Opening Call: The Australian share market is to open lower.
U.S. stocks were mostly lower as Covid-19 worries weighed on markets, one trading session after the Labor Department’s employment report showed hiring slowed in August. The yield on the 10-year Treasury rose to 1.37%. The WSJ Dollar Index strengthened to 87.23, helping to push both gold and oil prices lower.
Australia’s S&P/ASX 200 was essentially flat, rising just 1.8 points, as weakness in materials stocks offset strength elsewhere. Lower iron-ore prices weighed on the materials sector. The financial sector closed flat, while gains by online advertisers Seek and REA helped lift the telecoms sector by 0.9%.
The S&P 500 declined as investors worried that the spread of Covid-19 will weigh on economic growth. The S&P 500 fell 0.3%, while the Dow Jones Industrial Average retreated 0.8%. The tech-heavy Nasdaq Composite added 0.1%. The increase in Covid-19 cases this summer has prompted many employers to postpone plans to return to the office.
The travel industry’s hopes for a resurgence in business trips also appear to be on hold. In a fresh sign that the surge of the Delta variant is hindering the economic recovery, the Labor Department’s employment report on Friday showed the pace of hiring in the U.S. slowed significantly in August.
Gold futures declined, with their sharpest daily fall in about a month, pulling prices back below $1,800 as the U.S. dollar strengthened and Treasury yields climbed, weighing on appetite for precious metals. December gold futures declined by 1.9% to settle at $1,798.50 an ounce.
The drop marker the sharpest one-day percentage and dollar slide for a most-active contract since Aug. 9 and pushed the contract to the lowest settlement since Aug. 26, FactSet data show. The decline follows a 0.8% rise for bullion last week, with prices settling Friday at their highest since June 16.
Oil futures fell, with Brent building on weakness seen the previous session after Saudi Arabia slashed crude prices for Asia. The weaker tone came as strength in the U.S. dollar helped crude erase an earlier bounce that followed unexpectedly strong Chinese trade data.
The drop in prices is a bit puzzling, said Michael Lynch, president at Strategic Energy & Economic Research, given that Chinese trade data were strong for August and a lot of U.S. production remains offline following hurricane Ida, which “should be pretty bullish.”
West Texas Intermediate crude for October delivery fell 1.4% to settle at $68.35 a barrel on the New York Mercantile Exchange, the lowest front-month contract finish since Aug. 26, according to Dow Jones Market Data. November Brent crude, the global benchmark, lost 0.7%, to settle at $71.69 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$1.1880 to session lows near US$1.1835 and was near US$1.1840 at the US close. The Aussie dollar fell from highs near US74.35 cents to lows near US73.75 cents and was near US73.85 cents at the US close. And the Japanese yen eased from near 109.85 yen per US dollar to JPY110.30 and was near the lows at the US close.
European sharemarkets eased on Tuesday with investors cautious ahead of a meeting by the European Central Bank later in the week. Utilities, healthcare and chemicals fell by around 1%. Deutsche Telekom said on Tuesday that it had sold its Dutch unit TMobile Netherlands to a consortium of private equity houses for 5.1 billion euros (US$6.05 billion). The pan-European Stoxx 600 index fell by 0.5%. The German Dax index fell by 0.6% and the UK FTSE index lost 0.5%. In London trade shares in Rio Tinto were up 0.4% while shares in BHP fell by 0.3%
Earlier Tuesday, Chinese stocks climbed, as the Shanghai Composite Index continued its advance with a 1.5% gain to a new six-month high. Cyclical sectors including steelmakers, petrochemical companies and miners led gains, driven by the bright outlook for commodities and anticipation that these sectors’ performance will continue to be strong in 3Q, Huaan Securities said. The Shenzhen Composite Index added 1.1% and the ChiNext Price Index was 0.7% higher.
Hong Kong shares also closed higher as technology companies and oil-and-gas majors rose. The benchmark Hang Seng Index ended the day 0.7% higher, while the Hang Seng Tech Index advanced 1.6%. Japan’s Nikkei Stock Average rose 0.9%, led by gains in tech and electronics stocks thanks in part to growing hopes that more economic stimulus is on the way. Investors are focusing on any developments in the leadership election of Japan’s ruling party.