Australian shares extend fall on COVID-19 variant fears

Mining, tech sectors limit fall

  

Australian shares closed lower on Monday for the second straight session, as the country reported its first cases of the Omicron coronavirus variant over the weekend.

The S&P/ASX 200 index .AXJO settled 0.54% lower at 7,239.7 after dropping more than 1% in early trade to its lowest in nearly two months.

Australia confirmed two cases of the new Omicron variant on Sunday, putting the country's reopening plans in jeopardy.

Omicron, dubbed a "variant of concern" by the World Health Organization, is potentially more contagious than previous variants. Experts do not know yet if it will cause more or less severe COVID-19 compared to other strains.

"The global markets sold off last week after the Omicron jolt, and even though we bounced back a little today, markets will be nervous until there is more clarity," said Brad Smoling, managing director at Smoling Stockbroking.

The mining and tech sectors led the partial recovery from early falls as iron ore prices rose and bond yields declined, while financial and travel stocks bore the brunt of the selling.

A slump in bond yields pulled financial stocks .AXFJ down 1.07% to multi-month lows. Commonwealth Bank of Australia CBA.AX , the country's biggest lender, dropped 1.1%, while the rest of the "Big Four" banks skidded between 0.8% and 1.7%.

Travel stocks dropped to multi-month lows, with airline operator Qantas Airways QAN.AX hitting its weakest level in three months, while online travel websites Flight Centre Travel Group FLT.AX and Webjet WEB.AX slumped as much as 11.3% and 8.4%, respectively.

Major miners .AXMM rose 0.81% as Chinese iron ore futures rallied, with BHP Group BHP.AX , Rio Tinto RIO.AX and Fortescue Metals FMG.AX advancing between 1% and 2.4%. IRONORE/

Technology stocks .AXIJ climbed 0.59% as a sharp retreat in bond yields reduced the cost of borrowing. Software maker TechnologyOne TNE.AX advanced 3.1%, while network operator Megaport Ltd MP1.AX gained 1.7%.

New Zealand's benchmark S&P/NZX 50 index .NZ50 fell 0.8% to 12,531.7.


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