The ASX is down but has rallied slightly as it factors in the Omicron strain of the COVID-19 virus.
The S&P/ASX200 had dropped 14.90 points or 0.20% to 7,264.40 at time of writing, setting a new 20-day low.
This index has lost 1.21% for the last five days but sits 4.83% below its 52-week high.
The bottom-performing stocks so far are Unibail-Rodamco-Westfield down 5.79% and Vicinity Centres down 4.35%.
Also dragging the market down were the travel, oil and banking sectors.
Flight Centre was down 9.4% to $15.53, Webjet was 7.9% lower at $4.93 and Qantas fell 6% to $4.70.
On the energy front, Woodside Petroleum was 5.5% lower at $20.42, while Whitehaven Coal dropped 5.3% to $2.31.
Commonwealth Bank was down 1.2% to $93.63, ANZ was trading 1.3% lower at $26.72, NAB was down 1.5% to $27.24 and Westpac lost 1.9% to $20.67.
Health stocks were the saviour with Sonic Healthcare Ltd up 2.9% to $42.79 and Healius 2.7% higher at $4.88.
Others of note were Domino’s Pizza Enterprises Ltd up 4.8% and TechnologyOne Ltd 3.8% higher.
Flight Centre calls for calm, not grounding
As expected, travel stocks took a hit, with Flight Centre coming off the worst, however, CEO Graham Turner has called for calm and for domestic borders to open up as planned in time for Christmas.
While travel restrictions have been implemented for travellers from nine southern African countries on the back of the Omicron variant, Turner has urged state and federal governments to stay the course on reopening plans.
Turner argues millions of tourism dollars could be lost if the country locks down.
“As everyone said, these variants are going to happen," he told morning show Today.
"They're going to happen every few months, every six months, every year, so we just have to learn to live with it and move on and keep the plans open.
"I think that's a really important thing that we just don't get carried away. We look at the science, on the facts and not act on emotion."
Turner is hoping Queensland still opens its domestic borders as scheduled on December 17, lest tourism operators go broke.
“We've got our fingers crossed. I think the whole of Queensland Tourism has. The whole of Australia even, because I think everyone just wants the borders open now."
Flight Centre Travel Group Ltd dropped to a two-month low in morning trading.
The cost to tourism
The UN’s tourism body said the tourism sector’s recovery was “fragile” and “slow”, but the pandemic would cost the global tourism sector $US2 trillion in lost revenue in 2021.
The Madrid-based World Tourism Organization has stated international tourist arrivals would remain 70-75% below the 1.5 billion arrivals recorded in 2019 before the pandemic hit.
This mirrors the decline in 2020.
Global tourism was hit to the tune of $2 trillion in revenues last year due to the pandemic, according to the UNWTO which does not have a positive medium-term outlook.
“Despite the recent improvements, uneven vaccination rates around the world and new COVID-19 strains” such as the Delta variant and Omicron "could impact the already slow and fragile recovery", it said in a statement.
“It’s a historical crisis in the tourism industry but again tourism has the power to recover quite fast,” it added ahead of the start of the WTO’s annual general assembly in Madrid on Tuesday.
“We really hope that 2022 will be much better than 2021.”
Uncertain markets
IG believes we are in for several weeks of uncertainty.
"The crux of the issues of course is whether Omicron will lead to the sort of lockdowns, disruptions and weaker economic activity that plagued the globe at the outset of the pandemic and before vaccines became our ticket to freedom," IG analyst Kyle Rodda said.
Questions that will need to be answered include: How infectious is Omicron? Is it resistant to the vaccine? Does it cause more severe illness? How far has it already spread?
"The answers, medical experts are saying, won’t be known for a few weeks. So, while those questions remain unanswered, the markets could be an anxious and volatile place," Rodda said.
Meanwhile, Macquarie says the one sector to boom will be healthcare.
"In the near term, we see potential for increased COVID-19 testing, benefitting SHL and HLS," Macquarie said in a report today.
"For ANN (Ansell), we see increased supply of healthcare PPE over the past 12 months as likely to provide a less substantial benefit relative to prior variants, with supply chain/manufacturing impacts to consider.
“Similarly, we see an increased supply of ventilators globally as likely to provide modest impacts for RMD (ResMed).
"The implications for preferred exposures with leverage to improving activity (COH, CSL, RHC) will depend on potential health implications/policy responses (restrictions on movement) and their duration," the note said.
"For companies with greater domestic exposure (IDX, IVF, aged care), implications of the new variant may be less material given relatively high levels of COVID-19 vaccination in Australia and scope for policy responses (border restrictions)."
On the small cap front
Emyria Ltd (ASX:EMD) is up 9.09% at time of writing. EMD has appointed global pharmaceutical expert Dr Karen Smith, the founding CEO of Minderoo Foundation’s Eliminate Cancer Initiative to the board.
AdAlta Ltd (ASX:1AD) is up 6.25%. 1AD presented a progress report with ‘proof of principle’ data showing its i-body platform can be incorporated into Carina Biotech’s CAR-T cells and achieve targeted cell killing.
Queensland Pacific Metals Ltd (ASX:QPM) is up 5.13%. QPM has executed a non-binding memorandum of understanding (MOU) with Edify Energy Pty Ltd for the supply of green hydrogen.