Opening Call: The Australian share market is to open higher.
U.S. stocks ended higher as investors awaited key inflation data due Tuesday. The yield on the 10-year Treasury rose to 3.35% from 3.32% on Friday. The WSJ Dollar Index fell 0.43% to 100.30. Oil prices settled higher for the third session in a row, while gold futures settled at their highest in two weeks.
Australia’s S&P/ASX 200 index closed 1.0% higher amid strength in its heavyweight financial and materials sectors. Health was the only sector to close lower. The ASX is up 3.5% over three sessions.
U.S. stocks rose ahead of key inflation data that is expected to show a further cooling of consumer prices. The S&P 500 gained 1.1%. The Dow Jones Industrial Average added 0.7% while the technology-heavy Nasdaq Composite Index climbed 1.3%. All three indexes logged their fourth consecutive trading day of advances. “The biggest thing driving markets now is investor optimism that inflation is falling,” said Michael Arone, chief investment strategist for the U.S. ETF business at State Street Global Advisors. “We’re in that period where earnings season is over, and it does become all about the biggest story of the year: the Fed and what is the end-target federal funds rate.”
Gold futures settled at their highest in two weeks, as the U.S. dollar hit a two-week low and Treasury yields initially pulled back, helping to bolster demand for precious metals ahead of Tuesday’s critical inflation update. December gold climbed 0.7% to settle at $1,740.60 per ounce on Comex. Gold and silver prices are posting good advances “boosted by another sharp decline in the U.S. dollar index, which hit a two-week low overnight,” wrote Jim Wyckoff, senior analyst at Kitco.com.
Oil futures rose for a third straight session as the U.S. dollar continued to pull back from multidecade highs, negotiations over an Iran nuclear deal hit another snag, and investors weighed supply developments. West Texas Intermediate crude for October delivery rose 1.1% to settle at $87.78 a barrel on the New York Mercantile Exchange. November Brent crude, the global benchmark, was up nearly 1.3% at $94 a barrel on ICE Futures Europe.
Major currencies were stronger against the US dollar in European and US trade. The Euro rose from lows near US$1.0080 to highs near US$1.0198 and was near US$1.0115 at the US close. The Aussie dollar rose from lows near US68.35 cents to highs near US69 cents and was near US68.85 cents at the US close. And the Japanese yen firmed from near 143.50 yen per US dollar to JPY142.20 and was near JPY142.75 at the US close.
European sharemarkets climbed on Monday. Investors focussed on attempts by a number of countries to support utilities and consumers as energy prices continued to rise. Banks, which gain in a
rising interest rate environment, lifted 3.4%. And retail stocks rose by 4.5%. The pan-European STOXX 600 index rose by 1.8%. The German Dax index gained 2.4% and the UK FTSE index lifted 1.7%. In London trade, shares in Rio Tinto (+1.7%) and BHP (+2.1%) both advanced.
Earlier, in Asia, Japan’s Nikkei Stock Average ended 1.2% higher, led by gains in railway and airline stocks, following news the government is considering easing border restrictions to attract foreign visitors. Chinese stock exchanges were closed for the Mid-Autumn Festival holiday. Elsewhere, New Zealand’s NZX-50 rose 0.5% to close at its highest level since Aug. 18. Utilities were mixed. The NZX has now risen 2.3% across three trading sessions.