Opening Call: The Australian share market is to open higher.
Australia’s S&P/ASX 200 index closed 0.3% lower, edging back from its strongest start to a calendar year. Tech and health stocks led losses as the benchmark paused following Tuesday’s 1.95% gain. The tech sector gave up 2.9%, mirroring similar weakness in the U.S that pulled the Nasdaq Composite and S&P 500 lower. The heavyweight financial and materials sectors put on 0.5% and 0.4%, respectively.
U.S. stocks traded lower as investors digested minutes from the Federal Reserve’s recent policy meeting for clues about plans to wean markets off pandemic-era stimulus measures. The S&P 500 dropped 1.2% a day after the broad index pulled back from a record high as technology shares fell. The tech-heavy Nasdaq Composite Index fell 2.5%, while the blue-chip Dow Jones Industrial Average – which set its own record Tuesday – lost 0.6%.
“We expect growth to deflate as we go through the year. That will happen naturally. As the monetary, fiscal support fades, markets will have to stand on their own two feet,” said Hani Redha, a portfolio manager at PineBridge Investments. “It’s not a disaster but it is a headwind at the same time that central banks are on the move.”
Gold futures climbed, with prices up a second session in a row, finding support from a “flight to safety” as cases of the Omicron variant grew and benchmark U.S. stock indexes and the dollar weakened. February gold rose 0.6% to settle at $1,825.10 an ounce, following a 0.8% rise on Tuesday. Prices had fallen at the start of the week to their lowest level since Dec. 21, FactSet data show. In electronic trading, however, prices pulled back from the settlement following the release of the Federal Open Market Committee minutes from the December meeting, which came about a half hour after gold futures prices settled on the day.
Oil futures rose sharply, with the U.S. benchmark posting its highest finish since late November after government data revealed a sixth consecutive weekly decline in domestic crude supplies, along with a more than 10 million-barrel climb in gasoline inventories. West Texas Intermediate crude for February delivery rose 1.1% to settle at $77.85 a barrel on the New York Mercantile Exchange. Prices based on the front month ended off the day’s high of $78.58, but still finished at the highest since Nov. 24, according to Dow Jones Market Data. March Brent crude, the global benchmark, added 1% to $80.80 a barrel – the highest settlement since Nov. 25.
“The draw in crude was a little less than expected, (but) we saw an eye-opening build in gasoline and a very large build” at the Cushing, Okla., delivery hub, said Tariq Zahir, managing member at Tyche Capital Advisors.
Major currencies were weaker against the US dollar in European and US trade. The Euro held between US$1.1285 and US$1.1345 but was near US$1.1310 at the US close. The Aussie dollar fell from highs near US72.70 cents to US72.15 cents and was near lows at the US close. And the Japanese yen eased from 115.61 yen per US dollar to JPY116.17 and was near JPY116.10 at US close.
European sharemarkets rose on Wednesday led by autos (up 2.7%). Shares in BMW rose 2.2% after reporting record sales for the BMW brand in 2021. Mining rose 1.6% but tech fell 0.5%. The panEuropean STOXX 600 index rose 0.1% to record highs. The German Dax index lifted 0.7%. The UK FTSE index rose by 0.2%. In London trade, shares in Rio Tinto rose 2% and shares in BHP rose 2.1%.
Japanese stocks ended higher, led by gains in auto and machinery stocks, thanks partly to the yen’s recent weakening. Toyota Motor climbs 2.6% following news that it became the top-selling car company in the U.S. in 2021. Sony Group advances 3.7% after it said it would create a car unit and explore entering the electric-vehicle market. The Nikkei Stock Average rose 0.1%.
Chinese stocks closed lower, weighed by a further weakening of electric vehicle-related sectors. EV makers and suppliers extended losses following a cut in the government’s EV subsidy for this year. Dongguan Securities said the Chinese market looks divergent, with sectors like Chinese medicine, metaverse and agriculture outperforming, while sentiment is weak on new-energy vehicles and innovative drugs. The Shanghai Composite Index lost 1.0%, the Shenzhen Composite Index shed 1.7% and the ChiNext Price Index lost 2.7%.