Omicron and inflation jitters weighed on overnight markets, setting up the ASX for a 0.1% fall on Wednesday.
Overnight markets declined amid a surge in covid cases across Europe and reports that omicron is already becoming the dominant strain in London.
The US Federal Reserve kicked-off its closely watched two-day meeting. The Fed is expected to accelerate its bond tapering to combat inflation, but more importantly, make a decision on next year’s monetary policy.
There are few very large caps posting gains of more than 1% at open.
BlueScope Steel (ASX: BSL) opened 1.5% higher to a 3-month high. This follows a strong overnight performance for the Steel ETF, which rallied as much as 3% before closing 1% higher.
Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ) and National Australia Bank (ASX: NAB) are posting gains between 0.4% and 1%. Banks could be pushing higher amid expectations of interest rate hikes in 2022. Higher interest rates can improve a banks’ net interest margins.
In the mid-cap space, emerging lithium producer Lake Resources (ASX: LKE) jumped 6.5% after a positive drilling update.
The company said that drilling at its flagship Kachi Lithium Project indicates lithium brines extend well beyond the limits of its current resource. Continued similar results could double future planned production to 50,000 tonnes per annum of lithium carbonate.
Gold miners are selling off across the board as investors brace for a potential move ahead of the Fed meeting. Newcrest Mining (ASX: NCM) fell 2.5%, Northern Star Resources (ASX: NST) is down 2.9% and Evolution Mining (ASX: EVN) slumped 4.3%.
Gold prices could be punished in a scenario where the Fed accelerates its bond taper, strengthening the US dollar. A more hawkish approach to interest rates could also see funds flow back into fixed-income assets and away from the yellow metal, which does not bear any yield.
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