Opening Call: The Australian share market is to open higher.
U.S. stocks ended mixed as the tech losses hurt the Nasdaq and turmoil in Washington, D.C. pared gains elsewhere. The yield on the 10-year Treasury surged to 1.04%. The WSJ Dollar Index ticked lower to 84.54. Oil prices rose after U.S. oil inventories fell more than expected. Gold prices fell, hurt by strength in Treasurys.
Australia’s S&P/ASX 200 dropped 1.1%, with nearly every sector dropping amid the possibility of a Democrat-controlled U.S. Senate. The benchmark opened lower despite a positive lead from the U.S. and overnight strength in commodity prices, losing further ground as the session progressed. The tech sector was the biggest loser, falling 3.5%.
Investors piled into shares of economically sensitive companies and dumped big technology stocks, betting Democrats are poised to take control of the Senate and usher in another round of stimulus.
The Dow Jones Industrial Average, composed mostly of cyclical stocks, jumped 1.4%, led by shares of banks and manufacturers.
Earlier in the afternoon, the Dow had briefly crossed the 31000 thresholds for the first time on record. The index fell from its highs as the U.S. Capitol was placed on lockdown and multiple congressional buildings were evacuated amid protests outside.
The S&P 500 rose 0.6%. Meanwhile, the tech-heavy Nasdaq Composite lost 0.6% as some investors worried that a Democrat-controlled Congress would lead to higher taxes and tighter regulations on tech giants.
Gold futures settled with a loss of more than 2% as a jump in U.S. bond yields undercut the competitive advantage of owning risk-free Treasuries over bullion.
February gold lost 2.3% to settle at $1,908.60 an ounce.
Prices edged up in electronic trading following the close, shortly after the release of minutes from the Federal Reserve’s December meeting.
U.S. benchmark oil prices notched further gains, ending the session 1.4% higher at $50.63 a barrel, the first time WTI has ended a session above the $50 level since February 24.
Prices extended the previous day’s gains after the Energy Information Administration reported a huge, 8 million barrel weekly decline in U.S. oil inventories.
Major currencies were mixed against the US dollar in European and US trade. The Euro fell from highs near US$1.2350 to lows near US$1.2265 and was near US$1.2325 in late US trade. The Aussie dollar rose from lows near US77.50 cents to highs near US78.20 cents and was near US78.00 cents in late US trade. And the Japanese yen eased from near 102.67 yen per US dollar to near JPY103.43 and was near JPY103.00 in late US trade
European share markets were firmer on Wednesday. Investors were encouraged by prospects of a Democrat victory in the US Senate as it boosted prospects of bigger fiscal stimulus. Construction and material stocks rose 3.1%. Also, investor sentiment rose after the Moderna vaccine won approval for roll-out in Europe. The pan-European STOXX 600 index rose by 1.4%. The UK FTSE lifted by 3.5% while the German Dax index fell by 1.8%. In London trade shares in Rio Tinto rose by 6.0% and shares in BHP gained 5.6%.
Earlier Wednesday, China’s major stock benchmarks broadly gained, extending a recent run. The Shanghai Composite Index added 0.6%. Meanwhile, the CSI 300 Index that tracks the largest caps in Shanghai and Shenzhen rose 0.9%, topping the 5400 marks for the first time since Jan. 2008, according to data provider Wind. Materials and banks led the gains.
Hong Kong’s Hang Seng Index closed 0.2% higher, supported by China’s tech giants and oil majors.
The Nikkei Stock Average ended 0.4% lower, dragged by declines in electronics stocks despite some gains in financial shares.