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Omicron and interest rate fears to rattle ASX

ASX future markets suggest a slight rise of 11 points to 7260 when the exchange opens on Monday.

Saxo Bank’s Australian markets strategist Jessica Amir said the markets would be driven by the three major news stories of the day: whether vaccines are effective against omicron, the Federal Reserve’s withdrawal of stimulus, and the jig-sawing of oil prices.

“There’s a lot of uncertainly at the moment, so fund managers are taking money off the table and out of anything that’s away from a benchmark, anything that’s not deemed quality or blue chip,” Ms Amir said.

“Once the initial fear passes, perhaps in the next few days, we should see that calm down and ease into a reasonable Christmas.”

Tribeca Investment Partners lead portfolio manager Jun Bei Liu

The volatility threatened the Christmas rally which typically adds around 1.5 per cent to the ASX100 and S&P500, Ms Amir, but signs that existing vaccines are effective against the omicron variant could turn that around.

Ms Amir said fund managers and investors have been increasing their hedging, driving up the US dollar and Japanese Yen. The Aussie dollar has fallen 5 per cent against the greenback in the past month and on Sunday was trading at 70¢.

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