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The share market’s blistering recovery from last week’s omicron-induced sell-off looks set for a breather despite further gains on Wall Street.

ASX futures eased 27 points or 0.36 per cent as iron ore retreated and the dollar climbed towards 72 US cents.

US stocks overcame early weakness to add to this week’s strong gains. Oil, copper and gold rose.

The S&P/ASX 200 surged 91.5 points or 1.25 per cent yesterday to its biggest gain in two months. The local market has recouped all of last week’s losses during a four-day rally.

Wall Street

US stocks rose for a third day as the market continued to discount the economic threat from omicron and the effect of a faster Federal Reserve bond taper. The main indices overcame opening losses as investors digested mixed news on the latest Covid variant.

The Dow Jones Industrial Average recovered in the final hour to a gain of 35 points or 0.1 per cent. The blue-chip average put on more than 1,100 points across Monday and Tuesday.

The S&P 500 climbed 14 points or 0.31 per cent to within 1 per cent of a record. The Nasdaq Composite rose 100 points or 0.64 per cent.

“The two rallies that we had on Monday and Tuesday were so strong and they were back-to-back, and even for the most bullish of the bullish, you’ve got to take a pause,” Mike Zigmont, head of trading and research at Harvest Volatility Research, told CNBC.

Investors found enough positives to keep buying during a light session for corporate and economic data. Pfizer and BioNTech announced their vaccine provided good protection against omicron when a third dose was administered. Lab studies indicated a third shot increased antibody protection by a factor of 25.

“Although two doses of the vaccine may still offer protection against severe disease caused by the Omicron strain, it’s clear from these preliminary data that protection is improved with a third dose of our vaccine,” Pfizer CEO Albert Bourla said.

The news helped offset weakness on European markets after England announced fresh restrictions to contain the spread of the variant. Prime Minister Boris Johnson asked people to work from home and mandated the wearing of masks on public transport and vaccine passes for entry to major public events. He said the restrictions were necessary to slow infection rates while a booster program is rolled out.

The pan-European Stoxx 600 dropped 0.59 per cent. Markets in Britain, Germany and France also finished lower. Retailers wilted under the threat of tighter pandemic restrictions.

Reopening plays continued to outperform in the US. Norwegian Cruise Line Holdings jumped 8.55 per cent, United Airlines 4.24 per cent and Wynn Resorts 2 per cent.  

The Nasdaq was the pick of the main indices as Apple and Meta (Facebook) rallied. Apple climbed 2.28 per cent after UBS reaffirmed its ‘Buy’ rating. Meta added 2.4 per cent after giving employees more time to return to the office.

Australian outlook

The S&P/ASX 200 logged its longest winning run in four months yesterday and looks ripe for a pause. Four-day winning runs are uncommon, five-day streaks rarer still.

The market has completed the repairwork from the omicron sell-off. Yesterday’s rally briefly lifted the index above where it was before the new variant emerged. The index is now comfortably back within the sideways trading range that has developed since mid-September.

The dollar had another strong night in the wake of China’s move to loosen monetary policy earlier in the week. The Aussie climbed 0.78 per cent to 71.79 US cents.

US sector gains were muted. Two of the night’s top three performers were defensive: health +0.74 per cent and real estate +0.47 per cent. Communication services (Google, Twitter, etc) filled out the top three with a rise of 0.75 per cent.

Of the sectors that matter most on the ASX, materials gained 0.4 per cent. Financials shed 0.46 per cent.

RBA Governor Philip Lowe is due to deliver a speech at a virtual summit this morning. The central bank releases its quarterly bulletin at 11.30 am AEDT. China releases monthly inflation data at 12.30 pm.

Fonterra Shareholders’ Fund holds its annual general meeting today. Two IPOs originally slated for today have been pushed back.

Commodities

BHP and Rio Tinto declined in overseas trade after iron ore gave back a fraction of Tuesday’s 8.1 per cent price surge. BHP‘s US-listed stock eased 0.35 per cent after its UK-listed stock shed 1.13 per cent. Rio Tinto dropped 0.44 per cent in the US and 1.55 per cent in the UK.

The spot price for iron ore landed at Tianjin declined US$1.55 or 1.4 per cent to US$107 a tonne. Spot prices jumped on Tuesday after customs data showed Chinese imports increased almost 15 per cent last month as steel mills restocked.

Oil logged its highest close in two weeks as traders discounted the demand hit from omicron. Brent crude settled 38 US cents or 0.5 per cent higher at US$75.82 a barrel.

“Traders are starting to realize that omicron, though it may cause some slight demand destruction, is not going to be as deadly as feared,” Phil Flynn, senior market analyst at The Price Futures Group, told MarketWatch.

Gold touched its highest level in a week before trimming its advance. Metal for February delivery settled 80 US cents or less than 0.1 per cent ahead at US$1,785.50 an ounce after trading at US$1,794.30. The NYSE Arca Gold Bugs Index inched up 0.16 per cent.

“Gold seems to be finding difficulty in achieving any momentum in either direction,” Ross Norman, chief executive officer at Metals Daily, said.

Nickel had its best session in two weeks in Shanghai. The stainless steel ingredient closed 1.1 per cent ahead after earlier gaining 2.1 per cent. Copper edged up 0.1 per cent in Shanghai and 1.2 per cent in the US.

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