Home / Daily Market Update / ASX closes 1% higher as RBA signals Omicron no threat

ASX records third straight gain, RBA holds rates steady, Zip surges on update

Positive news from the White House on the severity of the Omicron variant supported another surge in the S&P/ASX200 (ASX: XJO), which gained 1 per cent, taking the winning streak to three straight days.
 
Consumer-facing companies, particularly travel stocks, lead the way with the sector up 1.6 per cent, slightly behind the healthcare and tech sectors which gained 1.7 and 1.9 per cent.
 
Corporate Travel (ASX: CTD) and Webjet (ASX: WEB) were standouts gaining 5.7 and 4.5 per cent respectively.
 
BNPL player Zip Co (ASX: Z1P) recovered from yesterday’s rout, gaining 9.9 per cent after management delivered a strong update on their global expansion.
 
They recorded some $10 billion in annualised volume, with customer numbers jumping another 71 per cent to 9.2 million as a number of regions embrace the delayed payment option for the first time.
 
The low cost of capital supporting the business is set to continue for the foreseeable future, with the Reserve Bank holding the cash rate at 0.1 per cent and reiterating that bond purchases would continue at $4 billion per month. Inflation is unlikely to exceed 2.5 per cent until at least 2023.
 
Whilst a lot of attention is being paid to the omission of a target date, they remain clear that any rate hike will depend on signs of strong wage growth. 
 
Magellan CEO steps down, BOQ margin hit, IAG, Carsales confirm guidance
 
Magellan’s (ASX: MFG) founder and CEO Brett Cairns announced he would be stepping down from the role for ‘personal reasons’ at a time when pressure continues to grow on the business from external forces; shares fell 6.4 per cent on the news.
 
Shares in competitor GQG (ASX: GQG) remain below their IPO issue price falling 1.7 per cent after reporting a US$3 billion reduction in assets under management in November.
 
Shares in Bank of Queensland (ASX: BOQ) jumped another 4.2 per cent despite the CEO flagging a further contraction in net interest margins due to price competition, yield curve volatility and the growing popularity of fixed-rate mortgages.
 
Carsales.com (ASX: CAR) fell 1.8 per cent despite flagging continued ‘solid growth’ in revenue, earnings and profit for FY22. Investors will now see ‘other investments’ broken out in a venture capital like approach, with assets including Redbook and Placie in this bucket.
 
After a tumultuous year dominated by weather events and pandemic shutdown claims Insurance Australia Group (ASX: IAG) reaffirmed FY22 guidance for single-digit growth in written premiums and an insurance margin of 10 to 12 per cent; shares gained 1.4 per cent on the news. 
 
US market rallies most in since March, technology dominates, Intel to demerge
 
The US technology sector is behind a significant surge in the market overnight, gaining over 3 per cent as news regarding the Omicron variant continues to improve.

After Dr Fauci highlighted the lower severity of disease, GlaxoSmithKline (LON: GSK) declared their treatment was seeing positive results in various mutations of the disease.
 
The S&P500 and Dow Jones also delivered strong gains up 2.1 and 1.4 per cent respectively, with the likes of NVIDIA (NYSE: NVDA) and Adobe (NYSE: ADBE) among the leaders gaining 8 and 4 per cent respectively.
 
In fact, all but eight of the Nasdaq 100 stocks finished higher.

Shares in Intel (NYSE: INTC) gained 3 per cent after the company announced they were considering the demerger and separate listing of their own self-driving car unit, called Mobileye.
 
The company was purchased for US$15 billion in 2018 for its chip-based camera guidance systems and may be worth as much as US$50 billion.
 
The US trade deficit fell 18 per cent amid the largest surge in exports in over 13 years, with experts blaming port closures for the massive fall in imports.