Opening Call: The Australian share market is to open higher.
U.S. stocks fell as the U.S. prepares to tap crude oil in storage. The yield on the 10-year Treasury note fell to 2.33% from 2.36% on Wednesday. The WSJ Dollar Index rose 0.31% to 91.18. Oil prices dropped on the release of U.S. crude reserves and as OPEC+ stuck to a planned output boost. And gold closed higher as the Russia-Ukraine war continued to boost haven demand.
Australia’s S&P/ASX 200 index closed 0.2% lower, ending a seven-session winning streak amid worries over inflation and a lack of progress in Russia-Ukraine talks. The volatile tech sector led losses, falling 2.2%. Banks NAB, ANZ, Westpac and Commonwealth gave up between 0.1% and 1.2%. The materials sector pared the overall losses, rising 1.5% on strength from iron-ore and gold miners. Telecoms, industrials and consumer staples also edged higher.
U.S. stocks fell as President Biden prepares a substantial release of oil reserves to staunch soaring energy prices and inflation. The S&P 500 fell about 1.6%. The Nasdaq Composite Index lost about 1.5%, and the Dow Jones Industrial Average gave up about 1.6%. President Biden is expected to tap up to 180 million barrels of government oil reserves over the next six months to address the rise in energy prices.
“This seems more like a concerted, more significant effort, one which might have a bit more weight to it. For markets, this means less inflation and less pressure for central banks to be aggressive with interest-rate hikes,” said James Athey, an investment manager at Abrdn. “It’s about relief, potentially taking away a destabilizing element” that is caused by high oil prices.
Gold futures finished higher, tallying gains for the month as well as the quarter as the Russia-Ukraine war continued to boost haven demand for the precious metal. June gold rose 0.8% to settle at $1,941.10 an ounce on Comex. Gold rose amid some safe-haven demand, due in part to the Ukraine-Russia war, weakness in the U.S. dollar, and likely “end-of-the-quarter interest,” said Jeff Wright, chief investment officer at Wolfpack Capital
Oil prices settled sharply lower, with the U.S. announcing its largest-ever release from the nation’s crude reserves and the Organization of the Petroleum Exporting Countries and its allies sticking to a previously agreed plan to raise output in May. West Texas Intermediate crude for May delivery fell 7% to settle at $100.28 a barrel on the New York Mercantile Exchange. May Brent crude, the global benchmark, fell 4.9% to end at $104.87 a barrel on ICE Futures Europe.
The release of crude reserves is “essentially a temporary measure designed to minimize the spring rally [in prices], and to that end, it could increase supplies marginally and thereby keep prices commensurately lower,” said Marshall Steeves, energy markets analyst at S&P Global Commodity Insights. “However, the war in Ukraine remains the overriding consideration and the possible loss of Russian output is the motivating factor.”
Major currencies were mixed against the US dollar in European and US trade. The Euro fell from highs near US$1.1175 to lows near US$1.1066 and was near session lows at the US close. But the
Aussie dollar rose from lows near US74.70 cents to highs near US75.12 cents and was near US74.85 cents at the US close. And the Japanese yen rose from 122.28 yen per US dollar to JPY121.26
and was near JPY121.72 at the US close.
European sharemarkets closed lower on Thursday. Retail stocks fell 4.9%. Reuters reported that Sweden’s H&M fell by 12.9% “after saying it would need to raise prices this year and reported weak
quarterly profit amid high raw material and transportation costs.” Hopes for success in peace talks between Ukraine and Russia waned, weighing on investor sentiment. The pan-European STOXX
600 index fell by 0.9% on Thursday and fell 6.5% in the March quarter. The German Dax index shed 1.3%. And the UK FTSE index lost 0.8%. In London trade, shares of Rio Tinto lifted 0.1% but BHP shares fell 1.1%.
Japanese stocks ended lower, dragged by falls in financial stocks, as uncertainty persisted over the war in Ukraine and its impact on global trade. Nomura Holdings lost 3.2% and Sumitomo Mitsui Trust Holdings dropped 3.1%. The Nikkei Stock Average fell 0.7%. Chinese stocks closed lower, weighed by Shanghai’s lockdown as the city entered the fourth day of a two-stage temporary lockdown to curb Covid infections. The Shanghai Composite Index was 0.4% lower, the Shenzhen Composite Index fell 0.9%, and the ChiNext Price Index was off 1.4%. China Vanke rose 0.9%, despite a decline in its 2021 net profit. Ganfeng Lithium slipped 3.1% after it posted its 2021 earnings.