Opening Call: The Australian share market is to open higher.
U.S. stocks rose as Federal Reserve officials hinted that they might need to pull back their support for the economy sooner than they expected. The yield on the 10-year Treasury slipped further to 1.32%, helping to push gold prices higher for a fifth straight session. The WSJ Dollar Index rose late in the day to 87.3. Oil prices continued to fall amid a host of worries.
Australia’s S&P/ASX 200 gained 0.9% despite the one-week extension to Sydney’s Covid lockdown. The benchmark shrugged off a mostly negative lead from the U.S. to move into positive territory for the week. The heavyweight financial sector rose 0.8%.
U.S. stocks rose modestly as traders weighed questions on the economy and the release of the Federal Reserve’s latest meeting minutes.
The S&P 500 and the Dow Jones Industrial Average rose 0.3%, adding to modest gains before the meeting minutes were released.
The Nasdaq Composite was up less than 0.1%, setting a new closing high along with the S&P 500.
While investors have been encouraged by the Federal Reserve, which has said it doesn’t plan to pull back on supportive policies in the near term, the central bank’s monetary policy has sparked a bout of inflation that is driving both supply and labour shortages and could curtail the economy’s growth. That is complicating the picture for investors.
Gold futures finished higher for a fifth straight session, before the release of minutes from the latest meeting of the U.S.’s rate-setting Federal Open Market Committee showed officials pondering the start of a reduction in asset purchases.
The gains in bullion were supported by a steady U.S. dollar and a decline of 10-year Treasury note yields to levels not seen since February, helping to bolster appetite for precious metals.
August gold gained 0.4% to settle at $1,802.10 an ounce. Gold hasn’t finished at or above the psychologically significant level at $1,800 since June 16.
Oil futures fell sharply, giving up early gains to end lower as traders monitor a standoff between the United Arab Emirates and fellow OPEC members over a proposed output rise.
West Texas Intermediate crude for August delivery fell 1.6% to close at $72.20 a barrel on the New York Mercantile Exchange. September Brent crude lost 1.5% to settle at $73.43 a barrel on ICE Futures Europe.
Oil trading has been volatile after talks by the Organization of the Petroleum Exporting Countries and its allies — a group known as OPEC+ — collapsed on Monday, derailing a proposal to ease existing output curbs in a controlled manner and allow production to rise by 400,000 barrels a day each month from August through December.
Major currencies were mostly weaker against the US dollar in European and US trade. The Euro fell from highs near US$1.1833 to lows near US$1.1781 and was near US$1.1790 at the US close. The Aussie dollar fell from highs near US75.33 cents to lows near US74.64 cents and was near US74.80 cents at the US close. But the Japanese yen rose from 110.80 yen per US dollar to JPY110.51 and was near JPY110.60 at the US close.
European sharemarkets climbed on Wednesday. The pan-European STOXX 600 index closed up by 0.8% with technology shares 1.2% higher, led by SAP (+3.5%). The German Dax index jumped 1.2% and the UK FTSE index gained 0.7% after shares of money transfer start-up Wise jumped 10% on its debut. UK-listed shares in Rio Tinto (+2.6%) and BHP (+3.2%) both traded higher.
Earlier Wednesday, Chinese stocks ended the session higher, recovering slightly from broad declines earlier this month. The benchmark Shanghai Composite Index rose 0.7%, its largest one-day gain in nearly two weeks.
The Shenzhen Composite Index added 1.7% while the ChiNext Price Index jumped 3.6%. Industrial companies, including steel producers, metal miners and power equipment makers, led the upturn.
Hong Kong stocks fell, extending a losing streak for the seventh consecutive trading day. The benchmark Hang Seng Index fell 0.4% to its lowest closing level since mid-May.
The Asian financial hub was mainly weighed by steep losses in Chinese tech giants, as investors grew increasingly worried after Beijing’s moves to heighten regulatory scrutiny on the sector.
The Nikkei Stock Average dropped 1.0%, with insurance and energy stocks falling especially sharply as the yen strengthened and caution about Covid-19 containment measures continued.