Omicron lowers markets, puts an end to Santa’s rally

Fed Governor Christopher Waller expects a strong economic recovery in 2022, however, “great uncertainty about this outlook, of course, is the Omicron variant,” he told the Forecasters Club of New York.

There were widespread losses on Wall St to end the week last week and these will spill over to the ASX this morning.

ASX SPI 200 futures were trading down 0.4% at 7,177 early in the morning.

Traders were worried about the effects of Omicron and what would happen to businesses if Omicron took hold.

We have seen the Dutch self-quarantine before and although Boris Johnson says the UK will not shut down, he is not a man who inspires confidence in the public. Paris has canceled the New Year’s festivities.

The withdrawal of the pandemic stimulus package in the United States has also had an effect, with three rate hikes now expected next year.

“It has been a volatile week, not only in terms of price developments, but also the news that has been released,” said Tom Cahill of Ventura Wealth Management.

“The markets are always trying to work through the scenario.”

The first rate hike is expected in the US spring.

“We would like to propose March as a possible date to start raising (interest rates) if we need to,” Fed Governor Christopher Waller said.

Waller expects a strong economic recovery in 2022, however, “great uncertainty about this outlook, of course, is the Omicron variant,” he told the Forecasters Club in New York.

Here is what we saw:

  • The AUD lost 0.8% to 71.25 cents US.
  • Spot gold fell 0.1% to US $ 1,798.11 / ounce.
  • Brent crude fell 2.9% to US $ 72.85 a barrel.
  • US oil fell 2.1% to US $ 70.86 per barrel.
  • Iron ore gained 3.1% to US $ 119.60 per tonne.

Australian markets

The ongoing saga of Woolworths vs Wesfarmers

Wesfarmers Ltd (ASX: WES) has fired the final shot in its battle with Woolworths Group Ltd for the API.

Wesfarmers CEO Rob Scott has sent a letter to the Pharmacy Guild warning them that Woolworths’ offer may be anti-competitive and that he is confident the $ 765 million takeover of Wesfarmers will be successful .

“Ownership of the API by supermarkets is not in the best interests of community pharmacists,” Scott wrote in the letter. “[We] recently heard direct concerns about competition concerns associated with API ownership by supermarkets. “

Pharmacists once sounded the alarm about Woolworths’ intentions when, in the 2000s, the retail giant made an offer to have drugstores in Woolworths stores.

Wesfarmers effectively distanced itself from supermarket retail when it parted ways with Coles.

“It is important to note that Wesfarmers now has a very limited market presence in these categories, which allows us to approach API acquisition without any major competition or channel conflicts,” said Scott.

The Pharmacy Guild is keeping a close watch on Woolworths and is ready to raise its concerns to the highest levels of Australia, including that of the Prime Minister and the Leader of the Opposition.

Rio’s new chair

Canadian Dominic Barton will replace Simon Thompson as president of mining giant Rio Tinto Limited.

Barton was Canada’s Ambassador to China, a post he left on December 6.

The former McKinsey boss will join Rio’s board of directors on April 4 and will be named president following its annual general meeting on May 5.

“I’m delighted with the choice of Dominic, who I think brings exactly the skills and experiences we need to Rio Tinto. I really look forward to working with Dominic in our efforts to continue to strengthen Rio Tinto, in particular drawing on his rich experience in Asia both in business and in diplomacy, ”said Rio Managing Director, Jakob Stausholm.

Original acquisition

Origin Energy Ltd (ASX: ORG) to acquire WINconnect for $ 42.4 million.

“The acquisition of WINconnect is a perfect fit for Origin, aligning with our retail strategy to expand our existing presence in the on-board network market,” said Frank Calabria, CEO of Origin.

“Since 2018, Origin’s CES activity has experienced strong growth with customer accounts increasing by 78%. This transaction allows us to significantly increase our customer base, while providing further upside potential through the sale of a wider range of behind-the-counter products and services to CES customers.

Bardoc Gold acquired for $ 157 million

St Barbara Ltd (ASX: SBM) is in the process of acquiring Bardoc Gold Ltd (ASX: BDC) for $ 157 million.

Bardoc shareholders will receive 0.3604 new St Barbara share for each Bardoc share, with an implied valuation of 29.2% over the last closing price of Bardoc.

“St Barbara has focused on expanding our footprint in the province of Leonora to fill the plant by developing our deposits, through acquisitions and exploration,” said the managing director and general manager of St Barbara, Craig Jetson.

“The acquisition of Bardoc Gold opens up access to large lots of land near our Leonora operations. The location of the Bardoc gold project, located near the railroad and highway south of Leonora, places the Bardoc ore bodies within the economic transport zone of our Leonora processing plant.

“Combined with our existing regional opportunities such as Tower Hill and Harbor Lights, the acquisition of Bardoc facilitates the expedited delivery of a province of decades of satellite mines supplying the Leonora processing plant. “

American markets

It was an off week for Wall St last week.

The S&P 500 fell 1.9%, the Dow Jones lost 1.7% and the Nasdaq fell 2.9% on the week.

Meanwhile, Tesla is being sued for CEO Elon Musk’s social media posts.

The main culprit is Musk’s Twitter poll of stock sales that pushed his stock price down.

Tesla investor David Wagner requested access to internal documents. The angry investor wants to investigate violations of an agreement with the U.S. securities regulator and whether Tesla’s board members failed to meet their fiduciary obligations.

European markets

European markets were also affected, with banks and luxury stocks posting declines on Friday.

The losses pushed European stocks into the red for the week as Omicron sent central banks hawkish.

The pan-European STOXX 600 index fell 0.6%, down 0.3% on the week and is now more than 3% from the records reached in November.

Germany’s blue-chip DAX fell 0.7% on lower corporate morale, supply bottlenecks and COVID-19 restrictions.

About Donnie R. Losey

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