Opening Call: The Australian share market is to open higher.
U.S. stocks advanced on signs of a cooling labor market. The yield on the 10-year Treasury note advanced to 3.01% versus 2.91% on Wednesday. The WSJ Dollar Index fell 0.15% to 98.88. U.S. oil prices rose despite bearish inventories data. And gold futures ended higher, breaking a losing streak.
Australia’s S&P/ASX 200 index closed 0.8% higher, lifted by its financials and rallying mining stocks. The materials sector rebounded 2.5% from a 5.0% fall a day earlier as the benchmark index followed U.S. stocks higher. Iron-ore miners BHP, Rio Tinto and Fortescue were among the strongest components, adding between 3.1% and 4.4%. Shares of banks and wealth managers also rose, with Westpac, Commonwealth and ANZ adding between 0.8% and 1.8%.
U.S. stocks finished a fourth-straight session of gains, lifted by shares of everything from banks to consumer-focused companies. The S&P 500 rose 1.5%, bringing the benchmark to its longest winning streak since March. The tech-heavy Nasdaq Composite Index gained 2.3% and also ended with its longest winning streak since March. The Dow Jones Industrial Average climbed 1.1%.
A report showed the number of new applications for U.S. unemployment benefits rose to a six-month high last week, a sign that growth in the labor market is slowing. “What the market is wanting to see is that there is some cooling in the labor market, but it’s not going to want to see a crash,” said Kiran Ganesh, a multiasset strategist at UBS.
Gold prices finished higher, snapping a seven-day losing streak – the longest string of losses for the yellow metal in more than three years. August gold added 0.2% to settle at $1,739.70 an ounce as the U.S. dollar steadied, helping to ease the downward pressure on gold and industrial commodities.
Oil futures ended higher after a two-day rout fueled by recession fears that sent the U.S. benchmark below $100 a barrel and into a bear market. West Texas Intermediate crude for August delivery rose 4.3% to settle at $102.73 a barrel on the New York Mercantile Exchange. September Brent crude, the global benchmark, rose 3.9% to $104.65 a barrel on ICE Futures Europe.
Official U.S. data revealed a hefty weekly rise in domestic crude inventories, but petroleum-product stocks declined. Offsetting the rise in crude stocks were inventory draws to both gasoline and distillates, said Matt Smith, lead oil analyst, Americas, at Kpler. “Not surprisingly, implied demand for gasoline was strong last week as gas stations filled up ahead of the July 4 holiday weekend.”
Major currencies were mixed against the US dollar in European and US trade. The Euro fell from highs near US$1.0220 to US$1.0145 and was near US$1.0160 at the US close. But the Aussie dollar rose from near US68.05 cents to near US68.47 cents and was near US68.40 cents at the US close. And the Japanese held between 135.57 yen per US dollar and JPY136.19 and was around JPY136 at the US close.
European sharemarkets were firmer on Thursday. Higher oil and metal prices boosted commodity-linked stocks. Miners lifted 5.4% and the energy sector rose by 4.1%. Minutes of the last European Central Bank meeting showed that policymakers debated flagging a bigger rate hike in July. The pan-European STOXX 600 index rose by 1.9%. The German Dax index rose by 2.0%. The UK FTSE index rose by 1.1% with investors digesting news of the resignation of Prime Minister Boris Johnson. In London trade, shares of Rio Tinto rose by 3.7% and shares in BHP rose by 3.9%.
Earlier, in Asia, Japan’s Nikkei Stock Average ended 1.5% higher, helped by concerns over fuel costs easing slightly. Toyota Motor advanced 2.3%, Honda Motor rose 1.5% and Nissan Motor gained 1.8%. Aeon rose 11% after its first quarter net profit more than tripled on-year. Sumitomo Mitsui Trust ended 1.3% higher after it said it was investing in Apollo Global Management’s alternative assets portfolio.
Chinese stocks ended higher. Investors continued to weigh the benefits of stimulus measures from Beijing over the Federal Reserve’s restrictive policy stance, rising risk of a U.S. recession and increasing worries over new Covid-19 infections in several cities in China. The benchmark Shanghai Composite Index rose 0.3% while the Shenzhen Composite Index was 0.9% higher.
The tech-heavy ChiNext Price Index led the pack with a 1.7% rise. Auto makers including both passenger car companies and commercial vehicle manufacturers were among the top gainers, as the auto sector remains a key beneficiary of China’s consumption stimulus policies.