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Aussie shares shrugged off sharp initial losses as investors looked beyond a profit plunge at Westpac, weak US index futures and a slump in crude oil.

The S&P/ASX 200 sank 76 points in early trade before reversing to a mid-session gain of 35 points or 0.7 per cent. The initial retreat extended Friday’s 5 per cent fall and briefly pushed the index below 5200 for the first time in more than a week.

A reversal in the big banks and gains in tech and health stocks and supermarkets helped the market overcome signs of overseas weakness as the White House ramped up its attacks on China over the COVID-19 pandemic. S&P 500 index futures dropped 27 points or 1 per cent after President Donald Trump said China “made a mistake” and his Secretary of State Mike Pompeo said there was a “significant amount of evidence” that the virus escaped from a laboratory in Wuhan. A Department of Homeland Security intelligence report accused China of concealing the severity of the outbreak while stockpiling medical supplies.

“My opinion is they made a mistake,” Trump told a Fox News virtual town hall. “They tried to cover it, they tried to put it out. It’s like a fire… They couldn’t put out the fire.”

The financial sector shook off news Westpac had suspended its dividend after impairments for bad debts helped drag its half-year profit down 70 per cent. Chief Executive Peter King described the result as “the most difficult… Westpac has seen in many years”. The share price climbed 2.7 per cent to $15.75. CBA and ANZ gained 1.2 per cent, and NAB 1 per cent.

Tech stocks, healthcare providers and supermarkets resisted the cold winds from abroad. As the broader market succumbed to worries about China, Afterpay surged 22.6 per cent on news Chinese tech giant Tencent had taken a 5 per cent stake in the buy-now-pay-later firm. Rival Z1P climbed 7.7 per cent.  

Import/export logistics service firm Qube was the morning’s other star performer, rising 16.8 per cent after completing an institutional capital raising. Supermarkets Woolworths and Coles both rose 1.3 per cent. Health giant CSL put on 2.2 per cent, Ansell 2.1 per cent and Estia Health 1.4 per cent.

Gold stocks also enjoyed a strong morning. Gold Road Resources rallied 6.8 per cent, Evolution Mining 6.6 per cent and Newcrest 6 per cent. Gold improved $6 or 0.4 per cent to $US1,706.90 an ounce.

Energy stocks fell for a second session, sagging 2.3 per cent as the threat of a trade war between the US and China sent oil into reverse. US crude fell $1.25 or 6.3 per cent this morning to US$18.53 a barrel, erasing some of last week’s 17 per cent rally. The international benchmark, Brent crude, dropped 52 cents or 1.9 per cent to US$25.93. Energy services group Worley fell 5.1 per cent, Beach Energy 4.3 per cent, Woodside 2.9 per cent and Santos 1.5 per cent.

A record collapse in job advertising underlined the hit to the employment market last month. ANZ’s ad gauge dived 53 per cent, almost five times as much as the worst month of the 2008 financial crisis. Building approvals deteriorated less than expected, declining 4 per cent versus predictions of a fall of around 15 per cent.

While most Asian markets were closed for holidays, Hong Kong’s Hang Seng slumped 3.6 per cent and South Korea’s Kospi 2 per cent.

The dollar eased 0.4 per cent to 63.94 US cents.

What’s hot today and what’s not:

Hot today: Hindsight shows the February-March collapse in Afterpay (ASX:APT) was one of the buying opportunities of the decade. At today’s peak, the buy-now-pay-later leader had reclaimed all of its losses since the start of the pandemic. Shares that traded as low as $8.01 in mid-March hit $39.59 this morning on news Chinese powerhouse Tencent had bought a stake, smoothing the Australian lender’s entry to the Chinese market. Afterpay shares were last up 22.6 per cent at $35.79.

Not today: Women’s fashion retailer City Chic Collective (ASX:CCX) offered a great buying opportunity during the pandemic low but has seen bounced more than 200 per cent. Shares on offer at 71.5 cents on March 24 hit $2.49 last week. With substantial profits on offer, it was no surprise to see the share price flag 9.1 per cent this morning to $2.10.

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