Opening Call: The Australian share market is to open higher.
Australia’s S&P/ASX 200 index closed 0.4% lower with all sectors in the red. Health care stocks were pummelled, losing 1.4%, while technology stocks continued to drag on the benchmark, falling 0.9%. Imugene was the day’s poorest performer, finishing 8.7% lower, while ResMed and CSL lost 3.4% and 1.3%, respectively. Buy-now-pay-later stock Zip retreated 5.7%, while Appen fell 3.1%. Still, Iress gained 1.7% after announcing it was ceasing the divestment of its U.K. mortgage business. Pendal fell 0.2% after saying it would reject Perpetual’s takeover offer, with Perpetual also falling 0.4%.
U.S. stocks indexes gave up their early gains as investors pondered how the Federal Reserve will act to tame inflation, which rose at the fastest annual pace in four decades in March. The Dow Jones Industrial Average fell about 0.3%, while the S&P 500 and the technology-heavy Nasdaq Composite Index also both lost roughly 0.3%. That was a retreat from a morning that initially featured bullish trading, with the S&P at one point up 1.3% on the day.
Labor Department data showed that inflation continued at an unsparing rate in March. The consumer-price index rose 8.5% last month from a year before. Fed governor Lael Brainard reiterated the Fed’s readiness to take an aggressive stance against inflation. “Inflation is too high,” Brainard said in remarks at a Wall Street Journal summit. “Getting inflation down is going to be our most important task.”
Gold futures rose for a fourth-straight day to their highest settlement in a month, as U.S. data showed annual inflation climbed above 8% in March for the first time in 40 years. June gold rose 1.4% to settle at $1,976.10 an ounce on Comex after eking out a third straight gain on Monday. Based on the most-active contract, prices marked their highest finish since March 11, FactSet data show.
“Gold continues to benefit from the tailwinds provided by spicy inflation numbers,” including [Tuesday’s] reading, which some are calling the prelude to a peak,” said Adam Koos, president at Libertas Wealth Management Group. “Not even interest rates or the rise in the [U.S. dollar] can seem to stop the higher prices in the yellow metal.”
Oil futures climbed by more than 6%, with U.S. and global benchmark prices posting their highest finish in a week, as China somewhat eased its Covid-19 lockdown of Shanghai. West Texas Intermediate crude for May delivery rose 6.7% to settle at $100.60 a barrel on the New York Mercantile Exchange, following a decline of 4% on Monday. June Brent crude, the global benchmark, added 6.3% to $104.64 a barrel on ICE Futures Europe — the highest finish in a week.
The news on Shanghai helped ease concerns around Chinese oil demand, offering a sort of “light at the end of the tunnel trade,” said Stephen Innes, managing partner at SPI Asset Management, in a daily note.
Major currencies were mixed against the US dollar in European and US trade. The Euro fell from highs near US$1.0900 to lows near US$1.0820 and was near US$1.0825 at the US close. But the Aussie dollar rose from lows near US74.23 cents to highs near US74.92 cents and was near US74.55 cents at the US close. And the Japanese yen firmed from 125.73 yen per US dollar to JPY124.80
and was near JPY125.30 at the US close.
European sharemarkets closed lower on Tuesday. The panEuropean STOXX 600 index fell by 0.4%, with bank stocks down 1.6%. Deutsche Bank (-9.4%) and Commerzbank (-8.5%) shares both fell after an undisclosed investor sold stakes of more than 5% in Germany’s largest lenders. The German Dax index lost 0.5% and the UK FTSE index slid 0.6%. In London trade, shares of Rio Tinto rose by 1.4% and BHP shares added 2.2%.
Japanese stocks ended lower, dragged by declines in shipping and machinery stocks, as concerns persisted over supply-chain disruptions and slower trade. Major shipper Mitsui O.S.K. Lines shed 6.1% and industrial-robot maker Fanuc dropped 5.5%. The Nikkei Stock Average fell 1.8%. Chinese stocks ended higher amid signs the country is relaxing some Covid-19 restrictions in Shanghai, Oanda analyst Jeffrey Halley said in a note.
“In Shanghai, restrictions have been loosened for about half the population. If an apartment complex has had no cases for two weeks, residents can start moving around,” and the resulting positive sentiment is driving shares up, Halley said. Consumer stocks including liquor makers closed higher. The Shanghai Composite Index rose 1.5%, the Shenzhen Composite Index climbed 1.8% and the ChiNext Price Index gained 2.5%.