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Bearish US equity futures helped pressure the Australian share market to its lowest close in almost two week as investors sweated on rising Covid cases and tightening monetary policy.

The S&P/ASX 200 shed as much as 46 points in morning trade before paring its loss to 12 points or 0.16 per cent. Today’s close was the weakest in nine sessions.

Fund manager Magellan lost almost a third of its value after losing a key client. Builder Cimic skidded 13 per cent following a broker downgrade. Growth stocks and bond proxies shielded the market from a deeper loss.

What moved the market

Hopes for an end-of-year “Santa rally” looked increasingly forlorn as investors wrestled with the economic implications of the fast-spreading omicron Covid variant and the prospect of higher global interest rates next year.

A round of gloomy Covid headlines over the weekend depressed US equity futures. S&P 500 futures slumped 43 points or 0.93 per cent by the Australian market close. Dow futures gave up 275 points or 0.77 per cent.

The declines followed news the Netherlands will return to a hard lockdown over Christmas and a warning from the White House’s top infectious diseases advisor that Americans should brace for record case numbers. Dr Anthony Fauci said the new variant was “raging through the world”.

“The one thing that’s very clear, and there’s no doubt about this, is its extraordinary capability of spreading, its transmissibility capability,” Fauci said. “And if you look even here in the United States, you have some regions that start off with a few percent of the isolates that are positive, now going up to 30%, 40%, and some places 50%,” he added.

New South Wales this morning reported 2,501 new cases following back-to-back records over the weekend. The World Health Organization said case numbers in some parts of the world were doubling within three days.

Also weighing in the US was news President Joe Biden’s signature social spending bill hit another roadblock. Renegade Democrat senator Joe Manchin told Fox News he would not support the package. Manchin’s support was seen as essential to get the bill over the line.

Asian markets deteriorated as the session went on. The Asia Dow doubled it loss to 1.51 per cent. Hong Kong’s Hang Seng shed 1.44 per cent, Japan’s Nikkei 2.01 per cent and China’s Shanghai Composite 0.75 per cent,

Winners’ circle

Australian trade turned defensive as a decline in market borrowing rates encouraged a rotation into growth stocks and bond proxies. The healthcare sector gained 0.83 per cent, consumer staples 0.71 per cent and technology 0.37 per cent.

CSL bounced 0.61 per cent off last week’s seven-month low. A positive day for the health sector saw Clinuvel rise 3.42 per cent, Healius 3.32 per cent and Sonic 2.94 per cent. Fisher & Paykel Healthcare added 2.64 per cent and ResMed 1.81 per cent.

In the tech space, Afterpay added 1.48 per cent, EML Payments 2.3 per cent and Xero 1.99 per cent. Supermarkets Woolworths and Coles gained 1.01 and 1.83 per cent, respectively.

Rio Tinto tacked on 0.23 per cent. The miner announced Canadian diplomat Dominic Barton will succeed Simon Thompson as Chair at next year’s AGM in May. Fortescue Metals advanced 2.53 per cent. BHP shed 0.72 per cent.

A rebound in fuel sales lifted Viva Energy 3.72 per cent. The company announced it expected full-year earnings to almost double this year from $244.6 million in FY20 to $470-$490 million. Sales had improved steadily since lockdowns ended in Victoria and NSW.

“The business has performed strongly during the fourth quarter, delivering higher retail fuel sales volumes and strong refining production, and enjoying favourable retail and regional refining margins,” CEO and Managing Director Scott Wyatt said.  

Forex and international payments group OFX soared 14.97 per cent on news it will acquire Canada’s Firma Foreign Exchange Corporation for $98 million. Firma services corporate clients and has nine offices in four countries.

Automotive aftermarket firm RPM climbed 5.17 per cent after acquiring Australian safety products business Safety Dave. RPM will pay $9.5 million in cash and equity to expand its offering into the caravan and camper trailer markets.

BNPL player Humm Group soared 22.97 per cent on news of takeover interest. The company said it had received approaches from unnamed third parties to acquire all or part of the group.

Doghouse

Investment manager Magellan tumbled 32.9 per cent following the loss of a major client. British multinational St James’s Place terminated its mandate with Magellan. The business represented around 12 per cent of Magellan’s annual revenues and will knock around 6 per cent off revenues for the financial year.

Cimic slumped 13.37 per cent following an analyst downgrade and questions about the construction company’s exit from its troubled Middle East venture. Credit Suisse reduced its recommendation to ‘Neutral’. The share price trimmed its fall after the company issued a statement saying it was working with the firm that acquired its Middle East business to ensure commitments to employees were met.

Westpac dropped 0.1 per cent during a soft session for lenders. The bank reported it had completed the sale of its wholesale automotive dealer loan book to Angle Auto Finance. ANZ lost 1.38 per cent and NAB 1.04 per cent. CBA inched up 0.08 per cent.

Biopharma Telix hit an all-time high before easing 6.21 per cent. The cancer specialist announced the US regulator had approved its prostate cancer imaging product. Shares in the biopharma had risen from below $1 last year to above $8 in anticipation of the news.

Origin Energy eased 0.59 per cent after expanding its community energy services footprint. A subsidiary will acquire WINconnect for $42.4 million from private-equity firm Pacific Equity Partners.

St Barbara dropped 6.46 per cent on news it will acquire Bardoc Gold. The deal values Bardoc at around $157 million. The offer price of 53 cents per share represented a 29.2 per cent premium to Friday’s closing price. Bardoc shares surged 14.63 per cent to 47 cents.

A profit downgrade pushed packaging firm Pro-Pac down 9.34 per cent. The company cut its first-half underlying profit before tax outlook to $4 million from previous guidance of $7.1 million.

The packaging industry has been impacted by labour shortages and shipping delays. Competitor Pact Group slipped 4.28 per cent.   

Other markets

Oil extended Friday’s retreat. Brent crude dropped US$2.01 or 2.7 per cent to US$71.51 a barrel.

Gold slid US$2.80 or 0.16 per cent to US$1,802.10 an ounce.

The dollar gave up early gains, falling 0.1 per cent to 71.09 US cents.

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