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The share market recouped yesterday’s losses as tremors from the emergence of the new Omicron Covid variant continued to subside.

The S&P/ASX 200 rallied 83 points or 1.15 per cent to 7323. The advance handed the Australian benchmark a chance to avert a third straight losing month. The index needs to close above 7323.7 this afternoon to avoid its longest run of monthly losses in three years.

The banks, Telstra and BHP led the rise. Defensive gold miners and utilities declined.

What’s driving the market

The mood on financial markets brightened amid hopes the latest Covid strain may not cause long-term economic damage. While the Federal Government announced it will delay the reopening of the international border by two weeks, Health Minister Greg Hunt said the “overwhelming view” of the government is that Omicron is “manageable“.

“Medical advice will guide our decision-making throughout,” Mr Hunt said. “But our overwhelming view is that while it’s an emerging variant, it’s a manageable variant,” he added

US stocks rebounded overnight after President Joe Biden pledged there would be no “shutdowns or lockdowns”. The S&P 500 bounced 1.32 per cent, regaining more than half of Friday’s loss.

US futures hinted at further gains tonight. S&P 500 futures rose 15 points or 0.2 per cent.

The head of BlackRock Investment Institute said any economic hit from the new strain would only delay the recovery.

“We stay invested for now as a new virus strain and European COVID surge are hurting risk sentiment,” Jean Boivin said. “Any delay of the powerful restart now means more later.”

Back home, a flurry of deal making underlined corporate confidence in the economic outlook. Credit Corp announced it will buy Radio Rentals from Thorn Group. GUD scooped up AutoPacific Group. Seven West Media will inject $10 million into Raiz (more on all below). 

Going up

Westpac bounced 0.72 per cent after striking a deal with the regulator to pay $113 million to settle a slew of lawsuits. The six lawsuits covered a range of matters, including charging dead customers for advice and issuing duplicate insurance policies without customer consent. CEO Peter King said the bank fell short of its standards and had worked with ASIC to put things right.

CBA put on 0.29 per cent, ANZ 2.44 per cent and NAB 1.6 per cent. Macquarie Group climbed 2.54 per cent after raising $1.3 billion from retail investors.

AMP bounced 7.46 per cent from a two-month low after outlining plans to revitalise the business through a demerger and a greater focus on growth. The investment manager will split into two companies in the first half of next year. AMP Ltd will service retail customers, while a Private Markets business will focus on international institutional clients.

A production upgrade at today’s AGM lifted lithium miner Orocobre 7.5 per cent. The miner expects to produce 210-220 kt of spodumene concentrate this calendar year.

Credit Corp and Thorn Group both rallied on news Credit Corp will buy Thorn’s Radio Rentals appliance leasing business for $60 million. Credit Corp shares jumped 10.16 per cent after the firm also upgraded its earnings guidance. Thorn gained 10.87 per cent.

A strong recovery in its European business lifted Collins Foods 7.99 per cent. The fast food company boosted first-half revenues by 8.5 per cent and earnings by 10 per cent. Revenue and earnings at the company’s KFC Europe business reached pre-pandemic levels.  

A rebound in court cases helped lift litigation funder Omni Bridgeway 7.21 per cent. Managing Director Andrew Saker told today’s AGM completed cases over the eight months to November had generated income of $83 million, versus $19 million over the 12 months to the end of March.

Raiz jumped 11.64 per cent on news Seven West Media will take a 6.6 per cent stake in the mobile financial services platform via a $10 million share placement. Seven West Media climbed 2.05 per cent.  

A broker upgrade helped lift Lynas Rare Earths 5 per cent. Barrenjoey raised its rating to ‘Overweight’.

Going down

Nuix sagged 12.5 per cent to a four-month low on news of higher costs and zero growth in contract values over the first four months of the financial year. CEO Rod Vawdrey said revenues had improved, but annualised contract value was flat. The cost base increased “materially” due to product development, higher employee costs and legal actions.

The morning’s biggest drags included BlueScope Steel -2.71 per cent, Newcrest -1.78 per cent, Fortescue Metals -1.19 per cent and Cochlear -1.18 per cent.

Swimming pool and car parts company GUD entered a trading halt to raise funds to acquire AutoPacific Group. GUD will pay $744.6 million to buy the trailer and 4WD accessory manufacturer from private equity investor Pacific Equity Partners. The purchase will be funded through a $405 million equity raising and the issue of new shares to the vendors.

Biome Australia continued a recent run of disappointing market debuts. Shares in the probiotics and alternative health business dived 40 per cent to 12 cents.

Other markets

Most Asian markets followed Wall Street higher. The Asia Dow tacked on 0.57 per cent, China’s Shanghai Composite 0.46 per cent and Japan’s Nikkei 1.21 per cent. Hong Kong’s Hang Seng fell 0.4 per cent.

Oil firmed for a second session. Brent crude put on 78 US cents or 1.05 per cent at US$74 a barrel.

Gold edged up US$2.50 or 0.14 per cent to US$1,784.80 an ounce.

The dollar was steady at 71.46 US cents.

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