The ASX shed a week of gains on Monday as Victoria faced the reality of an extended lock down while Sydney imposed a sudden ban on construction activity and a rising death toll from the Bondi Delta strain COVID outbreak.

Weak leads from Wall Street and concerns about oil prices saw the benchmark S&P/ASX200 plunge 1.3 per cent at the open before stabilising and closing 0.9 per cent lower at 7286 points. It was the first time the index had closed below 7300 in six sessions.

The healthcare sector out-performed the rest of the market with CSL gaining 1.8 per cent, while Sonic Healthcare and ResMed both hit new all-time highs.

Retailing giant Wesfarmers also hit a new record high, closing 0.8 per cent higher at $59.61.
But the heavyweight banking, materials, and energy sectors all dragged.

Bell Direct market analyst Jessica Amir noted there was weak leads from Wall Street, where traders have been taking profits ahead of company results. This week Intel, IBM, Netflix, Johnson Johnson and Twitter were all due to report.

“Traders are being quite cautious at the moment, but the real worry will be if results are worse than expected. Markets will pull back,″⁣ she said.

“What we are seeing now is that traders are hedging their bets and locking in their profits.”

Ms Amir said oil prices would have a strong influence on markets this week if they kept rising. She also warned extended lock downs for Sydney could plunge Australia back into recession.

“If COVID restrictions continue for Sydney beyond September, then Australia will get its second COVID recession. We have never had construction shut down before, it’s a huge blow to the infrastructure sector.”

The big four banks all closed lower on renewed concerns about doubtful debts, while BHP and Rio Tinto both closed more than 2 per cent lower.

Gold miners were under pressure and Evolution Mining dropped 8.7 per cent after an analyst downgrade, while Chalice Mining fell 9.7 per cent. Deterra Royalties managed to close higher thanks to a rating upgrade from Goldman Sachs.

Information technology closed flat with Altium down 3.8 per cent at $35.17 after an earlier fall of 10.5 per cent after Autodesk walked away from a takeover offer. But Afterpay closed 1.6 per cent higher at $104.90 and Xero gained 1.1 per cent to $138.64.