Jarden Brief: US markets rebound after Omicron sell-off

The discovery of Omicron sparked a major sell-off last week. Photo / Getty Images

Keeping you up to date with the latest market moves, in association with Investment firm Jarden

New Zealand

The NZX 50 fell 0.8 per cent yesterday on news of the increasing spread of the Omicron Covid-19 variant, in line with steep drops in most global markets over the weekend.
Those seeing the biggest declines on Monday were retail and travel-exposed stocks, which have historically dropped the most on negative Covid-19 developments.

Cabinet announced yesterday that Auckland, Northland and some of the central North Island will move to the Red setting of the Covid-19 Protection Framework on Friday, while the rest of New Zealand moves to Orange. There will be greater freedoms for vaccinated people, with no gathering limits for many hospitality venues using vaccine certificates under Orange. Red is similar to Alert Level 2 settings for the vaccinated, with gatherings limited to 100 people. These settings will be reviewed on 13 December.

Financials and consumer cyclicals declined 1.8 and 1.5 per cent, respectively, leading the index downwards.

Travel management and expense company Serko declined 5.6 per cent, retailer Kathmandu Holdings fell 3.3 per cent and Air New Zealand lost 3.2 per cent. Air New Zealand declined on news of the Omicron variant, despite a surge in bookings reported over the weekend with 25,000 international seats booked in the 48 hours following the Government's announcement of the new border settings.

Healthcare was the only sector to increase, up 0.3 per cent and led by Fisher & Paykel Healthcare's 1.2 per cent gain. The company's ventilators are used to treat symptoms of Covid-19, and the initial outbreak of the pandemic drove its hospital sales significantly.
Refining New Zealand was placed into trading halt after it announced a ~$43.5 million equity raising to fund the establishment of private storage for its customers.

International                                                                                         
US

US markets rebounded post a negative final session last week as Omicron fears led to a worldwide selloff. This morning the S&P 500, Nasdaq, and Dow Jones Industrial Average were currently trading higher by 1.6, 2.0, and 1.0 per cent, respectively.

Sector gains include technology and consumer discretionary, each posting 2.5 and 2.1 per cent increases. No sectors have lost ground at the time of writing.

These sector gains were well supported by the single stock winner Moderna (+10.3 per cent). The stock of the Covid-19 vaccine producer spiked as demand for booster shots, or potentially even a new vaccine, will likely increase over the coming months as the US and Europe head into winter fighting a new strain of the virus. Similarly, Pfizer also came to the party on Friday evening with gains of over 8.0 per cent, and cooled off this morning - now trading lower by 0.2 per cent.

Tech company Seagate Technology Holdings was another top performer following a bumper black Friday sale for its hard drive and data storage products. The stock traded 4.9 per cent higher at the time of writing.

Share price drops came from healthcare company Merk & Co (-5.3 per cent) as the US Food and Drug Association (FDA) published documents surrounding the effectiveness of its Covid-19 treatment pill late last week - finding the treatment less potent than originally anticipated.

Energy storage solutions company Generac Holdings and pharmaceutical company Organon lost 2.9 per cent each those experiencing declines.

Rest of the world

Main Asian indices were lower at the close, and reacted to Saturday morning sell-offs across Europe and the US. The Hang Seng and the Nikkei slipped 1.0 and 1.7 per cent while the Shanghai Composite remained roughly unchanged.

Highlights included e-commerce company Meituan losing 7.0 per cent after the firm confirmed a loss of over U$1.5bn to investors on Friday. Sun Entertainment Group (-31.0 per cent) also had a poor session after one of its larger shareholders, among many others, had been arrested on gambling offence charges.

Commodities

Amongst the commonly tracked commodities,, Ggold remained steady at US$1,786.6. US 10-year bond yields have fallen since last week as investors moved toward less risky assets during Friday's trading, but were steadier this morning, roughly unchanged at 1.53 per cent.

Oil is another commodity hit hard by news of the variant. Oil, much like in the early stages of 2020, fell over the weekend in reaction to potential restrictions of global transport and shipping, which will likely curb demand for fuel. The WTI traded at US$78 per barrel on Friday, dropping further to below US$70 on Saturday, and has now recovered to US$71.
Crypto currencies rose today with Bitcoin jumping 7.0 per cent to US$58,792 while Ethereum followed suit with its own gain of 7.9 per cent, now trading at US$4,458

Australia

The ASX 200 closed 0.5 per cent lower after dropping by more than 1.0 per cent at market open on Monday. The NSW government acknowledged the Omicron variant by putting in place hotel quarantine for travellers who arriving from a range of countries in southern Africa. It was announced yesterday that two more passengers arriving from the area tested positive for the new strain.. The NSW Premier Dominic Perrottet said that "we need to learn to live alongside the virus" and indicated that state and international borders will remain open.

Most sectors experienced declines, led lower by A-REIT (-1.4 per cent) and energy (-1.4 per cent). Information technology (+0.6 per cent) and materials (+0.7 per cent) were the only two sectors posting gains.

Investment and superannuation platform services provider Hub24 was the best single stock performer on the ASX 200 yesterday, closing 4.8 per cent higher. Meanwhile, pre-paid card provider EML Payments corrected some of the gains made at the end of last week and closed 5.5 per cent lower.

Historic Covid-19 beneficiaries performed well yesterday, with car part distributor Bapcor rising 4.6 per cent, reversing some of last week's losses, and Domino's Pizza Enterprise up 4.1 per cent.

On the flip side, those more exposed to Covid-19 performed poorly.

Shopping centre owner and manager Vicinity Centres dropped 4.8 per cent, while Westfield owner Scentre Group also experienced a decrease, of 3.8 per cent.

On Wednesday, Australia's third quarter GDP numbers will be released, alongside the Markit PMI Manufacturing data. Thursday will see trade balance and home loan numbers published.

• For more information on the latest market moves, get in touch with Jarden.

Disclaimer: The Jarden Brief is provided for general information purposes only. It reflects views and research available at the time of publication, using external sources, systems and other data and information we believe to be accurate, complete and reliable at the time of preparation. We make no representation or warranty as to the accuracy, correctness and completeness of that information, and will not be liable or responsible for any error or omission. The Jarden Brief is not to be relied upon as a basis for making any investment decision. Please seek specific investment advice before making any investment decision. Jarden Securities Limited is an NZX Firm. A financial advice disclosure statement is available free of charge at https://www.jarden.co.nz/our-services/wealth-management/financial-advice-provider-disclosure-statement/ Full disclaimer available at: https://www.jarden.co.nz/wealth-sales-and-research-disclaimer