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The Australian share market fell to its lowest in almost two weeks as omicron worries weighed on Wall Street.

The S&P/ASX 200 hit 7258 before trimming its fall to 34 points or 0.46 per cent at 7268.

Gains in CSL, Afterpay and the major supermarkets were outweighed by declines in the big four banks and most of the miners.

What’s driving the market

Weak overseas leads were compounded this morning by pressure on US equity futures. S&P 500 futures dived 22 points or 0.48 per cent following a weekend of negative pandemic headlines in Europe and the US. The fall pointed to further weakness tonight following a 1.03 per cent slide for the US benchmark on Friday.

Omicron is set to be the Grinch who stole Europe’s Christmas with weekend news that the Netherlands will be the first country to go into lockdown until 14 January (non-essential stores closed and only 2 visitors to a home),” NAB’s Director, Economics, Tapas Strickland said.

“Other European countries have also tightened restrictions. With trading into year-end starting to thin out, it may be a volatile run into Christmas.”

The new strain has been identified in 43 of 50 US states. Case numbers have been doubling within three days, according to the World Health Organization. Back home, New South Wales this morning reported 2,501 new cases following record tallies over the weekend.

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.

All 11 US sectors declined on Friday amid year-end tax selling and pressure on cyclicals as rising Covid cases raised questions about demand destruction. Australian trade turned defensive this morning. A decline in market borrowing rates encouraged a rotation into growth stocks and bond proxies.

The healthcare sector gained 2.3 per cent, technology 0.7 per cent and consumer staples 0.6 per cent. Energy, financials and industrials led the retreat.

Going up

CSL was the pick of the heavyweights, bouncing 2.84 per cent off last week’s seven-month low. A strong morning for the health sector saw Sonic Healthcare rise 3.24 per cent, Healius 3.61 per cent and ResMed 2.19 per cent.

Afterpay added 1.57 per cent, Woolworths 1.19 per cent and Coles 1.03 per cent. Fortescue Metals shrugged off wider weakness in the materials sector, rising 1.69 per cent.

A rebound in fuel sales lifted Viva Energy 3.49 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 17.11 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 0.86 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 16.89 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.

Going down

Investment manager Magellan tumbled 28.37 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 15.38 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 Australian Financial Review reported former employees had contacted ASIC and the Fair Work Ombudsman, alleging salaries and entitlements had not been paid.  

Westpac dropped 1.12 per cent during a soft morning for lenders. The bank reported it had completed the sale of its wholesale automotive dealer loan book to Angle Auto Finance. CBA lost 0.88 per cent, ANZ 1.85 per cent and NAB 1.47 per cent.

Rio Tinto eased 1.31 per cent. The miner announced Canadian diplomat Dominic Barton will succeed Simon Thompson as Chair at next year’s AGM in May. BHP shed 1.24 per cent.

Biopharma Telix hit an all-time high before easing 2.53 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 1.27 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 7.14 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 4.82 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 3.5 per cent.   

Other markets

A broadly negative morning on Asian markets saw the Asia Dow decline 0.7 per cent, Hong Kong’s Hang Seng 0.35 per cent and Japan’s Nikkei 0.62 per cent. China’s Shanghai Composite rose 0.18 per cent,

Oil extended Friday’s retreat. Brent crude dropped US$1.43 or 1.95 per cent to US$72.09 a barrel.

Gold slid US$4.40 or 0.24 per cent to US$1,800.50 an ounce.

The dollar edged up 0.02 per cent to 71.18 US cents.

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