Opening Call: The Australian share market is to open higher.
U.S. stocks ended higher after a second day of testimony from Fed Chairman Powell. The yield on the 10-year Treasury note fell to 3.09% from 3.16% on Wednesday. The WSJ Dollar Index rose 0.02% to 97.13. U.S. oil prices extended losses as recession fears rose. And gold futures settled lower on dollar strength.
Australia’s S&P/ASX 200 index closed 0.3% higher despite renewed selling of commodity stocks. Gains among tech, financial and consumer staples helped the benchmark index bounce from Wednesday’s 0.2% slip. Banks Commonwealth, Westpac, NAB and ANZ put on between 0.2% and 1.1%, while WiseTech, NextDC and Block added between 3.1% and 4.7%.
U.S. stocks advanced amid a second day of testimony from Federal Reserve Chairman Jerome Powell after he warned that rapidly rising interest rates threatened a recession. The S&P 500 was up 0.95%, the technology-heavy Nasdaq Composite Index rose 1.6%, and the blue-chip Dow Jones Industrial Average added 0.6%. Mr. Powell acknowledged the risk of a recession in two days of testimony to lawmakers, saying that a recession was possible and that a soft landing for the economy would be “very challenging.”
Gold futures ended lower, stretching losses into a fourth straight session. August gold fell 0.5% to settle at $1,829.80 per ounce. Losses for gold are “mainly due to the strength in the dollar, as expectations are that (the Federal Reserve)may adopt even more hawkish monetary policy,” said Naeem Aslam, chief market analyst at AvaTrade.
Oil futures extended their losses into a second session, with U.S. prices booking their lowest finish in more than six weeks as recession worries rose. West Texas Intermediate crude for August fell 1.8% to settle at $104.27 a barrel on the New York Mercantile Exchange. Front month August Brent crude, the global benchmark, declined by 1.5% at $110.05 a barrel on ICE Futures Europe.
Crude prices have lost ground since trading at three-month highs earlier this month, with analysts tying the decline in part to worries that aggressive efforts by the Federal Reserve and other central banks to rein in inflation could sharply slow the economy, undercutting demand.
Major currencies were mixed against the US dollar in European and US trade. The Euro fell from highs near US$1.0577 to lows near US$1.0483 and was near US$1.0520 at the US close. But the Aussie dollar rose from lows near US68.69 cents to highs near US69.25 cents and was near US69.00 cents at the US close. And the apanese yen rose from 135.85 yen per US dollar to JPY134.28 and was near JPY134.95 at the US close.
European sharemarkets fell on Thursday as slowing euro zone business activity heightened economic growth worries. The euro zone S&P Global composite index fell from 54.8 to 51.9 in June (survey:54). The pan-European STOXX 600 index shed 0.8% with Deutsche Bank shares down by 12.2%. The German Dax index lost 1.8% and the UK FTSE index shed 1.0%. In London trade, shares of Rio Tinto fell by 2.2% and BHP lost 1.1%.
Earlier, in Asia, Japan’s Nikkei Stock Average closed 0.1% higher, supported by gains in insurance stocks. Insurer Sompo Holdings rose 1.7% and Tokio Marine added 2.6%. Toshiba advanced 3.5% on a report that bidders may offer up to Y7,000 a share to take the Japanese conglomerate private. Auto maker Toyota ended 1.4% lower after cutting its global production plan for July.
Chinese stocks closed higher after President Xi reiterated his commitment to meet China’s 5.5% gross domestic product growth target this year amid mounting macroeconomic headwinds, Oanda senior market analyst Jeffrey Halley said in a note.
The Shanghai Composite Index ended 1.6% higher, the Shenzhen Composite Index advanced 2.1%, and the ChiNext Price Index rose 3.1%. Multiple sectors rose amid improved sentiment, including autos and financials. Great Wall Motor advanced 6.4% and Dongfeng Motor gained 7.4%, while China International Capital was up 4.3% and CSC Financial rose 10%.