Opening Call: The Australian share market is to open higher.
U.S. stocks rose after Democrats and Republicans said they reached an agreement to extend the debt ceiling through early December. The yield on the 10-year Treasury edged up to 1.58% as long-dated yields reached their highest levels in more than three months. The WSJ Dollar Index slipped to 88.56. Oil prices erased overnight declines to finish the session higher, putting them on course for a seventh straight weekly increase. Gold prices edged lower.
Australia’s S&P/ASX 200 gained 0.7%, bouncing from consecutive declines with advances in nearly every sector. The benchmark built on late momentum from U.S. stocks, led by shares of financial and tech companies. The energy was the only sector to lose ground amid lower oil prices.
Major U.S. stock indexes ripped higher after Senate Majority Leader Chuck Schumer said lawmakers had reached a deal on a short-term debt-limit extension, which would put off a possible government default for several months. The stock market turned decidedly upward, with everything from shares of technology companies to energy firms to manufacturers and miners rising.
Stocks hit their session highs following Sen. Schumer’s remarks from the Senate floor and continued to trade near those levels in the afternoon. While the Senate must still vote on the deal, investors appeared ready to remove the debt ceiling as an obstacle to further gains.
The Dow Jones Industrial Average rallied 1%. The S&P 500 added 0.8%. The Nasdaq Composite rose as technology stocks recouped recent losses, lifting the benchmark by 1%. The session’s gains put stocks on firm footing for the week. All three major benchmarks are up at least 1.2% over the past four trading days. That marks a full recovery from Monday losses when a selloff in Facebook stock and shares of other big technology companies rippled through the market.
Gold futures fell, with prices pressured as Treasury yields edged up following weekly U.S. data that revealed a drop in jobless benefit claims, as investors awaited Friday’s September employment data from the Labor Department.
“Gold has essentially been a battleground for bulls and bears this week with conflicting themes pulling and pushing the metal in a relatively narrow range,” said Lukman Otunuga, senior research analyst at FXTM. “The choppy price action illustrates the growing struggle for power ahead of the key jobs data.”December gold futures lost almost 0.1% to settle at $1,759.20 an ounce.
Oil prices recouped some of their recent losses from a larger-than-expected rise in U.S. crude inventories after the Energy Department reportedly said it has no plans to release crude from its Strategic Petroleum Reserve. Natural-gas futures, meanwhile, ended almost flat after spending the bulk of the trading session lower after Russia on Wednesday said it would raise natural-gas supplies to Europe.
Oil prices also moved up along with the stock market because the U.S. debt ceiling debate is being settled, at least for now, and that’s “taking the risk of a near-term recession off the table, and puts off the potential debt ceiling calamity for another day,” increasing oil demand expectations, said Phil Flynn, the senior market analyst at The Price Futures Group. West Texas Intermediate crude for November delivery climbed 1.1% to settle at $78.30 a barrel. WTI remains 1.3% higher for the week. December Brent crude added 1.1% to settle at $81.95 a barrel on ICE Futures Europe.
Major currencies were mixed against the US dollar in European and US trade. The Euro fell from highs near US$1.1571 to lows near US$1.1546 and was near US$1.1550 at the US close. But the Aussie dollar rose from lows near US72.70 cents to highs near US73.23 cents and was near US73.10 cents at the US close. And the Japanese yen eased from 111.23 yen per US dollar to JPY111.63 and was near JPY111.60 at the US close.
European sharemarkets rose on Thursday. The pan-European STOXX 600 index closed up by 1.6% with auto and parts stocks 3.2% higher. The automakers-heavy German Dax index posted its best session since May, up 1.9%, shrugging-off data that showed a 4% decline in industrial production in August (survey: -0.5%). And the UK FTSE index added 1.2%. London-listed shares in Rio Tinto jumped by 3.5% and BHP shares were 3.6% higher.
Earlier Thursday, Hong Kong’s Hang Seng Index advanced 3.1%, led by gains in technology stocks. Tech stocks rose on positive investor sentiment following news that U.S. President Biden will hold a virtual meeting with Chinese President Xi Jinping by the year-end, KGI Securities said. The Hang Seng TECH Index rose 5.2%.
Markets in mainland China are closed until Friday for the Golden Week holiday. The Nikkei Stock Average climbed 0.5%, supported by shipping and machinery-related stocks. The strong performance by U.S. markets overnight and by U.S. index futures helped lift spirits in the Japanese market, which has been showing a high correlation to Wall Street lately, Oanda said. Shipping companies were among the notable gainers.