Opening Call: The Australian share market is to open higher.
U.S. stocks were mixed as rising bond yields continued to hurt tech stocks. The yield on the 10-year Treasury rose to 1.60% as selling pressure on government debt resumed. The WSJ Dollar Index rose to 87.2. Oil prices slipped after it was determined a weekend attack on a Saudi port didn’t hurt output. Gold prices fell under pressure from higher bond yields and the dollar’s gains.
Australia’s S&P/ASX 200 edged 0.4% higher after giving up much of its early gains. The benchmark jumped ahead by as much as 1.7% in the opening hour amid a strong lead from U.S. stocks and the Senate’s approval of a $1.9 trillion coronavirus relief package. The index then declined steadily, with the tech sector again being the worst performer.
The Dow Jones Industrial Average climbed, while a selloff in U.S. government bonds extended into its sixth week and sapped demand for technology stocks.
The blue-chip index gained 1.0%, following progress on a new fiscal stimulus bill that brightened economic prospects. The S&P 500 fell 0.5%.
Meanwhile, the Nasdaq Composite fell 2.4%, entering correction territory, as tech stocks extended their declines. Rising bond yields dent the allure of growth stocks like those of big tech companies.
A rise in the dollar and government bond yields combined to a dim appetite for bullion, pushing gold prices to their lowest finish since early April, FactSet data show.
Richer bond yields and a stronger U.S. currency, which many commodities are priced in, can make bullion comparatively less attractive to own for those buying overseas.
Gold for April delivery on Comex fell 1.2% to settle at $1,678 an ounce, with prices based on the most-active contract ending at their lowest since April 3, FactSet data show.
Oil futures pulled back Monday, posting their first loss in four sessions after an attack on Saudi oil facilities briefly lifted global benchmark Brent crude prices above $70 a barrel for the first time since early last year. “Production appears to have been unaffected,” though the market’s concern “seems to be more the frequency of attacks rather than their severity,” said Marshall Gittler, head of investment research at BDSwiss, in a Monday note.
The price of the front-month May Brent crude contract fell 1.6% to settle at $68.24 a barrel, after hitting a high of $71.38 a barrel on Sunday. It was the first time the global benchmark traded above $70 since January 2020, according to FactSet data.
April West Texas Intermediate crude lost 1.6% to settle at $65.05 a barrel after hitting a high near $68 overnight. Both contracts are up more than 30% year to date, adding more than 7% last week following a surprise move by the Organization of the Petroleum Exporting Countries and its allies to rollover current production cuts through end-April.
Major currencies were weaker against the US dollar in European and US trade. The Euro fell from highs near US$1.1914 to lows near US$1.1843 and was near US$1.1845 at the US close. The Aussie dollar fell from highs near US77.13 cents to lows near US76.36 cents and was near US76.45 cents at the US close. And the Japanese yen eased from near 108.31 yen per US dollar to JPY108.93 yen and was near JPY108.90 at the US close.
European sharemarkets advanced on Monday. The pan-European STOXX 600 index gained 2.1%. Bank stocks lifted 3.7% to hit a fresh one-year high. The German Dax index surged 3.3% and hit a new intraday high. And the UK FTSE index lifted 1.3% with Rolls-Royce shares up 7.3% after the US and EU agreed a tariff freeze in their dispute over aircraft subsidies. London-listed shares in Rio Tinto (+3.2%) and BHP (+2.8%) both climbed.
Earlier Monday, China’s main stock benchmarks tumbled, erasing all of this year’s gains, as investors grappled with signs that policy makers in Beijing will take more action to rein in debt and prevent asset bubbles from forming.
The CSI 300–an index of the 300 largest stocks listed in mainland China–fell 3.5% while the Shanghai Composite Index dropped 2.3%, hitting their lowest closing levels in The Shenzhen Composite Index lost 3.2% and the ChiNext Price Index tumbled 5.0%.
Hong Kong’s Hang Seng Index slipped 1.9%, weighed by tech stocks. The Hang Seng TECH Index fell 6.4%, as rising U.S. Treasury yields undermined equity investors’ sentiment in the U.S. market Friday and pushed the tech-heavy Nasdaq into year-to-date losses.
The Nikkei Stock Average shed 0.4%, as declines in electronics shares offset gains in steel and energy stocks.