Sydney’s cafes, gyms and restaurants welcomed back fully vaccinated customers on Monday after nearly four months of lockdown, as Australia aims to begin living with the coronavirus and gradually reopen with high rates of inoculation.
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Some pubs in Sydney, Australia’s largest city, opened at 12:01 a.m. (1301 GMT Sunday) and friends and families huddled together for a midnight beer, television footage and social media images showed.
“I see it as a day of freedom, it’s a freedom day,” New South Wales (NSW) state Premier Dominic Perrottet told reporters in Sydney, the state capital. “We are leading the nation out of this pandemic but this will be a challenge.”
Perrottet warned that infections would rise after reopening, and virus-free states such as Western Australia and Queensland are watching what living with COVID-19 is going to look like amid concerns health systems could be overwhelmed.
While NSW’s dual-dose vaccination rate in people above 16 hit 74%, in neighbouring Queensland, whose borders remain closed to Sydney-siders, the rate is only 52% and the state government is following an elimination strategy with rapid lockdowns to control any outbreak.
Perrottet has declared an end to lockdowns in NSW and has strong support for reopening in Sydney, whose more than 5 million residents endured severe restrictions from mid-June following an outbreak of the highly infectious Delta variant.
The outbreak has since spread to Melbourne and Canberra, forcing lockdowns in those cities, even as case numbers dwindle in NSW.
New South Wales on Monday reported 496 new locally acquired cases, well down from their peak last month, while Victoria logged 1,612 new infections, the lowest in five days.
Under the relaxed rules for NSW, retail stores and restaurants reopened with reduced capacity, and more vaccinated people were allowed to gather in homes and attend weddings and funerals.
The state aims to hit an 80% vaccine rate around late October, when more curbs will be relaxed. But the unvaccinated must remain at home until Dec. 1.
Steven Speed, the publican at Sydney’s oldest pub, Fortune of War, told Reuters he hoped it was the last lockdown after 18 months of restrictions.
“Just the costs of closing down and opening up, closing down and opening up – they’re huge,” said Speed, whose most loyal customers returned from 9:00 a.m. on Monday for the first post-lockdown beers with friends.
Kyl Raggio, owner of the KR Performance gym in the Sydney suburb of Randwick, said Australia could no longer afford to rely on rolling lockdowns to combat the virus.
“I hope that we can deal with whatever happens now moving forward, looking at the rest of the world hopefully we can stay open and do our thing,” said Raggio, who welcomed his clients back into his training facility early Monday morning.
Prime Minister Scott Morrison urged Sydney residents to “enjoy the moment”.
“Today is a day so many have been looking forward to – a day when things we take for granted, we will celebrate,” he said.
Morrison, who must call an election before next May, has come under pressure to press all states to reopen borders to bolster the economy and allow families separated by state border closures to reunite by Christmas. Some states with few cases have not said when they will re-open their borders.
With the vaccine rollout gaining momentum, Australia is planning a staggered return to normal, letting fully vaccinated residents enter and leave the country freely from November, although New South Wales plans to bring forward those dates.
Australia shut its international borders in March 2020, helping keep its coronavirus numbers relatively low, with 130,000 cases and 1,448 deaths.
Reporting by Renju Jose and Jonathan Barrett; additional reporting by Jill Gralow; editing by Stephen Coates.
World shares edged higher on Monday courtesy of gains in China, while rising Treasury yields lifted the dollar to a near three-year peak against the Japanese yen.
Brent oil prices extended their bull run to reach ground last visited in late 2018, with gains across the energy complex stoking inflation concerns.
“Higher energy prices, shortages will inevitably make their way through global value chains in the form of rising prices and potentially shortages of industrial and consumer goods,” said OANDA analyst Jeffrey Halley.
“All of this makes the constant blathering from central bankers around the world about inflation being ‘transitory’ ring more and more hollow.”
Inflation jitters kept investors cautious, with the Euro STOXX 50 (.STOXX50E) 0.2% lower.
Nasdaq futures and S&P 500 futures were down around 0.4% and 0.3%, respectively.
The MSCI world equity index (.MIWD00000PUS), which tracks shares in 50 countries, was 0.1% higher.
Sentiment in China was partly helped by some cities’ planned supportive measures for the beleaguered property market.
China’s blue-chip CSI300 index (.CSI300) rose 0.1%, while MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) added 0.6%.
The drop in the yen provided a welcome boost to Japan’s Nikkei (.N225) which reversed early losses to rise 1.6%.
The U.S. earnings season kicks off this week and is likely to bring tales of supply disruptions and rising costs. JPMorgan reports on Wednesday, followed by BofA, Morgan Stanley and Citigroup on Thursday, and Goldman on Friday.
U.S. INFLATION, RETAIL SALES
The focus will also be on U.S. inflation and retail sales data, and minutes of the Federal Reserve’s last meeting that should confirm that a November tapering was discussed.
“The week ahead will centre around the US CPI release on Wednesday, but it might be a touch backward-looking given that energy has spiked more recently and that used car prices are again on the march after a late summer fall that will likely be captured in this week’s release,” Deutsche Bank’s Jim Reid wrote in a note to clients.
While headline U.S. payrolls number on Friday disappointed, it was partly due to reopening problems in state and local education while private sector employment was firmer.
Indeed, with a lack of labour driving the jobless rate down to 4.8%, investors were more concerned about the risk of wage inflation and pushed Treasury yields sharply higher.
Yields on 10-year notes were trading up at 1.62%, having jumped 15 basis points last week in the biggest such rise since March.
Germany’s 10-year Bund yield rose to its highest since May, up more than 2 basis points to -0.117% .
British gilt yields rose sharply, with the 10-year yield marking its highest since May 2019 after weekend comments from Bank of England policymaker Michael Saunders that households should get ready for “significantly earlier” rate rises as inflation pressure mounts.
Money markets moved to fully price a 10 basis-point rate hike from the European Central Bank by the end of 2022.
Analysts at BofA warned the global inflationary pulse would be aggravated by energy costs with oil potentially topping $100 a barrel amid limited supply and strong re-opening demand.
The winners in such a scenario would be real assets, real estate, commodities, volatility, cash, and emerging markets, while bonds, credit and stocks would be affected negatively.
BofA recommended commodities as a hedge and noted resources accounted for 20-25% of the main equity indexes in Britain, Australia and Canada; 20% in emerging markets; 10% in the euro zone, and only 5% in the United States, China and Japan.
The dollar was underpinned as U.S. yields outpaced those in Germany and Japan, lifting it to the highest since late 2018 on the yen at 112.90 .
The euro hovered at $1.1571 , having reached the lowest since July last year at $1.1527 last week. The dollar index held at 94.123, just off the recent top of 94.504.
U.S. currency and fixed income markets are closed on Monday for a holiday.
The firmer dollar and higher yields have weighed on gold, which offers no fixed return, and left it sidelined at $1,756 an ounce .
U.S. crude oil prices kept climbing after gaining 4% last week to the highest in almost seven years.
Brent jumped 1.7% to $83.75, while U.S. crude rose 2.2% to $81.06 per barrel.