Opening Call: The Australian share market is to open lower.
U.S. stocks extended this week’s selloff after data showed the rise in consumer prices picked up speed in April. The inflation data sent the yield on the 10-year Treasury higher to 1.70% and pushed the WSJ Dollar Index up to 85.9. Oil prices climbed to a two-month high as a key U.S. fuel pipeline remained shut due to a cyberattack. Gold prices fell under the weight of climbing Treasury yields and the strengthening dollar.
Australia’s S&P/ASX 200 closed 0.7% lower after an early jump by tech stocks ran out of steam. Utilities, energy and industrials led the losses, while the heavyweight financial and mining sectors lost 0.6% and 0.7%, respectively.
U.S. stocks fell, giving the Dow Jones Industrial Average and S&P 500 their steepest three-day declines in nearly seven months, after a sharp rise in consumer prices heightened concerns that interest rates could be headed higher.
The S&P 500 dropped 2.1%, while the Dow Jones Industrial Average retreated 2%. Both indexes had their largest three-day point and percentage declines since late October. The tech-heavy Nasdaq Composite slumped 2.7%.
The Labor Department’s report on consumer prices showed the consumer-price index jumped 4.2% in April from a year before, the most in any 12-month period since 2008.
The increase in prices was steeper than economists had expected. Earlier Wednesday, Chinese stocks ended the session higher. The benchmark Shanghai Composite Index gained 0.6%, while the Shenzhen Composite Index added 0.9%. The ChiNext Price Index closed 1.3% higher. Automakers led the upturn following the industry’s strong April sales data. Oil companies lent further support as crude prices climbed amid concerns over a potential U.S. fuel supply shortage.
Gold prices logged their first back-to-back retreat so far this month, as a reading of U.S. inflation revealed the biggest monthly increase in 13 years, leading to a rise in U.S. Treasury yields and the dollar.
“Gold is commonly seen as an inflation hedge, so it received an initial boost from the surprisingly high headline U.S. inflation number,” said Colin Cieszynski, chief market strategist at SIA Wealth Management. However, “rising inflation pressures also sparked rallies in the 10-year Treasury note yield and the U.S. dollar.” June gold futures fell 0.7% to settle at $1,822.80 an ounce.
Oil futures marked their highest settlement since March, boosted by an upbeat outlook for demand in the second half of 2021 and data showing a fall in U.S. crude inventories.
Traders also kept an eye on gasoline shortages across the U.S. Southeast as the Colonial Pipeline moves to restore service on a key fuel artery.
West Texas Intermediate crude for June delivery rose 1.2% to settle at $66.08 a barrel on the New York Mercantile Exchange. That was the highest front-month contract finish since March, according to Dow Jones Market Data. July Brent crude added 1.1% to settle at $69.32 a barrel on ICE Futures Europe, also the highest finish since March.
Major currencies were weaker against the US dollar in European and US trade. The Euro fell from highs near US$1.2145 to lows near US$1.2064 and was near US$1.2075 at the US close. The Aussie dollar fell from highs near US78.16 cents to lows near US77.19 cents and was near US77.25 cents at the US close. And the Japanese yen eased from 108.65 yen per US dollar to near JPY109.65 at the US close.
European sharemarkets lifted on Wednesday. The pan-European STOXX 600 index rose by 0.3% with oil and gas shares up 2%. The German Dax index climbed 0.2% with Commerzbank shares up 8.6% after it raised its revenue outlook. The UK FTSE index rose by 0.8%. Britain’s economy (GDP) grew by a stronger-than-expected 2.1% in March (survey: +1.5%). In London trade shares in Rio Tinto rose by 0.5% and shares in BHP gained 0.6%.
Earlier Wednesday, Chinese stocks ended the session higher. The benchmark Shanghai Composite Index gained 0.6%, while the Shenzhen Composite Index added 0.9%. The ChiNext Price Index closed 1.3% higher. Automakers led the upturn following the industry’s strong April sales data. Oil companies lent further support as crude prices climbed amid concerns over a potential U.S. fuel supply shortage.
Hong Kong shares also rose as the market ended a three-session losing streak. The benchmark Hang Seng Index rose 0.8%. Chinese tech companies led the upturn as the sector recovered from steep losses earlier this week.
Japan’s Nikkei Stock Average fell 1.6%, reversing earlier gains amid inflation concerns. Losses on the benchmark index were broad-based.