Opening Call: The Australian share market is to open higher.
U.S. stocks closed higher on the final day of a tumultuous month. The yield on the 10-year Treasury note was little changed, edging up to 1.79% from 1.78% Friday. The WSJ Dollar Index fell 0.51% to 90.30. Oil prices rose on the day and scored a more than 17% monthly rise. And gold prices ended higher for the session, but fell by nearly 2% for the month.
Australia’s S&P/ASX 200 index closed 0.2% lower after tech stocks helped the benchmark pare early losses. The heavyweight finance sector was the biggest drag, with Westpac, Macquarie, NAB, Commonwealth and ANZ giving up between 1.6% and 3.4%.
The S&P 500 rose but closed out its worst month since March 2020 as expectations for higher interest rates eroded enthusiasm for stocks. On the final trading day of January, the S&P 500 advanced 1.9%, while the Dow Jones Industrial Average gained 1.2%. The tech-heavy Nasdaq Composite Index advanced 3.4%, chipping away at its monthly losses. The broad U.S. stock index has retreated 5.3% in volatile trading in January as investors wrestle with the question of how tighter monetary policy would influence equity valuations.
“January really snuck up on a lot of people,” said Wayne Wicker, chief investment officer at MissionSquare Retirement. “Everybody was predicting volatility, but I think the declines in January probably exceeded expectations.” The Nikkei Stock Average rose 1.1%, reversing earlier losses amid gains in U.S. stock futures. However, volatility in financial markets could stay elevated in the near term, especially with most of Asia out for Lunar New Year holidays for parts of this week, Maybank said. Top performers included shipping companies, such as Mitsui O.S.K. Lines jumping 9.6% and Nippon Yusen K.K., climbing 7.2%.
Gold futures ended higher following the sharpest weekly decline for bullion since November — a slide that helped to bring the commodity’s value to a six-week nadir. April gold, which is now the most-active futures contract, rose nearly 0.6% to settle at $1,796.40 an ounce. Gold futures logged a 2.5% weekly decline on Friday and marked the lowest settlement since Dec. 15 based on a most-active contract, according to Dow Jones Market Data. For the month, they lost 1.8% – the biggest monthly percentage decline since September.
“Any sign of further escalation in tensions over Ukraine is likely to be supportive for gold as investors seek out haven assets in a flight to safety,” wrote Rupert Rowling, market analyst at Kinesis Money.
Oil futures finished higher, capping a sharp January rally that lifted the U.S. benchmark by more than 17% for the month, as traders follow the threat of a Russian invasion of Ukraine. West Texas Intermediate crude for March delivery added 1.5% to settle at $88.15 a barrel on the New York Mercantile Exchange. The U.S. benchmark tallied a 17.2% monthly rise, according to Dow Jones Market Data. Global benchmark March Brent crude rose 1.3% at $91.21 a barrel on ICE Futures Europe, for a monthly rise of 17.3% as the contract expired at the end of the session.
“While the crude oil market is short-term overbought, and the Russia situation seems to have moderated somewhat, the threat against supply remains and is combined with residual demand optimism to leave the bull camp with the edge,” analysts at Zaner wrote in a note.
Major currencies were stronger against the US dollar in European and US trade. The Euro rose from US$1.1145 to US$1.1245 and was near US$1.1230 in late US trade. The Aussie dollar rose from
US70.10 cents to US70.75 cents and was near US70.65 cents in late US close. And the Japanese yen rose from 115.50 yen per US dollar to JPY114.91 and was near JPY115.10 in late US trade.
European sharemarkets were firmer on Monday. Technology led the gains, up 3.5%, but was down 12% in the month. Energy fell 0.7% on position-squaring, ending 8.6% higher on the month. Traders await meetings by the Bank of England and European Central Bank on Thursday. The pan-European STOXX 600 index rose by 0.7% but was down 3.9% in January. The German Dax index rose 1.0%. But the UK FTSE index was flat. In London trade, shares in Rio Tinto eased by 3.7%. Shares in BHP lost 1.5%.
The Chinese stock exchanges are closed this week for holiday.