Opening Call: The Australian share market is to open higher.
U.S. stocks continued their slide, hitting their lowest levels in 2022. The yield on the 10-year Treasury note was at 3.04%, compared with 3.12% Friday. The WSJ Dollar Index rose 0.30% to 96.32. U.S. oil prices closed lower as Saudi Arabia lowered prices and China export data slumped. And gold prices fell as traders picked the dollar as a haven for the Fed rate-hike cycle.
Australia’s S&P/ASX 200 index closed 1.2% lower to its lowest close since the middle of March. Technology was one of the worst performing sectors, falling 3.2%. Novonix declined 12.3% and was the benchmark index’s worst performer.
A broad selloff in U.S. stocks accelerated, leaving investors with few places to shelter from the market’s tumult. Major indexes fell to their lowest levels of the year to date, with the S&P 500 declining 3.2%, adding to losses after closing out its longest streak of weekly declines since 2011. The Nasdaq Composite Index tumbled 4.3% and the Dow Jones Industrial Average shed 2%. Selling hit most sectors of the S&P 500, dragging lower everything from shares of manufacturers to bank stocks to even energy producers, a relative bright spot this year.
“The U.S. equity market is quite expensive, particularly technology stocks. The market doesn’t know how high the Fed has to go to control inflation, and we have the sense of a global slowdown,” said Sebastien Galy, a macro strategist at Nordea Asset Management. “There’s a lot of negatives that are happening in the market.” Japanese stocks ended broadly lower as concerns persisted about higher costs of borrowing and raw materials. Among the biggest losers, Nippon Paint Holdings dropped 8.0% and food company Ajinomoto lost 7.0%. Japan Steel Works tumbled 19% after it said inspection data for some products was altered improperly at its unit. The Nikkei Stock Average fell 2.5%.
Gold futures fell as investors chose the greenback over the yellow metal as the safe place to hide while the Federal Reserve ratchets up interest rates. June gold fell 1.3% to settle at $1,858.60 an ounce on Comex, marking the worst daily percentage decline for the most-active contract since May 2, according to FactSet. “The dollar is proving the haven asset of choice at a time of continued falls on equity markets in the wake of the Federal Reserve’s trajectory of interest rate hikes and now concerns over China’s economic growth due to the ongoing COVID-related lockdown,” said Rupert Rolwing, market analyst at Kinesis Money.
Crude tracked a selloff in global assets, with the commodity pressured as Saudi Arabia cut prices for Asian customers and elsewhere, while China reported sharply weaker export data. West Texas Intermediate crude for June delivery dropped 6.1% to settle at $103.09 a barrel on the New York Mercantile Exchange. July Brent crude, the global benchmark, dropped 5.7% to close at $105.94 a barrel, its largest one-day drop since March 28. June natural-gas futures tumbled 12.6% to end at $7.026 per million British thermal units, its biggest daily percentage drop since Jan. 22, 2019. “Oil prices are dropping fast as crude demand destruction fears grow given China’s Covid situation and the de-risking event happening with U.S. stocks,” said Edward Moya, senior market analyst at Oanda, in a note.
Major currencies were mixed against the US dollar in European and US trade. The Euro rose from near US$1.0495 to US$1.0590 and was near US$1.0560 at the US close. The Aussie dollar fell from near US70.25 cents to US69.48 cents and was near lows at the US close. And the Japanese yen lifted from 131.34 yen per US dollar to JPY130.12 and was at JPY130.20 at the US close.
European sharemarkets were weaker on Monday on fears of prolonged Covid-19 curbs in China. Travel & leisure lost 6% with technology down 5% and miners falling 4.4%. Rising bond yields were also an influence in driving technology shares lower. And the Sentix measure of investor morale in the euro zone fell to a 2-year low in May. The pan-European STOXX 600 index fell by 2.9% to two-month lows. The German Dax lost 2.2% and the UK FTSE fell by 2.3%. In London trade shares in Rio Tinto fell by 4.6% and shares in BHP fell by 4.4%.
Japanese stocks ended broadly lower as concerns persisted about higher costs of borrowing and raw materials. Among the biggest losers, Nippon Paint Holdings dropped 8.0% and food company Ajinomoto lost 7.0%. Japan Steel Works tumbled 19% after it said inspection data for some products was altered improperly at its unit. The Nikkei Stock Average fell 2.5%.
Chinese stocks ended mixed after data showed China’s export growth hit its lowest level in nearly two years. The Shanghai Composite Index inched 0.1% higher, the Shenzhen Composite Index rose 0.4%, while the ChiNext Price Index declined 0.8%. Oil-related stocks were higher, following data that showed China’s crude oil imports in April grew almost 7% on year.