Opening Call: The Australian share market is to open higher.
U.S. stocks rose sharply to kick off the fourth quarter but suffered substantial losses for the week. The yield on the 10-year Treasury fell to 1.46%, as yields posted their largest daily declines in months. The WSJ Dollar index dropped to 88.44, as the dollar was broadly lower, boosting gold prices higher. Oil futures rallied at the end of a volatile session, ahead of next week’s OPEC+ meeting.
Australia’s S&P/ASX 200 slumped 2.0%, rounding out a fourth consecutive weekly loss for the first time since September 2020. The financial sector led the session’s broad-based losses, shedding 2.8% for its worst day since mid-June. Every sector lost ground, with real estate, consumer discretionary and materials stocks also badly hit. Travel stocks benefited from Australia’s prime minister saying the country’s Covid-related border closure will relax within weeks. The ASX 200 lost 2.1% for the week.
U.S. stocks turned higher, as investors displayed a little risk appetite, thinking a new page in the calendar might push the market past the issues that drove it down earlier in the week. The Dow Jones Industrial Average-which snapped a five-quarter winning streak Thursday-rose 1.4%. The S&P 500 rose 1.15% after the broad stocks index closed out its biggest monthly loss since March last year. The technology-focused Nasdaq Composite Index rose 0.8%.
Equities started the session lower but turned midday. That move combined with other “risk-on” trades like a sharp rally in the cryptocurrency bitcoin gave some investors the gumption to wade back into the market, said Frank Cappelleri, the executive director of brokerage Instinet. “All of that probably made some traders realize it wasn’t a complete risk-off event,” he said.
Gold futures also settled higher, tallying a small gain for the week, with prices finding some support from weakness in the dollar and government bond yields even after a reading on the cost of U.S. goods and services revealed a rise for August. Futures for the precious metal, based on the most active contract, posted a weekly gain of 0.4%.
“Three inflation numbers this week…suggest that gold should rise,” Chintan Karnani, director of research at Insignia Consultants, told MarketWatch. Mr Karnani referred to German import prices, which rose at the fastest in 40 years last month, Eurozone inflation, which hit a 13-year high last month and a rise in U.S. inflation in August, which left the inflation rate at a 30-year high. But for the short term, he suggests “cautious optimism in gold,” as trader sentiment is “neutral to bearish.”December gold futures rose nearly 0.1% to settle at $1,758.40 an ounce.
Oil futures settled higher, building on again for the week, as traders weighed possible outcomes for Monday’s expected decision by OPEC and its allies on crude production levels. The group of oil producers, together known as OPEC+, will meet Monday, and “production quotas could be revised higher amid indications of rising global demand,” said Marshall Steeves, energy markets analyst at IHS Markit.
“While OPEC+ may decide to increase quotas, some members are unable to meet their individual quotas,” said Mr Steeves. “Ministers may decide to leave quotas unchanged so as to support current price levels.”November West Texas Intermediate crude rose 1.1% to settle at $75.88 a barrel on the New York Mercantile Exchange, the highest front-month contract finish since October 2018, according to Dow Jones Market Data.
December Brent crude, the global benchmark, added 1.2% to settle at $79.28 a barrel on ICE Futures Europe. For September, WTI gained 9.5%, while Brent saw a rise of 7.6%, based on the front-month contracts, according to Dow Jones Market Data. For the quarter, WTI climbed 2.1%, up a sixth consecutive quarter, while Brent marked a 4.5% advance.
Major currencies were firmer against the US dollar in European and US trade. The Euro rose from lows near US$1.1570 to highs near US$1.1605 and was near US$1.1595 at the US close. The Aussie dollar rose from lows near US71.90 cents to highs near US72.75 cents and was near US72.55 cents at the US close. And the Japanese yen rose from 111.28 yen per US dollar to JPY110.90
and was near JPY111.05 at the US close.
European sharemarkets fell again on Friday. The pan-European STOXX 600 index fell by 0.4% to be down 2.2% over the week. Technology and miners were down 1.3% and banks down 0.7%. A survey showed a slowdown of euro-zone manufacturing activity due to supply chain issues. The German Dax index lost 0.7%. And the UK FTSE index eased by 0.8%. In London trade, shares in Rio Tinto fell by 2.1% and shares in BHP fell by 2.4%.
Earlier Friday, Japan’s Nikkei Stock Average fell 2.3%, as investors trimmed bets on continued policy stimulus on the back of easing of Covid-19 pandemic in some parts of the world. Nintendo was among the biggest losers, dropping 8.7%. Markets in Hong Kong and mainland China were closed for a holiday. Australia’s S&P/ASX 200 slumped 2.0%, rounding out a fourth consecutive weekly loss for the first time since September 2020.
The financial sector led the session’s broad-based losses, shedding 2.8% for its worst day since mid-June. Every sector lost ground, with real estate, consumer discretionary and materials stocks also badly hit. Travel stocks benefited from Australia’s prime minister saying the country’s Covid-related border closure will relax within weeks. The ASX 200 lost 2.1% for the week.