Opening Call: The Australian share market is to open higher.
U.S. stocks were mixed with small companies outperforming the broader market. The yield on the 10-year Treasury note rose to 1.34% amid worries about looming inflation. The WSJ Dollar Index fell to 85.17. Oil prices fell as Texas continued to recover from unusually frigid weather. Gold prices nudged higher amid weakness in the dollar.
Australia’s S&P/ASX 200 closed 1.3% lower, rounding out a consecutive weekly loss with its worst day in more than three weeks. The benchmark stumbled on a weak lead from U.S. and European markets and was dragged lower by weakness in commodity stocks.
Investors dumped government bonds and piled into shares of economically sensitive companies, betting that the U.S. economy will rev up in the coming months. The yield on the 10-year Treasury note touched its highest level since February 2020, before the coronavirus pandemic shut down businesses around the country.
Shares of small companies and sectors of the market like financials and energy notched strong gains, while the broader stock market’s moves were more muted.
The Russell 2000 index of small companies gained 2.2%. Meanwhile, the Dow Jones Industrial Average and Nasdaq Composite pared their early gains to finish little changed. The S&P 500 slipped 0.2%.
Gold futures ended higher, stretching their gain from a day earlier, but the precious metal still suffered its sharpest weekly drop since early January.
Gold fell earlier in the session, but recovered, “thanks to the weakness in the U.S. dollar,” said David Madden, market analyst at CMC Markets UK.
April gold rose 0.1% to settle at $1,777.40 an ounce, after edging up by 0.1% on Thursday and snapping a four-session skid. On an intraday basis, however, the most active contract fell to as low as $1,759, the lowest intraday level since June of last year, FactSet data show. For the week, gold saw a roughly 2.5% fall.
Oil futures fell, with the U.S. benchmark ending back below the $60-a-barrel level and posting a loss for the week, on expectations that crude output shut down by winter storms in Texas will soon be restored.
Expectations that major oil producers making up the OPEC+ group will decide as early as next month to loosen production curbs, as well as early signs of a thaw in U.S.-Iran relations were also a negative for oil prices, analysts said.
West Texas Intermediate crude for March delivery fell 2.1% to settle at $59.24 a barrel on the New York Mercantile Exchange, ahead of the contract’s expiration at the end of Monday’s trading session. April WTI , the most actively traded contract, lost 2.1% to settle at $59.26 a barrel.
April Brent crude, the global benchmark, fell 1.6% to $62.91 a barrel on ICE Futures Europe.
Based on the most-actively traded contracts, WTI saw a weekly loss of 0.4%, while Brent was up 0.8%, for its fifth consecutive weekly climb, after hitting 13-month highs earlier in the week, according to Dow Jones Market Data.
Major currencies were mixed against the US dollar in European and US trade. The Euro rose from lows near US$1.2090 to highs near US$1.2140 and was near US$1.2115 at the US close. The Aussie dollar rose from lows near US77.60 cents to highs near US78.75 cents and was near US78.70 cents at the US close. And the Japanese yen rose from 105.68 yen per US dollar to JPY105.24 yen and was near JPY105.43 at US close.
European sharemarkets rose on Friday after data showed factory activity in February had lifted to a 3-year high. Basic resources rose by 2.8%. The pan-European STOXX 600 index rose by 0.5%, lifting the market to the third week of gains. The German Dax index rose by 0.8%. The UK FTSE index only edged 0.1% higher after the pound rose to its highest point against the US dollar in three years. In London trade, shares in both Rio Tinto and BHP rose by 1.9%.
Earlier Friday, China’s major stock benchmarks clawed back from early losses to end broadly higher, led by commodity-related stocks. The Shanghai Composite Index closed up 0.6% and the Shenzhen Composite Index added 0.75%, while the startup-heavy ChiNext Price Index slipped 1.0%. Agricultural and metal stocks made strong gains, as domestic prices rose sharply for commodities ranging from hogs to copper.
Hong Kong’s Hang Seng Index rose 0.2%, led by Chinese telecommunications operators. The Nikkei Stock Average, however, lost 0.7% amid ebbing positive sentiment after Wall Street’s tech-driven fall overnight. Political developments are likely to be in focus, following local reports of a potential ethics code violation involving the son of Prime Minister Yoshihide Suga. Energy stocks and aviation stocks weakened.