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Aussie shares logged their weakest close in almost two months despite trimming their losses as strengthening US equity futures fuelled hopes of a Wall Street rebound.

The S&P/ASX 200 finished just 11 points or 0.15 per cent in the red after earlier tumbling 67 points. The partial recovery mirrored similar sessions on Monday and Wednesday as traders took advantage of the lowest prices since early October.

Gains in toll road operator Transurban, Wesfarmers and most of the banks offset declines in Afterpay, CSL and the major miners.

What moved the market

The tug of war between market bulls and bears intensified this session as the market once again tested horizontal technical support. A sharp mid-session reversal on Wall Street overnight gave the bears enough momentum to drive the market to its weakest point since October 1. Dip-buyers once again stepped in below 7200, powering the index from 7169 to 7225.

A similar struggle on Wall Street has seen a succession of overnight plunges followed by revivals in futures trading during Australian hours. S&P 500 futures firmed 25 points or 0.56 per cent this afternoon, sharpening hopes of a revival.

Overnight, the S&P 500 dived 1.18 per cent after confirmation of the first omicron case on US shores triggered a mid-session sell-off. The Nasdaq Composite swung from a gain of 1.8 per cent to a loss of the same magnitude.

“The new Omicron Covid-19 variant has caused a major spike in market volatility, as investors fear the potential of another major hit to growth because of the pandemic,” IG market analyst Kyle Rodda said. “Many questions remain unanswered right now, with the overarching concern the virus may have mutated to become possibly more infectious, and virus resistant.”

The Australian volatility index hit a near two-month high this session. Overnight, the US VIX climbed 14.45 per cent to a level last seen in early February.

In domestic economic news, a strong revival in retail sales last month pointed to a strong holiday shopping season for retailers. Sales jumped 4.9 per cent as the eastern states came out of lockdown.

The Australian Bureau of Statistics said there were strong gains in clothing, footwear and accessories (+27.7 per cent). Department store sales jumped 22.4 per cent.

A separate report showed the trade balance declined by $604 million to $11.22 billion in October. The value of exports declined 3 per cent as iron ore prices dived.

Winners’ circle

Australian Pharmaceutical Industries jumped 16.05 per cent after Woolworths topped Wesfarmers’ offer for the operator of the Priceline chain. Woolworths lobbed a non-binding proposal to acquire API at $1.75 per share. The offer values the business at $872 million and represents a 20 cents per share premium to Wesfarmers’ bid. API said it would allow the supermarket chain to carry out due diligence.

Woolworths shares gained 0.38 per cent. Wesfarmers rose 1.37 per cent.

Macquarie Group firmed 1.47 per cent after announcing former Reserve Bank Governor Glenn Stevens as its next Chair.

A mixed session for the high-street banks saw CBA rise 2.15 per cent, NAB 0.8 per cent and ANZ 0.19 per cent. Westpac declined 0.78 per cent.

Aristocrat Leisure inched up 0.16 per cent as its takeover of UK firm Playtech made progress. Playtech shareholders voted overnight in favour of selling its Finalto financial trading division to Gopher Investments. The sale is a key condition of the Aristocrat offer proceeding.

Elsewhere at the heavyweight end of the market, Transurban rose 2 per cent, Telstra 0.5 per cent and Goodman Group 0.49 per cent.

Crown Resorts gained 0.73 per cent after rejecting a third takeover offer from Blackstone, but inviting the US investment manager to try again. The board said an offer of $12.50 per share did “not represent compelling value” for shareholders. Blackstone would be allowed access to the books to revise its proposal.

Doghouse

Afterpay skidded 6.08 per cent to a four-month low on news of a delay to its proposed takeover by US giant Square. A meeting of shareholders on Monday to approve the deal has been postponed while Afterpay awaits regulatory approval from the Bank of Spain.

Retailer Premier Investments dipped 0.83 per cent after reporting a strong rebound in sales since lockdowns were lifted in NSW, Victoria and the ACT. Chair Solomon Lew told today’s AGM sales had increased by 10.1 per cent in the three weeks since all stores were able to trade.

Other major drags this session included Newcrest -2.42 per cent, Woodside -1.86 per cent, Rio Tinto -1.63 per cent and CSL -1.26 per cent. BHP shed 0.48 per cent and Coles 0.51 per cent.

Property group SCA faded 0.36 per cent after announcing a new $750 million joint venture with Singapore’s GIC. The companies will launch a new unlisted vehicle to invest in metropolitan convenience retail centres across Australia.

Other markets

Asian markets were mixed but little changed at the Australian market close. The Asia Dow dipped 0.13 per cent. China’s Shanghai Composite was flat.. Hong Kong’s Hang Seng added 0.23 per cent. Japan’s Nikkei fell 0.4 per cent.

Gold unwound most of its overnight gains. The yellow metal dropped US$6 or 0.34 per cent to US$1,778.30 an ounce.

Oil reversed last night’s 36 cent decline. Brent crude bounced 77 US cents or 1.12 per cent to US$69.63 a barrel.

The dollar hovered around 71 US cents, easing 0.13 per cent to 70.98 US cents.

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