleep disorder device company ResMed, up 2.43 per cent at $34.52, and biotech giant CSL, up 1.8 per cent at $282.74.

Telstra eased 0.27 per cent to $3.76 after confirming it was in talks to potentially acquire Digicel Pacific in the South Pacific region, with financial and strategic risk management support offered by the Australian government.

Telstra said Digicel was a commercially attractive asset and critical to telecommunications in the region.

Gina Rinehart-backed Vulcan Energy Resources slipped 2.79 per cent to $9.07 after inking its first binding sales deal for lithium hydroxide from its project in Germany with LG Energy Solution – the world’s biggest producer of lithium-ion batteries for electric vehicles.

“The stock has experienced extraordinary gains over the past two years, going from 20 cents to $9, and recently hit a valuation of $1b,” Mr Tchourilov said.

“It’s the most-bought and most-traded stock across the Openmarkets client base today.”

The Aussie dollar was fetching 73.83 US cents, 53.66 British pence and 62.53 Euro cents in afternoon trade.

Originally published as Australian sharemarket a sea of red, with resources, banks and travel stocks among the losers