Opening Call: The Australian share market is to open higher.
U.S. stocks rose as the market forecasts Democratic control of Congress will lead to further U.S. stimulus. The yield on the 10-year Treasury rose to 1.08%. The WSJ Dollar Index climbed to 84.97. Oil continued higher. Gold prices rose slightly.
Australia’s S&P/ASX 200 gained 1.6% as the local share market largely mirrored that in the U.S., where cyclical gained and tech stocks dropped in anticipation of further stimulus and tax rises. The financial, materials and energy sectors led the gains.
Political unrest in Washington didn’t dent the stock market’s ongoing rally, with U.S. stocks climbing toward fresh records.
Financial and technology stocks led Thursday’s gains, pushing the S&P 500 up 1.5% and putting the broad index on pace to close at its first record of 2021. The Dow Jones Industrial Average also rose, adding 0.7%, while the Nasdaq Composite jumped 2.6%, putting both of those benchmarks on track for new closing highs as well.
Investors largely looked past Wednesday’s violent clash between pro-Trump protesters and law enforcement in the Capitol building that left four people dead, instead of focusing on what the shift of political power from Republicans to Democrats means for the market.
Gold futures scored a partial rebound, day after rising U.S. bond yields prompted the metal, which doesn’t offer a coupon, to post its first loss in six sessions.
Commodity dealers are betting that the longer-term outlook for gold is higher, with a Democratically controlled Congress likely to champion greater government spending to reflate the economy which is bullish for gold prices.
February gold rose 0.3% to settle at $1,913.60 an ounce.
Oil futures rose to post a third straight session gain, buoyed by data showing a larger-than-expected weekly drop in U.S. crude inventories and a recent pledge by Saudi Arabia to further cut its production levels.
West Texas Intermediate crude for February delivery rose 0.4% to settle at $50.83 a barrel on the New York Mercantile Exchange. March Brent crude, the global benchmark, added nearly 0.2%, settling at $54.38 a barrel on ICE Futures Europe.
Major currencies were weaker against the US dollar in European and US trade. The Euro fell from highs near US$1.2325 to lows near US$1.2245 and was near US$1.2260 in late US trade. The Aussie dollar fell from highs near US77.95 cents to lows near US77.25 cents and was near US77.65 cents in late US trade. And the Japanese yen eased from near 103.10 yen per US dollar to near JPY103.95 and was near JPY103.83 in late US trade.
European sharemarkets were firmer on Thursday. Construction and materials stocks posted the biggest gains (up 2.3%) on the prospect for more infrastructure spending in the US under a new administration. Mining rose 2.8% with energy up 1.8%. The pan-European STOXX 600 index rose by 0.5%. The UK FTSE lifted by 0.2% while the German Dax index rose by 0.6%. In London trade shares in Rio Tinto rose by 3.2% and shares in BHP gained 1.0%.
Earlier Thursday, mainland China stocks continued the rally that started with the new year, with the large-cap benchmark CSI 300 Index closing at its highest level since early The CSI 300 Index which tracks the largest stocks listed in Shanghai and Shenzhen rose 1.8%. Meanwhile, the Shanghai Composite Index advanced for the sixth consecutive session, rising 0.7%. Tourism firms and suppliers of non-ferrous metals stood out in the session.
Hong Kong’s Hang Seng Index closed 0.5% lower, mainly weighed by tech stocks. China’s three major telecom companies tumbled after the NYSE reversed course again and said it would move to delist their ADRs.
The Nikkei Stock Average rose 1.6%, led by gains in steel and financial stocks, on growing hopes for additional U.S. pandemic relief and infrastructure investments.