There were broad-based losses on Wall St to end the week last week and these will filter through to the ASX this morning.
The ASX SPI 200 futures were trading 0.4% lower to 7,177 in the early morning.
Traders were concerned about the effects of Omicron and what will happen to business if Omicron takes hold.
We have already seen the Dutch go into lockdown and while Boris Johnson is saying the UK will not shut down, he is not a man who instils confidence in the public. Paris has cancelled New Year festivities.
The withdrawal of pandemic stimulus measures in the US also had an effect, with three rate hikes now expected next year.
“It’s been a volatile week, not only in terms of price actions but the news that has been coming out,” said Ventura Wealth Management’s Tom Cahill.
“The markets are still trying to work through the scenario.”
The first rate hike is expected in the US spring.
“We’d like to put March on the table as a possible date to start lifting (interest rates) if we need to,” Fed Governor Christopher Waller said.
Waller expects a strong economic recovery in 2022, however, “one big uncertainty about this outlook, of course, is the Omicron variant,” he told the Forecasters Club of New York.
Here’s what we saw:
- AUD was down 0.8% to 71.25 US cents.
- Spot gold fell 0.1% to $US1,798.11/ounce.
- Brent crude dived 2.9% to $US72.85 a barrel.
- US oil was down 2.1% to $US70.86 a barrel.
- Iron ore gained 3.1% to $US119.60 a tonne.
Australian markets
The ongoing saga of Woolworths vs Wesfarmers
Wesfarmers Ltd (ASX:WES) has fired the latest shot in its battle with Woolworths Group Ltd for API.
Wesfarmers CEO Rob Scott has sent a letter to the Pharmacy Guild warning that Woolworths' bid could be anti-competitive and that he has confidence that Wesfarmers’ $765 million takeover would be successful.
“Supermarket ownership of API is not in community pharmacists’ best interests,” Scott wrote in the letter. “[We] have heard direct concerns recently about the competition issues associated with supermarket ownership of API.”
Pharmacists have raised alarm bells previously over Woolworths' intentions when in the 2000s, the retail giant made a bid to have pharmacies in Woolworths stores.
Wesfarmers effectively distanced itself from supermarket retail when it demerged from Coles.
“Importantly, Wesfarmers now has a very limited market presence in these categories, allowing us to approach the API acquisition without any material competitive or channel conflict,” Scott said.
The Pharmacy Guild is watching Woolworths closely and is prepared to take its concerns to Australia’s highest offices, including that of the Prime Minister and opposition leader.
Rio’s new chair
Canadian Dominic Barton will replace Simon Thompson as chairman of mining giant Rio Tinto Limited.
Barton was Canada’s ambassador to China, a position he quit on December 6.
The former McKinsey boss will join Rio’s board on April 4 and be appointed to the role of chair at the conclusion of its annual general meeting on May 5.
“I am delighted with the choice of Dominic, who I believe brings exactly the skills and experiences that we in Rio Tinto need. I am truly looking forward to working with Dominic in our effort to continue to strengthen Rio Tinto, in particular drawing on his wealth of experience across Asia in both a business and diplomatic capacity,” Rio’s chief executive Jakob Stausholm said.
Origin acquisition
Origin Energy Ltd (ASX:ORG) will acquire WINconnect for $42.4 million.
“The acquisition of WINconnect is a strong fit for Origin, aligning to our retail strategy to expand our existing presence in the embedded networks market,” Origin chief executive Frank Calabria said.
“Since 2018, Origin’s CES business has experienced strong growth with customer accounts increasing by 78%. This transaction allows us to add considerable scale to our customer base, while providing further upside potential through the sale of a broader suite of behind the meter products and services to CES customers.”
Bardoc Gold acquired for $157 million
St Barbara Ltd (ASX:SBM) is set to acquire Bardoc Gold Ltd (ASX:BDC) for $157 million.
Bardoc shareholders will receive 0.3604 new St Barbara shares for each Bardoc share, with the implied valuation is at a 29.2% premium to Bardoc’s last close price.
“St Barbara has been focused on expanding our footprint within the Leonora Province to fill the mill by growing our deposits, through acquisitions and exploration,” St Barbara managing director and chief executive Craig Jetson said.
“Acquiring Bardoc Gold unlocks access to extensive land packages near our Leonora Operations. The location of the Bardoc Gold Project, situated near the rail line and highway to the south of Leonora, brings the Bardoc ore bodies within economic haulage range of our Leonora processing plant.
“Combined with our existing regional opportunities such as Tower Hill and Harbour Lights, the acquisition of Bardoc facilitates the accelerated delivery of a multi-decade province of satellite mines feeding the Leonora processing plant.”
US markets
It was a down week for Wall St last week.
The S&P 500 fell 1.9%, the Dow lost 1.7% and the Nasdaq declined 2.9% over the week.
Meanwhile, Tesla is being sued over CEO Elon Musk’s social media posts.
The main culprit is Musk’s Twitter poll on stock sales that pulled down its stock prices.
Tesla investor David Wagner has called for access to internal documents. The angry investor wants to investigate violations to an agreement with the US securities regulator and whether Tesla’s board members failed to adhere to their fiduciary duties.
European markets
European markets were also hit, with banks and luxury stocks leading declines on Friday.
The losses pushed European shares 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% away from record highs scaled in November.
Germany’s blue-chip DAX lost 0.7% on the back of declining business morale, supply bottlenecks and COVID-19 restrictions.