Opening Call: The Australian share market is to open higher.
U.S. stocks recovered from early losses as the top Senate Republican proposed allowing Democrats to pass a short-term debt limit extension. The yield on the 10-year Treasury was flat at 1.53%, as Treasury markets stabilized. Natural gas prices sank enough to completely reverse yesterday’s price surge. Oil prices dropped due to bearish U.S. inventories data. Gold prices eked out a small gain.
Australia’s S&P/ASX 200 lost 0.6%, fading after a strong start amid weakness in banking stocks after Australia’s prudential regulator tightened serviceability standards on mortgage lending. The financial sector, which represents about half of the ASX 200 by market capitalization, finished 0.9% lower.
U.S. stocks rose, erasing losses after a morning marked by broad pullbacks across sectors. The S&P 500 rose 0.4% as of the 4 p.m. close of trading in New York. The Dow Jones Industrial Average gained about 0.3%. The tech-focused Nasdaq Composite Index advanced 0.5%.
Stock trading has been bumpy lately as investors have grappled with soaring energy prices and a general shift higher in government bond yields. On Tuesday, the S&P 500 logged its 25th gain of at least 1% for the year. The market’s momentum looked like it was fading earlier in the day when stocks opened lower, but major indexes managed to break into positive territory in the final few hours of trading.
It isn’t unusual to see stocks oscillate between gains and losses. In fact, most of the stock market’s big advances this year have come on the heels of significant losses, according to an analysis by Frank Cappelleri, a desk strategist at Instinet. Mr Cappelleri added that he wouldn’t be surprised to see more choppy trading action in the final quarter of the year.
Gold futures ended higher as Treasury yields slipped, despite a better-than-expected climb in U.S. private-sector employment, providing modest support for the precious metal despite strength in the dollar. “More attention will be on Friday’s U.S. Department of Labor employment reports and meaningful jobs creation, and a decrease of ‘continuing claims'” could be the trigger for Federal Reserve Chairman Jerome Powell to “commence the taper of asset purchases” in late October or November, said Jeff Wright, chief investment officer at Wolfpack Capital.
The “bias for gold is downward without meaningful change of events or safe-haven buying,” he said. December gold futures rose 0.05% to settle at $1,761.80 an ounce, after trading as low as $1,745.40.
Natural-gas futures declined by just over 10%, a day after settling at the highest price since 2008, as Russian President Vladimir Putin said the country would boost supplies to Europe, which is bearing the brunt of a global energy crunch. Putin said gas sales to Europe could hit a record and that flows via Ukraine could exceed Gazprom’s contract with Kyiv, Reuters reported. Critics have accused Russia of holding back supplies.
The remarks sent natural-gas futures in Europe tumbling. After spiking nearly 40% earlier, U.K. natural-gas futures fell by more than 6% to 282.68 pence a therm. U.S. natural-gas futures also retreated, with the November contract down 10.1% to settle at $5.675 per million British thermal units, posting the biggest daily percentage decline since Sept. 2020, according to Dow Jones Market Data.
Oil futures also declined, with West Texas Intermediate crude for November delivery down 1.9% to settle at $77.43 a barrel on the New York Mercantile Exchange after ending Tuesday at the highest level since 2014. November Brent crude, the global benchmark, lost 1.8% to settle at $81.08 a barrel on ICE Futures Europe, after ending at a nearly three-year high on Tuesday.
Major currencies were mixed against the US dollar in European and US trade. The Euro fell from highs near US$1.1589 to lows near US$1.1528 and was near US$1.1555 at the US close. But the Aussie dollar rose from lows near US72.25 cents to session highs near US72.75 cents at the US close. And the Japanese yen rose from 111.77 yen per US dollar to JPY111.20 and was near JPY111.40 at the US close.
European share markets fell on Wednesday. The pan-European STOXX 600 index closed down by 1% as soaring oil and gas prices intensified concerns inflation will dent economic growth. The German Dax index fell by 1.5%. Germany’s factory orders slumped by 7.7% in August (survey: -2.2%) – the biggest drop in 30 years. And the UK FTSE index lost 1.2% with London-listed shares in Rio Tinto (-0.5%) and BHP (-1.4%) both lower.
Earlier Wednesday, Hong Kong’s benchmark Hang Seng Index shed 0.6%, as the market extended a broad downturn since mid-September. Chinese consumer-product makers led losses. Citi has warned of slowing retail sales in China this month due to local Covid-19 outbreaks and tightened movement restrictions.
Markets in mainland China are closed until Friday for the Golden Week holiday. Japan’s Nikkei Stock Average fell 1.1%, dragged by airline and auto stocks amid continuing concerns about higher costs of fuel, materials and borrowings. Investors are focusing on Prime Minister Fumio Kishida’s fiscal stimulus and other economic initiatives.