Australian shares to open lower on Omicron, taper concerns

Highlights

  • The Australian share market is expected to give away yesterday’s gains on Wednesday.
  • According to the latest SPI futures, the ASX 200 is expected to open the day 30 points or 0.4% lower on Wednesday.
  • Moderna issued warning that the existing vaccines are not likely to be as effective against the new coronavirus variant.

The Australian share market is expected to give away yesterday’s gains on Wednesday after the country confirmed its first community case of the Omicron coronavirus variant. It raised concerns among investors about reimposition of restrictions and negative impact on economic recovery. The fears were compounded after global drugmaker Moderna issued warning that the existing vaccines are not likely to be as effective against the new coronavirus variant, pushing investors towards safe-haven assets.

According to the latest SPI futures, the ASX 200 is expected to open the day 30 points or 0.4% lower on Wednesday. The benchmark rose 0.22% on Tuesday.

On Wall Street, Dow Jones fell 1.86%, S&P 500 closed down 1.90% and tech-heavy NASDAQ settled 1.55% lower.

 Tech, energy drag shares lower; GDP data ahead

 

Earlier, US Federal Reserve Chair Jerome Powell suggested that bond buying program could be tapered soon. Powell told Congress that high inflation will persist until the middle of next year.

MSCI's gauge of stocks across the globe fell 1.20% following broad declines in Europe and Asia. In Europe: Stoxx fell 50 -1.1%, FTSE slipped 0.7%, CAC plunged 0.8% and DAX dipped 1.2%.

Bond yields

At 3:10 PM in New York

2-year yield: US 0.53%, Australia 0.59%

5-year yield: US 1.15%, Australia 1.28%

10-year yield: US 1.44%, Australia 1.68%, Germany -0.35%

The dollar index turned positive after the Powell comments and was last up 0.1% at 96.331.

Oil prices fall

Concerns about the efficacy of current vaccines on the Omicron variant spooked oil markets.

  • Brent crude futures fell $2.95, or 4%, to $70.49 a barrel by 12:12 PM EST (1712 GMT).
  • West Texas Intermediate (WTI) crude futures fell 6.2%, to US$65.65 a barrel.

Gold prices fall

Gold beat a hasty retreat on Tuesday as investors latched on to seemingly hawkish remarks from the U.S. Federal Reserve chair.

  • Spot gold fell 0.7% to US$1,773.21 per ounce by 02:14 PM ET (1914 GMT).
  • US gold futures settled down 0.5% at US$1,776.5.

Meanwhile, the most-traded iron ore contract on the Dalian Commodity Exchange, for January delivery, ended 2.4% higher at 610 yuan (US$95.75) a tonne.

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