Australia: Shares extend fall on Covid-19 variant fears

[BENGALURU] Australian shares closed lower on Monday (Nov 29) 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 settled 0.54 per cent lower at 7,239.7 after dropping more than 1 per cent in early trade to its lowest in nearly 2 months.

Australia confirmed 2 cases of the new Omicron variant on Sunday (Nov 28), 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.

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

Travel stocks dropped to multi-month lows, with airline operator Qantas Airways hitting its weakest level in 3 months, while online travel websites Flight Centre Travel Group and Webjet slumped as much as 11.3 per cent and 8.4 per cent, respectively.

Major miners rose 0.81 per cent as Chinese iron ore futures rallied, with BHP Group, Rio Tinto and Fortescue Metals advancing between 1 per cent and 2.4 per cent.

Technology stocks climbed 0.59 per cent as a sharp retreat in bond yields reduced the cost of borrowing. Software maker TechnologyOne advanced 3.1 per cent, while network operator Megaport gained 1.7 per cent.

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

REUTERS