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The share market slumped to its lowest level in two months following a sharp reversal on Wall Street triggered by the first confirmed case of omicron on US shores.

The S&P/ASX 200 declined 23 points or 0.32 per cent to 7213 by mid-session. A close at that level would be the weakest since October 6. Today’s fall was the benchmark’s fourth in five sessions.

Afterpay was the biggest drag on the index, losing more than 5 per cent following a delay to its takeover by US giant Square. Toll road operator Transurban, Wesfarmers and some of the banks resisted the downtrend.

What’s driving the market

Omicron‘s symptoms may be milder than previous Covid strains, but the effect on world markets has been pronounced. The S&P 500 has fallen 4 per cent in four sessions since the new strain was identified. At today’s low, the ASX 200 had given up 3.2 per cent.

Overnight, US stocks hit ‘Reverse’ as soon as the first US case was confirmed in California. A 520-point rally on the Dow flipped to a loss of 462 points or 1.34 per cent. The S&P 500 shed 1.18 per cent. The Nasdaq Composite went from +1.8 per cent to -1.8 per cent.

“We’ve seen this movie before and Wall Street will likely remain COVID-variant headline driven until a clear assessment over this wave can be made,” Ed Moya, senior market analyst at Oanda, said. “The next couple of weeks will likely see risk appetite take a cue from incremental Omicron updates, supply chain issues, and every inflation reading,” he added.

This morning’s ASX trading repeated the now-familiar pattern of a sharp opening slump, followed by a rebound as investors bought the dip. The index fell as low as 7169 before a partial recovery. The reversal mirrored similar rebounds on Monday and yesterday.

A strong revival in retail sales last month pointed to a strong holiday shopping season for retailers. Sales jumped 4.9 per cent as the eastern states came out of lockdown.

The Australian Bureau of Statistics said there were strong gains in clothing, footwear and accessories (+27.7 per cent). Department store sales jumped 22.4 per cent.

A separate report showed the trade balance declined by $604 million to $11.22 billion in October. The value of exports declined 3 per cent as iron ore prices dived.

Going up

Priceline owner Australian Pharmaceutical Industries jumped 17.06 per cent after Woolworths topped Wesfarmers’ offer for the company. Woolworths lobbed a non-binding proposal to acquire API at $1.75 per share. The offer values the business at $872 million and represents a 20 cents per share premium to Wesfarmers’ bid. API said it would allow the supermarket chain to carry out due diligence.

Woolworths shares eased 0.33 per cent. Wesfarmers rose 0.72 per cent.

Macquarie Group firmed 0.87 per cent after announcing former Reserve Bank Governor Glenn Stevens as its next Chair.

A mixed morning for the high-street banks saw CBA rise 1.73 per cent and NAB 1.06 per cent. ANZ dipped 0.19 per cent and Westpac 0.68 per cent.

Elsewhere at the heavyweight end of the market, Transurban rose 2 per cent and Goodman Group 0.57 per cent.

Crown Resorts gained 0.37 per cent after rejecting a third takeover offer from Blackstone, but inviting the US investment manager to try again. The board said an offer of $12.50 per share did “not represent compelling value” for shareholders. Blackstone would be allowed access to the books to revise its proposal.

Going down

Afterpay skidded 5.59 per cent to a four-month low on news of a delay to its proposed takeover by US giant Square. A meeting of shareholders on Monday to approve the deal has been postponed while Afterpay awaits regulatory approval from the Bank of Spain.

Aristocrat Leisure eased 0.09 per cent as its takeover of UK firm Playtech made progress. Playtech shareholders voted overnight in favour of selling its Finalto financial trading division to Gopher Investments. The sale is a key condition of the Aristocrat offer proceeding.

Retailer Premier Investments dipped 1.09 per cent after reporting a strong rebound in sales since lockdowns were lifted in NSW, Victoria and the ACT. Chair Solomon Lew told today’s AGM sales had increased by 10.1 per cent in the three weeks since all stores were able to trade.

Other major drags this morning included Newcrest -2.33 per cent, Woodside -2.14 per cent, Rio Tinto -1.56 per cent and BHP -1.1 per cent. CSL shed 0.97 per cent and Coles 0.62 per cent.

Property group SCA faded 0.18 per cent after announcing a new $750 million joint venture with Singapore’s GIC. The companies will launch a new unlisted vehicle to invest in metropolitan convenience retail centres across Australia.

Other markets

Most Asian markets turned positive late morning. The Asia Dow inched up 0.02 per cent, China’s Shanghai Composite 0.08 per cent and Hong Kong’s Hang Seng 0.17 per cent. Japan’s Nikkei fell 0.45 per cent.

US futures rebounded. S&P 500 futures firmed 16 points or 0.34 per cent.

Gold pared overnight gains. The yellow metal dropped US$2.60 or 0.15 per cent to US$1,781.70 an ounce.

Brent crude rose eight US cents or 0.12 per cent to US$68.95 a barrel.

The dollar edged back above 71 US cents, rising 0.02 per cent to 71.09 US cents.

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