US investors can’t seem to make up their mind when it comes to the Omicron strain of COVID-19. It was a bumpy ride on Wall St overnight, which could set the tone for the ASX today.
The US did confirm its first Omicron case.
“The California and San Francisco departments of public health and the CDC have confirmed that a recent case of COVID-19 among an individual in California was caused by the Omicron variant,” President Joe Biden’s top medical adviser Dr Anthony Fauci said.
Fauci’s comments took the wind out of the market's sails, so with Omicron in mind and with the ASX SPI 200 futures trading 1.1% lower to 7,160 as of 8.30am AEDT, it looks like we are in for a rocky start in morning trading.
As for commodities, they are also experiencing ups and downs: coffee is trading at a 10-year high having more than doubled in price from this time last year. Soybeans, orange juice, sugar, timber and a raft of other commodities have also had a strong rally. However, coming off the boil slightly is natural gas as the situation in Europe looks to be easing.
Here’s what we saw:
- The Aussie dollar fell from highs near US71.70 cents to lows near US71.00 cents and was near session lows in afternoon US trade.
- Global oil prices were lower on Wednesday. Reuters reported: "The US Deputy Energy Secretary said the Biden administration could adjust the timing of its planned release of strategic crude oil stockpiles if global energy prices drop substantially."
- Commsec’s Graig James noted that “While this provided support to prices, data showed that US gasoline stocks rose by 4 million barrels last week, well above expectations.”
- Brent crude fell by US36 cents or 0.5% to US$68.87 a barrel.
- The US Nymex crude price fell by US61 cents or 0.9% to US$65.57 a barrel.
- Base metal prices were mixed on Wednesday.
- Aluminium rose 1.7%.
- Zinc fell 0.6%.
- Copper fell by 0.2%.
- The gold futures price rose by US$7.80 or 0.4% to US$1,784.30 an ounce.
- Spot gold was trading near US$1,779 an ounce at the US close.
- Iron ore rose US$1.30 or 1.3% to US$101.40 a tonne.
Australian markets
While the market is expected to open in the red this morning, there are few companies making news …
Blackstone to do due diligence on Crown
Despite determining that Blackstone’s offer is no good for shareholders, Crown Resorts Group Ltd has given its potential acquirer permission to do its due diligence, albeit on a non-exclusive basis.
"The Crown board is of the view that the proposal does not represent compelling value for Crown shareholders," it said in a statement.
"The Crown board has offered Blackstone the opportunity to access non-public information to allow Blackstone to undertake initial due diligence inquiries on a non-exclusive basis so that it can formulate a revised proposal that adequately reflects the value of Crown."
The companies will enter a confidentiality agreement.
"The Crown board is focused on maximising value for Crown shareholders and will carefully consider any proposal that is consistent with this objective," it says.
Blackstone’s offered $12.50 cash per share in a deal worth $8.5 billion in its latest takeover bid, 50 cents higher than its previous offer.
Crown shares closed on Wednesday at $10.94.
OpenPay links up with AMEX
Openpay Group Ltd (ASX:OPY) has joined forces with American Express in a 12-month deal that will allow Amex card users to access buy now, pay smarter plans to purchase healthcare, auto repair and maintenance items.
The initial rollout will connect 40 Amex merchants in the healthcare and automotive sectors with Oopenpay’s longer, larger and customisable payment plans.
"We are constantly striving to drive additional value to our Card Members and merchants," American Express' president of merchant services, US, Colleen Taylor said.
The companies will explore further opportunities in the B2B and B2C space.
The agreement comes with an additional one-year renewal term.
OPY shares last traded at 97 cents.
ETF Securities and 21Shares partner up to launch crypto ETFs
ETF Securities and 21Shares, the world’s first and largest crypto ETP provider have partnered to launch Australia’s first Bitcoin and Ethereum ETFs and a best-in-class blockchain research and education centre.
Subject to regulatory approvals, the ETFS 21Shares Bitcoin ETF (EBTC) and ETFS 21Shares Ethereum ETF (EETH) will provide Australians with a way to invest in Bitcoin and Ether, via funds operated by ETF Securities, the world’s first issuer of a GOLD-backed ETP, in partnership with 21Shares the world’s pioneering crypto ETP provider.
Zurich-based 21Shares currently has almost US$3 billion in assets under management inside its 20 European crypto ETPs and total of 80 listings. The firm has managed Bitcoin and Ethereum ETPs for almost three years and created the world-first physically-backed crypto ETP in 2018.
“Once we had decided to build a range of crypto ETFs for the Australian market, there was only one partner we wanted to work with and that’s 21Shares. They are the cutting edge of crypto ETPs in the world today,” ETF Securities Australia executive chairman Graham Tuckwell said.
The research and education centre will build on 21Shares investment-grade and cutting-edge research, which is some of the most comprehensive in the world. It covers a vast range of different cryptocurrencies and blockchains. This includes famous cryptocurrencies like Bitcoin and Ether, but also lesser-known but faster-growing cryptos like Solana, Polygon or Avalanche.
The research centre will explain in simple English how the often-complicated world of blockchain works. It will also feature the bleeding edge news on crypto, various blockchain metrics, price action and important news on miners, custodians and other companies in the supply chain.
“We are excited to partner with ETF Securities Australia to launch crypto ETFs for Australian investors. This partnership is an opportunity to combine our expertise to provide the simplest and most transparent way to access the best-performing asset class of the last 10 years,” 21Shares CEO Hany Rashwan said.
To find out more, visit the crypto research hub: https://crypto.etfsecurities.com.au/
Will it be a merry Christmas?
Federal Treasurer Josh Frydenberg is looking forward to a strong Christmas that will help Australia’s economic recovery.
The Treasurer told Sky News, “We don't want a stop-start recovery. We want a smooth recovery and we know that the virus or the vaccine, right here in Australia is now one of the highest in the world and I do believe that's going to give us a strong layer of defence and it has allowed restrictions to be ease.
“I'm very confident about the economy's prospects next year, and for a strong Christmas retail period. We did see, as you said, a contraction in the September quarter, but that's because our two largest states, New South Wales and Victoria, were in lockdown.
"But since the pandemic began, Australia's had a stronger economic recovery and all but two of the major advanced economies, our economy has recovered more strongly than the United Kingdom and Canada, then Japan, then Germany, then Italy."
Australian indices (at time of writing)
- ASX 200 fell 0.28% to 7,235.90.
- ASX24 futures fell 1.1% to 7,160.
- S&P/ASX Small Ordinaries fell 1.42% to 3,439.80.
- All Ordinaries fell 0.39% to 7,557.80.
US markets
It was a wild day on Wall St.
S&P500 opened at 4,602.8 and traded up to the day’s high of 4,652.9 before taking a dive after the Omicron announcement of the case to a low of 4,562.7.
The Dow and the Nasdaq were also volatile.
Bonds also had a busy day: the US 10-year note opened at 1.48%, traded up to a high of 1.51% before trading down to a low of 1.42% which is roughly where it is trading now.
Meanwhile, Afterpay acquirer Square, is set to change its name to Block to better reflect its expanding business.
“The [Block] name has many associated meanings for the company — building blocks, neighbourhood blocks and their local businesses, communities coming together at block parties full of music, a blockchain, a section of code, and obstacles to overcome,” Square said in a press release.
The company will continue to trade under the ticker symbol SQ, with the name change to become official around December 10.
As for the acquisition of Afterpay, the Australian company has delayed a shareholder meeting vote on its proposed $39 billion merger, blaming the delay on the Bank of Spain as it awaits regulatory approvals.
"Afterpay and Square are confident that the Bank of Spain condition will ultimately be satisfied," CEO Anthony Eisen said in a statement to shareholders. "Whilst the statutory deadline for Square’s application for Bank of Spain approval is currently February 21 2022, at present Square expects that the Bank of Spain condition will be satisfied in mid-January 2022.
"Afterpay intends to approach the New South Wales Supreme Court for orders in connection with the adjourned Scheme Meeting and Second Court Date and approving further materials for dispatch to Afterpay shareholders outlining the new Scheme Meeting details."
The merger remains on track to be completed by Q1 2022 pending shareholder approval.
US indices
- Dow Jones was down 1.3% to 34,022.04.
- S&P 500 fell 1.2% to 4,513.04.
- Nasdaq fell 1.8% to 15,254.05.
European markets
Omicron had less effect in Europe, with stocks surging overnight as investors took advantage of the recent sell-off.
The benchmark Stoxx 600 Index was led by gains in carmakers, technology companies and commodity stocks.
Travel & leisure companies were also on the rebound from heavy losses overnight.
Directions from the World Health Organization and comments that vaccines would likely protect against severe cases of the Omicron variant had a positive impact.
Autos rose by 3.8% and travel & leisure rose by 3.1%. Materials rose 2.3% and energy rose 2.1%. Restraining sentiment was data showing factory price inflation at the fastest rate in 19 years.
European indices
- STOXX 600 rose 1.71% to 470.86.
- German Dax rose 2.5% to 15,254.05.
- UK FTSE rose 1.6% to 7,168.68.