Opening Call: The Australian share market is to open higher.
U.S. stocks rose as investors eyed Ukraine and interest rates. The yield on the 10-year Treasury note rose to 1.89%, from 1.71% Tuesday. The WSJ Dollar Index fell 0.09% to 90.34. Oil prices rallied past $110 as the Russia-Ukraine war fueled panic buying. And gold prices settled lower as talks between Russia and Ukraine were set to resume.
Australia’s S&P/ASX 200 index closed 0.3% higher as data showed the country’s economy grew 3.4% in the December quarter. Shares of commodity companies led local gains, with oil prices at multi-year highs and gold prices rising. Energy explorers Beach, Woodside and Santos added between 4.2% and 6.2%, while gold miners gained and iron-ore miners BHP, Rio Tinto and Fortescue put on between 3.8% and 4.7%. Australia’s energy sector is up 21% so far in 2022 against a 4.4% decline for the ASX 200.
U.S. stocks shot higher as investors watched for updates from Ukraine and parsed testimony on the Federal Reserve’s plans to raise interest rates. The S&P 500 rose 1.9%, a day after the benchmark index fell 1.6%. The Dow Jones Industrial Average gained 1.8% and the technology-focused Nasdaq Composite Index added 1.6%. The advances were broad-based, with most of the S&P 500’s 11 sectors rising 1% or more.
Fed Chairman Jerome Powell, appearing before the House Committee on Financial Services, said he would propose a quarter-percentage point rate increase at the central bank’s meeting in two weeks. That alleviated concerns on Wall Street that the central bank would raise rates by half a percentage point. Investors are responding to fast-moving developments on the battlefield, a volley of Western sanctions on Moscow and major companies cutting ties with Russia.
Gold futures logged their first loss in three sessions, with prices pulling back a day after settling at a 13-month high, as talks between Russia and Ukraine were poised to resume, helping to momentarily quell haven demand.
April gold fell 1.1% to settle at $1,928.90 an ounce. Russia and Ukraine were ready to resume discussions aimed at stopping the war, even as Russia renews its assault on Ukraine’s second-largest city, Kharkiv, according to a report from the Associated Press.
Oil prices settled above $110 a barrel as investor concerns mounted over potential supply disruptions from an intensifying Russia-Ukraine war. West Texas Intermediate crude for April delivery rose nearly 7% to settle at $110.60 a barrel on the New York Mercantile Exchange. May Brent crude, the global benchmark, jumped 7.6%, to $112.93 a barrel. It logged the highest settlement since June 2014. OPEC+ offered no surprises at its monthly meeting, quickly agreeing to boost production in April by another 400,000 barrels a day.
This “modest increase” may signal that OPEC+ isn’t as concerned with higher prices as others may be, and could just be willing to stick with its original plan all the way through given that prices have already broached $100, said Rohan Reddy, research analyst at Global X.
Major currencies were mixed against the US dollar in European and US trade. The Euro rose from lows near US$1.1058 to highs near US$1.1140 and was near US$1.1130 in afternoon US trade.
The Aussie dollar rose from lows near US72.45 cents to US73.05 cents and was near highs in afternoon US trade. But the Japanese yen eased from 115.02 yen per US dollar to JPY115.67 and was
near JPY115.50 in afternoon US trade.
European sharemarkets rebounded on Wednesday. The oil and gas index rose by 4.1% with miners up 2.3%. Banks added 1.4% after the US Fed chief said he will vote for a rate hike at the next
meeting. Car makers lost 1.6%. Utilities fell by 1.7%. Eurozone inflation hit record highs of 5.8%. The pan-European STOXX 600 index rose by 0.9%. The German Dax index rose by 0.7% with the
UK FTSE index up by 1.4%. In London trade, shares in Rio Tintorose by 3.5% and BHP lifted by 4.4%.
Japanese stocks ended lower, dragged by falls in auto and financial stocks, as uncertainty persists over the war in Ukraine. Bridgestone lost 6.8% and Honda Motor dropped 4.5%, weighed by concerns about higher costs of crude and other raw materials. Meanwhile, oil explorer Inpex rose 7.7% and Sumitomo Metal Mining gained 3.4%. The Nikkei Stock Average fell 1.7%.
Chinese shares closed lower, tracking broad declines among other Asian equities markets on worries over the escalating Russia-Ukraine military conflict. “The conflict clearly shows no signs of easing, with Russia ramping up its attacks on Ukraine and adding on to concerns of further economic disruptions and more persistent pricing pressures ahead,” IG said.
Petrochemical stocks led the session’s declines, with Hengli Petrochemical ending 8.6% lower and Rongsheng Petro Chemical declining 7.3%. The Shanghai Composite Index closed 0.1% lower, the Shenzhen Composite Index fell 0.6%, and the ChiNext Price Index slipped 1.8%.