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The share market’s first weekly advance in a month ended with a modest final-session loss as investors turned cautious ahead of risk events in the US.

The S&P/ASX 200 broke a four-week losing run thanks to strong gains on Tuesday and Wednesday.

Investors began to take profits yesterday and continued this session. The Australian benchmark faded 31 points or 0.42 per cent to trim its tally for the week to 112 points or 1.5 per cent.

The increasingly defensive tone on financial markets was underlined by gains in only four sectors today, three of them defensive. Fortescue Metals fell on news CEO Elizabeth Gaines will stand down.

What moved the market

A broadly positive week brought an end to a run of losses that climaxed last week with the emergence of the omicron Covid variant. The Australian market steadied on Monday and by Wednesday night had recovered all of its omicron-triggered losses. The ASX 200 hit a three-week high before two days of modest profit-taking to end the week.

“Global share markets rebounded over the past week on indications that Omicron may only be resulting in mild cases,” AMP’s chief economist Dr Shane Oliver said.

“The 5% or so pull back in share markets on the back of Omicron and the Fed becoming more hawkish just looks like it was a normal correction after markets had become overbought again,” he added.

“Historically share market seasonality turns more decisively positive from mid-December. Of 22 cases of negative Novembers in the US share market since 1950, 19 were followed by gains in December. Of course, much will depend on Omicron.”

Wall Street fell overnight for the first time in four sessions as investors reduced their exposure ahead of tonight’s inflation report and next week’s Federal Reserve policy meeting. European markets retreated for a second night since the UK announced tougher restrictions to contain the spread of omicron.

“Following a three-day winning streak, the US stocks lost some momentum on Thursday as investors’ focus shifted to crucial inflation data due tonight. Investors mostly shrugged off encouraging labour market data, which exhibited a fall in weekly jobless claims to the lowest level in 52 years,” Kalkine Group CEO Kunal Sawhney said.

“A continuing rise in inflation could add further conviction to the central bank to embrace interest rate hikes next year sooner than anticipated.”  

Westpac economist Elliot Clarke said investors should not be afraid of higher rates next year. The coming run of increases would be milder than previous cycles.

“Given the global economy’s strength, dynamic policy making by the FOMC [Federal Open Market Committee] and other major central banks is not to be feared,” he said.

“Instead, as a baseline expectation, it is best to hold that authorities will continue to adapt their decision making to the evolving circumstances, actual and expected, reducing inflation risks and sustaining growth at or above trend.

“As a result, we continue to believe that the rate hike cycles to come through 2022-2024 will be modest versus history, but also that policy rates and term interest rates will sustain at or near peak levels to the end of the horizon as healthy growth continues.”

Winners’ circle

The defensive utilities was the only sector to record an advance of any consequence. The sector rose 0.38 per cent as AGL Energy added 1.03 per cent and APA Group 0.94 per cent.

The session’s best performers were online marketplace Redbubble +10.26 per cent, miner Iluka Resources +7.29 per cent and health insurer NIB +4.87 per cent.

At the pointy end, Wesfarmers gained 0.52 per cent and Telstra 0.25 per cent. Supermarkets Coles and Woolworths put on 0.06 and 0.12 per cent, respectively.

Grange Resources surged 22.13 per cent on news the Tasmanian iron ore producer will pay a special dividend of 10 cents per share. The special dividend is in addition to four cents per share in dividends already distributed this year.

Vulcan Energy climbed 3.88 per cent after acquiring a geothermal renewable energy power plant in Germany. The Gina Rinehart-backed lithium miner will pay 31.5 million Euros ($49.8 million) for the plant in the Upper Rhine Valley. The purchase will be funded from a $200 million capital raising in September.

Investment manager Pendal Group bounced 1.06 per cent off a 14-month low after warning of continuing pressure on institutional fund flows. CEO Nick Good told today’s AGM the company was strengthening its sales, marketing and client service teams to better support clients in Europe.

Bapcor rose 0.9 per cent after refinancing its debt facilities. The share price crumbled to a 16-month low earlier this week following a boardroom bust-up between the board and retiring CEO Darryl Abotomey.

Doghouse

Fortescue Metals slid 0.82 per cent on news CEO Elizabeth Gaines will step down. Gaines will continue as a non-executive director and as the company’s “global green hydrogen brand ambassador”. She will also assist in identifying her successor.

Westpac shed 0.81 per cent after extending a share buyback to take advantage of its depressed stock price. The bank said the rationale for the $3.5 billion buyback had been made “more compelling” by recent declines.

Other heavyweight drags included Afterpay -4.37 per cent, CSL -2.09 per cent and Newcrest -1.74 per cent.

Other markets

Hong Kong’s Hang Seng fell 0.5 per cent as Evergrande shares dropped 1.67 per cent. The Asia Dow lost 0.58 per cent, Japan’s Nikkei 0.54 per cent and China’s Shanghai Composite 0.32 per cent.

US futures were mixed but broadly steady. S&P 500 futures inched up three points or 0.06 per cent. Dow futures dipped five points or 0.01 per cent.

Oil declined for a second session. Brent crude gave up 14 US cents or 0.2 per cent at US$74.28 a barrel.

Gold bounced US$1.90 or 0.1 per cent to US$1,778.60 an ounce.

The dollar crept up 0.04 per cent to 71.49 US cents.

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