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The share market climbed to its highest in a week before tempering gains ahead of this afternoon’s Reserve Bank policy update.

The S&P/ASX 200 trimmed a 67-point opening rally to 48 points or 0.66 per cent at mid-session.

Travel stocks rebounded after the White House’s medical expert talked down the risk from the omicron Covid variant. The speculative end of the market also recovered. Declines in Transurban and Fortescue Metals kept the rally in check.

What’s driving the market

The ASX 200 pushed towards its first three-day advance in a month following the Dow’s best night since March. The US blue-chip average climbed 1.87 per cent. The broader S&P 500 put on 1.17 per cent.

The pendulum swung from fear back to greed after White House pandemic advisor Dr Anthony Fauci said omicron symptoms appeared to be less severe than those of previous variants. A “risk-on” session saw equities, crude oil and iron ore all rise overnight.

“Although there is still a lot of uncertainty over Omicron‘s health and economic impact, investors have embraced news from South Africa suggesting the exponential rise in Omicron infections has not been followed by a big wave in hospitalisations,” NAB currency strategist Rodrigo Catril said. “Comments on Sunday from Dr Fauci, US President Joe Biden’s chief medical adviser, noting initial data from South Africa are “a bit encouraging regarding the severity,” certainly helped the mood at the start of the new week.”

Travel and tourism stocks hit multi-month lows when news of the new variant first broke. Several companies rallied today to their highest since the new variant was identified.

Corporate Travel Management gained 6.05 per cent, Flight Centre 4.7 per cent, Qantas 3.61 per cent and Webjet 3.67 per cent.

Speculative stocks outperformed a day after diving entering a technical correction. The S&P/ASX Emerging Companies Index bounced 2.06 per cent. The rally reversed more than half of yesterday’s tumble.

The Reserve Bank met this morning and was due to update the market this afternoon. While no major policy changes were anticipated, some analysts think the central bank should start to lay the groundwork for higher rates.

Going up

Oil Search climbed 1.76 per cent as shareholders prepared to vote on a merger with Santos. If approved, the merger will create one of the world’s 20 largest oil and gas producers. Santos shares gained 0.62 per cent.

Bank of Queensland firmed 5.39 per cent after reconfirming full-year guidance. CEO and Managing Director George Frazis told today’s AGM the bank expects 2 per cent “positive jaws”, meaning gross income growth will exceed expense growth.

IAG used a Business Update day for investors to reaffirm full-year margin and premium guidance. The insurer aims to deliver a return on equity of 12-13 per cent and an insurance margin of 15-17 per cent. The share price rose 1.4 per cent.

Junior biotech Neuren Pharmaceuticals doubled in value following positive results from a Phase 3 trial on the firm’s experimental treatment for Rett syndrome. CEO Jon Pilcher said regulatory approval of trofinetide in the US would generate revenue of $111 million, plus royalties in 2022 and 2023. The firm’s shares were lately up 93.5 per cent after earlier rising more than 100 per cent.

Z1P Co clambered 7.49 per cent off a 19-month low after another record month. The BNPL company reported fresh highs in transaction volumes and customer numbers.

Going down

The biggest drags on the index were toll road operator Transurban -0.61 per cent, Fortescue Metals -0.52 per cent and CBA -0.08 per cent.

Iluka Resources shed 2.22 per cent, Nickel Mines 2.69 per cent and Lynas Rare Earths 2.5 per cent. Other notable drags included exchange operator ASX -3.05 per cent and NIB -1.73 per cent.

Fund manager Magellan fell 4.23 per cent to its lowest since February 2019 following the resignation of CEO Dr Brett Cairns for “personal reasons”. Long-serving Chief Financial Officer Kirsten Morton will act up until a replacement is found.

A decline in funds under management (FUM) pulled GQG Partners down 1.12 per cent. The asset manager reported FUM declined to $87.3 billion last month from $90.4 billion at the end of October. GQG was one of this year’s most keenly-anticipated floats.

Online ads business Carsales eased 1.61 per cent after reaffirming its full-year outlook at today’s Investor Day.

Other markets

Asian markets rebounded. The Asia Dow gained 0.98 per cent, China’s Shanghai Composite 0.3 per cent, Hong Kong’s Hang Seng 1.04 per cent and Japan’s Nikkei 1.13 per cent.

US futures also rose. S&P 500 futures were recently ahead eight points or almost 0.2 per cent.

Oil added to last night’s 4.6 per cent surge. Brent crude firmed 56 US cents or 0.77 per cent to US$73.65 a barrel.

Gold was steady at US$1,779.50 an ounce.

The dollar continued to climb off 13-month lows, rising 0.04 per cent to 70.52 US cents.

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