Australian shares have fallen at the open, following losses on Wall Street to end last week as worries surrounding the Omicron coronavirus variant persisted.
- The ASX had a negative start to trade after broad losses on Wall Street
- Omicron cases spark worries about the hit to the global economy
- The minutes from the RBA’s most recent board meeting will be released on Tuesday
The ASX 200 was down 0.3 per cent to 7,285 points at 10:25am AEDT, with heavy losses in energy (-1.1pc) and finance (-0.9pc) stocks.
The final week before Christmas is expected to be quiet, and the RBA board minutes for the December meeting to be released on Tuesday are unlikely offer anything new beyond what Governor Lowe addressed last week.
Wall Street’s main indices fell on Friday, weighed down by cyclical stocks linked closely to the economy, as investors digested the Federal Reserve’s decision to end its pandemic-era stimulus faster.
An announcement from the Fed last week signalling the likelihood of three 25-basis-point interest rate hikes by the end of 2022 to combat surging inflation had sparked a move into cyclical stocks but those gains proved to be short-lived.
Ten of the 11 major S&P 500 sector indexes fell, with a 2.2 per cent decline in financials weighing the most on the benchmark index. Only the real estate sector escaped losses.
Other economically sensitive sectors including energy, industrials and materials also declined.
Technology stocks dropped 1 per cent but pared their declines by early afternoon trading. Apple, Meta Platforms (formerly Facebook), Amazon and Microsoft last fell between 0.5 per cent and 1.4 per cent.
Traders also pointed to year-end tax selling and the simultaneous expiration of stock options, stock index futures and index options contracts — known as triple witching — as potential causes for volatility.
“People are closing out their positions on a day like this because we have long weekend coming up for Christmas next week, especially institutions as they clear their books, and also a combination of year-end tax selling,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
Global stocks also retreated on Friday on concerns about the fast-spreading Omicron variant of COVID-19, which has impacted trading sentiment since late November.
The pan-European EUROSTOXX 50 was down 1 per cent, Germany’s DAX dropped 0.7 per cent, although Britain’s FTSE 100 bucked the trend with a 0.1 per cent rise.
The Australian benchmark ASX 200 index settled 0.1 per cent higher last Friday.
The small-cap Russell 2000 index gained 0.8 per cent, after having fallen more than 10 per cent from a record high hit in early November.
The Australian dollar ended last week lower, down 0.8 per cent at 0.71 US cents, and it is trading around that level this morning.
The Brent crude oil price ended last week around $US73 a barrel, but had fallen further this morning to $US72.16 by 11:00am AEDT.