Opening Call: The Australian share market is to open lower.
U.S. stocks fell on inflation worries. The yield on the 10-year Treasury dropped to 1.30%, as yields sank for the fourth day. The WSJ Dollar Index slipped to 87.2. Oil prices notched their first gain of the week after the EIA reported large, weekly declines in U.S. inventories of oil and gasoline. Gold prices slipped, but losses were tempered by weakness in other haven investments.
Australia’s S&P/ASX 200 gained 0.2% after overcoming a mid-session slump. Tech stocks led the rise. Zip Co. jumped 14% amid reports a strategic investor picked up a 4% stake in the buy-now-pay-later provider. The move partially offset losses elsewhere in the financial sector.
U.S. stocks fell, while Treasury yields sank for a fourth day, as investors unwound bets on a spell of high growth and inflation.
The S&P 500 lost 0.9%, a sharp reversal from Wednesday when the broad stock-market gauge closed at an all-time high. The Dow Jones Industrial Average slid 0.8%. Meanwhile, the technology-heavy Nasdaq Composite, which also notched a new high Wednesday, fell 0.7%.
All three indexes tumbled to start the day before paring some of their losses. The session’s selloff across the U.S. market was broad-based and came after investors pulled back from equities around the globe.
All of the S&P 500’s 11 sectors traded lower in late afternoon trading. Financial services companies, technology firms and homebuilders were among the hardest hit.
Stocks have powered to a series of record highs this year, but some investors have grown concerned that labour shortages and supply-chain bottlenecks may crimp the pace of economic recovery.
The spread of the highly contagious Delta variant of the coronavirus globally is adding to worries.
Gold futures finished slightly lower, marking the first decline in six sessions, as stocks, bond yields and the dollar all headed lower, perhaps checking bullion’s decline.
A selloff in the equity market may have resulted in investors liquidating some of their winning holdings like gold, weighing on the precious metal’s price, strategists speculated.
The spread of the Delta variant of the coronavirus was one other factor that was helping stoke appetite for safe-haven assets like Treasurys and gold, said Chintan Karnani, chief market analyst at Insignia Consultants.
August gold traded 0.1% lower to settle $1,800.20 an ounce. Gold hit an intraday peak at $1,819.50 before pulling back.
Oil futures ended higher, after government data showed a large drop in U.S. crude and gasoline inventories, but uncertainty about global supplies continued to limit upside amid a dispute between OPEC heavyweights over production plans.
“Gasoline posted its best report of the summer driving season in this report, after weeks of disappointment,” said Robert Yawger, executive director of energy futures at Mizuho Securities. “At this time of year, the market needs strong gasoline fundamentals to lead the way higher, not Iran and OPEC+ headlines that simply rally crude oil and leave gasoline in the dust.”
West Texas Intermediate crude for August delivery rose 1% to close at $72.94 a barrel on the New York Mercantile Exchange, after trading as low as $70.76. September Brent crude rose 0.9% finishing at $74.12 a barrel.
Major currencies were mixed against the US dollar in European and US trade. The Euro rose from lows near US$1.1791 to highs near US$1.1866 and was near US$1.1845 at the US close. The Aussie dollar fell from highs near US74.61 cents to lows near US74.16 cents and was near US74.30 cents at the US close. And the Japanese yen rose from 110.32 yen per US dollar to JPY109.52 and was near JPY109.75 at the US close.
European sharemarkets fell on Thursday. The pan-European STOXX 600 index closed down by 1.7% with bank shares 2.7% lower as bond yields extended declines. The European Central Bank (ECB) revised its inflation target to 2% and said it would allow consumer prices to overshoot when deemed necessary. The German Dax and UK FTSE indexes both lost 1.7%. London-listed shares in Rio Tinto (-2.8%) and BHP (-1.5%) both traded lower.
Earlier Thursday, Chinese stocks ended the session mixed, as muted momentum continued. The benchmark Shanghai Composite Index fell 0.8%, while the Shenzhen Composite Index lost 0.5%.
The ChiNext Price Index, however, rose 0.7%. Gains were concentrated in the new-energy sector, with battery makers and wind farm equipment suppliers as the top winners. But the momentum was offset by weakness in consumer stocks such as education services providers and food-and-beverage companies.
Hong Kong stocks retreated, extending the market’s losing streak for the eighth consecutive trading day. The benchmark Hang Seng Index fell 2.9%, hitting its lowest closing level so far this year. The plunge was mainly due to continued losses in the tech sector, as Beijing’s rising regulatory scrutiny of the industry intensified investor concerns.