Australian Market

Australia’s S&P/ASX 200 closed 1.0% higher, rallying to a seven-month high on hopes that inflation may be peaking at home and in the U.S. Australia’s materials sector led the gains, with shares of gold, lithium and iron-ore miners all rising.

US Market 

Stocks ended a choppy day with mixed results as investors weighed signs of cooling inflation against fears of how a recession could drag down corporate earnings. The S&P 500 was off 0.1%, with financial stocks falling. Investors cited concerns that banks might set aside more funds to cover potential credit losses, a move that cuts into their profits.

The Dow Jones Industrial Average fell 0.6% while the tech-heavy Nasdaq Composite Index gained 0.1%. Bonds continued their gains even as stocks’ big rally stalled out, a sign that traders’ focus was shifting to the recession that many investors have for months assumed inevitable, said Steve Wyett, chief investment strategist for BOK Financial.

“The asset classes will act differently if that’s the case,” Wyett said. The prospect of lower inflation and slowing Fed rate increases is clearly positive for bonds, he said. “Now equities are kind of saying, are lower rates really good news here?” he added.

Commodities

Gold futures posted their largest one-day gain in more than two years to settle above $1,800 an ounce for the first time in nearly four months. Prices for the precious metal got a boost as the U.S. dollar and Treasury yields extended a retreat following remarks a day earlier by Federal Reserve Chairman Jerome Powell indicating policy makers would likely deliver a smaller interest rate increase this month.

Gold futures for February delivery rose 3.1% to settle at $1,815.20 an ounce on Comex. Traders believe that “an era of aggressive interest rate hikes is over, and only smaller rate hikes will be taking place.” said Naeem Aslam, chief market analyst at AvaTrade.

Oil Futures

U.S. oil prices marked their highest settlement in two weeks, as China moved to ease some Covid-19 curbs and traders awaited a weekend meeting of OPEC+ ministers. West Texas Intermediate crude for January delivery rose 0.8% to settle at $81.22 a barrel on the New York Mercantile Exchange. February Brent crude gave up early gains to finish 0.1% lower, at $86.88 a barrel on ICE Futures Europe.

“While we shouldn’t expect a dramatic shift in policy from the leadership, particularly before the March Congress, any modest softening in its Covid-zero policy will and should be welcomed,” said Craig Erlam, senior market analyst at Oanda, in a market update. “The approach has been extremely damaging to growth and confidence and the protests highlight how public opinion towards it is changing.”

Forex

Major currencies ended mixed against the US dollar in European and US trade. The Euro fell from highs near US$1.0545 to lows near US$1.0430 but was back near US$1.0540 at the US close. The Aussie dollar fell from highs near US68.35 cents to lows near US67.50 cents and was back near US67.90 cents at the US close. And the Japanese yen eased from near 133.65 yen per US dollar to near JPY135.95 and was at JPY134.30 at the US close.

European Markets

European sharemarkets eased modestly on Friday. Energy fell by 1.1% with technology down 0.5% but real estate rose by 1.3% and retailers rose 0.7%. Shares in Credit Suisse rose 9.3% after announcing it will speed up cost cutting. The continentwide FTSEurofirst 300 index fell by 0.1% and the UK FTSE 100 fell by less than 0.1%.

Asian Markets

Earlier Thursday, Chinese shares ended higher, extending their recovery as investor sentiment picked up after Beijing officials softened their tone on Covid risk and containment measures. The benchmark Shanghai Composite Index added 0.4% and the Shenzhen Composite Index rose 1.3%. The tech-heavy ChiNext Price Index advanced 1.5% amid a broad tech rally in Asia.

Hong Kong’s Hang Seng Index ended higher for the third straight session, up 0.7%, tracking gains in regional equities. Investors continue to look for signs of looser Covid-19 restrictions in China, with reports that some positive cases will be allowed to quarantine at home. The Nikkei Stock Average rose 0.9%, led by gains in electronics stocks, amid growing hopes for slower Fed tightening.