Opening Call: The Australian share market is to open higher.
U.S. stocks slipped as inflation and supply-chain concerns outweighed a continuing economic rebound. The yield on the 10-year Treasury continued its drift lower to 1.49%, helping gold prices nudge higher. The WSJ Dollar Index edged higher to 85.3. U.S. oil prices ended a fraction lower after a weekly EIA report that sent out some mixed messages on oil supply and demand.
Australia’s S&P/ASX 200 lost 0.3% amid declines in tech, retail and financial stocks. The benchmark rose as much as 0.6% in the first hour despite a mixed lead from the U.S. Yet the index was back in negative territory with more than two-thirds of the session remaining, giving back all of Tuesday’s 0.15% gain and more.
U.S. stocks edged lower in quiet trading, with the S&P 500 staying slightly below its record close from early May.
The S&P 500 dropped 0.2%, with losses in the financial, industrial and consumer sectors weighing against gains in healthcare and technology. The Dow Jones Industrial Average fell 0.4%, while the Nasdaq Composite inched down 0.1%.
The market has been subdued for much of the last two weeks as investors balance confidence in the economic reopening against the risks of rising inflation, supply-chain problems and the possibility of higher taxes. Such worries have contributed to a cautious view of the outlook for stocks, which are trading around all-time highs.
Gold futures were supported in part by a retreat in benchmark Treasury yields, but prices held below $1,900 an ounce a day ahead of a U.S. inflation reading that could drive the precious metal’s next big move.
Gold has struggled to hold a close above $1,900 recently, and while 10-year U.S. Treasury yields have moved lower, “this hasn’t had the same bullish impetus for gold as it previously has,” said David Russell, director of marketing at GoldCore. This may be due to the Federal Reserve “working hard to talk down inflation expectations and as a result, keeping real yields constrained.”
August gold futures rose nearly 0.1% to settle at $1,895.50 an ounce, following a 0.2% decline on Tuesday, which marked bullion’s first decline in three sessions.
U.S. oil futures logged a modest loss, to finish below the $70 mark following data that showed domestic crude inventories down a third-straight week, but gasoline stockpiles up by seven million barrels.
Gasoline futures led to the percentage losses among major energy futures for the session, as data also revealed that implied demand for the fuel edged lower for the week.
West Texas Intermediate crude for July delivery fell 0.1% to settle at $69.96 a barrel on the New York Mercantile Exchange.
August Brent crude, the global benchmark, settled at $72.22 a barrel on ICE Futures Europe, unchanged from Tuesday which saw the highest finish since May 2019.
Major currencies were weaker against the US dollar in European and US trade. The Euro eased from highs near US$1.2215 to lows near US$1.2175 and was near the lows at the US close. The Aussie dollar fell from highs near US77.60 cents to lows near US77.25 cents and was near US77.30 cents at the US close. And the Japanese yen eased from 109.22 yen per US dollar to JPY109.65 and was near JPY109.61 at the US close.
European share markets were mixed again on Wednesday. Major airlines rose around 3% after the US Centers for Disease Control and Prevention (CDC) said it was easing travel recommendations on 110 countries and territories. The broader travel & leisure sector rose 0.9%. Investors await the European Central Bank meeting. The pan-European STOXX 600 index lifted by 0.1% to a new closing high. But the German Dax index lost 0.4% and the UK FTSE index fell by 0.2%. In London trade shares in Rio Tinto fell by 2.0% while shares in BHP lost 2.1%%.
Earlier Wednesday, Chinese stocks closed broadly higher, after the country released consumer and producer price data for May, with PPI jumping at its fastest pace in nearly 13 years. U.S.-China trade relations are likely to be in focus after the U.S. Senate on Tuesday approved a bipartisan, $250 billion bills boosting government spending on technology research and development amid rising competition from China and other nations.
The Shanghai Composite Index closed 0.3% higher, the Shenzhen Composite Index inched 0.1% higher, while the ChiNext Price Index, which measures emerging industries and startups, closed flat.
Hong Kong shares declined, extending losses in recent sessions. The benchmark Hang Seng Index fell 0.1%, continuing a losing streak for the sixth straight trading day. Chinese tech giants led the decline. Consumer stocks also weighed on the index.
The Nikkei Stock Average fell 0.4%, succumbing to profit-taking in semiconductor-related stocks, despite gains in the airline and real-estate stocks in hopes for an economic reopening.