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The share market’s longest winning run in four months ended with a modest decline as a revival of omicron worries depressed US equity futures.

The S&P/ASX 200 traded both sides of break-even before finishing 21 points or 0.28 per cent lower. The loss was the benchmark’s first in five sessions.

Gains in Fortescue Metals, Afterpay and CBA were outweighed by declines in BHP, Rio Tinto and Wesfarmers.

What moved the market

The market took a smoko following almost two weeks of frantic trading. After plunging to a two-month low last week following the emergence of the omicron Covid variant, the ASX 200 clawed back all of its losses in four gulps. The recovery climaxed yesterday with the index’s biggest gain in two months.

Wall Street showed signs of rally fatigue overnight, but managed a third night of gains. The S&P 500 put on 0.31 per cent and the Dow 0.1 per cent.

US equity futures drifted lower this afternoon after a Japanese study suggested the omicron Covid variant was 4.2 times more transmissible than delta. S&P 500 futures eased seven points or 0.15 per cent.

An advisor to the Japanese government used mathematical modelling to reach his conclusions. The study, which has not been peer reviewed, appeared to confirm early suspicions about the contagiousness of the new variant.

“The omicron variant transmits more, and escapes immunity built naturally and through vaccines more,” Hiroshi Nishiura, professor of health and environmental sciences at Kyoto University, said.

European stocks fell overnight after England tightened restrictions to slow the spread of the virus. The pan-European Stoxx 600 eased 0.59 per cent.

“The introduction of new restrictions in the UK are a potential taste of what is yet to come in Europe and other regions around the globe,” NAB currency strategist Rodrigo Catril said.

Westpac expects the economy to grow 6.4 per cent next year, before growth eases to 2.7 per cent the following year as monetary policy tightens. The bank’s chief economist Bill Evans expects the Reserve Bank to raise the cash rate off record lows in February 2023. House prices will decline and consumer spending slow.

“In an environment of rising interest rates, declining house prices and a deterioration in confidence, we expect household spending growth to slow in 2023 – albeit to a still above trend pace of 3.2%,” Evans said.

Winners’ circle

Sydney Airport climbed 2.87 per cent on news the competition watchdog will not oppose a takeover by a consortium of investment funds. The ACCC said airports are natural monopolies, so the change of ownership would not lessen competition.

The watchdog also waved through waste manager Cleanaway‘s acquisition of several landfills and transfer stations from Suez. The ACCC said the transaction was unlikely to alter the competitive dynamics in Sydney. Cleanaway shares eased 0.68 per cent.

On a busy day for the watchdog, the ACCC also cleared Seven West Media‘s proposed takeover of regional TV affiliate Prime Media. ACCC Chair Rod Sims said the acquisition was unlikely to lessen competition or choice for advertisers and consumers. Prime shares climbed 1.18 per cent. Seven shares fell 3.91 per cent.

OZ Minerals rose 0.59 per cent to an all-time high after offloading joint venture interests in two copper-gold projects to a subsidiary of Minotaur. Demetallica will acquire the stakes for $6.6 million up-front and up to US$8.82 million in deferred payments contingent on the outcome of feasibility studies.

Lithium hopeful Vulcan Energy jumped 13.89 per cent after signing a binding offtake agreement with Volkswagen Group. The German automotive giant will purchase a minimum of 34,000 tonnes of battery-grade lithium hydroxide when deliveries under the five-year deal start in 2026.

Brambles +1.54 per cent, Fortescue Metals+1.5 per cent and Afterpay +0.48 per cent were the pick of the heavyweights. Newcrest put on 0.26 per cent, Goodman 0.2 per cent and CSL 0.11 per cent.

Doghouse

ANZ drifted lower following a $25 million fine from the financial regulator for failing to apply fee waivers and discounts under the bank’s Breakfree package. The bank admitted the contraventions and said it would not contest the proceeding.

ASIC Deputy Chair Sarah Court said, “ANZ’s conduct was long standing and impacted over half a million customers. These customers were entitled to receive the benefits they signed up for and in many instances paid for. This case is yet another example of a widespread system failure by a major bank impacting thousands of customers.”

The case marks the conclusion of ASIC’s investigations into matters raised by the Royal Commission into misconduct in the financial services industry. ANZ’s share price eased 0.18 per cent.

Elsewhere in the sector, Macquarie Group shed 0.53 per cent and Westpac 0.24 per cent. NAB and CBA both added 0.21 per cent.

Tech companies and other growth stocks struggled as long-term interest rates rose. The yield on ten-year Australian government bonds climbed six basis points. Growth stocks are particularly vulnerable to increased borrowing costs.

Redbubble shed 9.31 per cent, Z1p Co 4.16 per cent, Codan 3.48 per cent and Xero 3.21 per cent. WiseTech eased 3.15 per cent, Tyro Payments 2.74 per cent and Nearmap 1.67 per cent.

The biggest drags on the index were Transurban -2 per cent, BHP -1.2 per cent, Rio Tinto -0.94 per cent and Wesfarmers -0.95 per cent.

Other markets

Asian markets were mixed but mostly higher. The Asia Dow added 0.17 per cent, China’s Shanghai Composite 1.03 per cent and Hong Kong’s Hang Seng 0.89 per cent. Japan’s Nikkei dipped 0.23 per cent.

Oil built on two-week highs. Brent crude climbed 54 US cents or 0.7 per cent to US$76.36 a barrel.

Gold added US$1.20 or 0.07 per cent to US$1,786.70 an ounce.

The dollar edged up 0.08 per cent to 71.74 US cents.

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