Opening Call: The Australian share market is to open higher.
Australia’s S&P/ASX 200 index closed 1.75% lower as a tech rout helped drag the index to its lowest close since March 8. The tech sector tumbled 8.7% for its worst day since the Covid-19 pandemic roiled global markets in March 2020. Only 13 ASX 200 components gained ground, with commodity and consumer stocks also weak. The ASX 200 is 3.7% lower for the week and on course for its biggest weekly loss since October 2020.
U.S. stocks were mixed, extending a streak of volatility in a market driven by worries that the Federal Reserve will hamper growth in its effort to bring inflation under control. The S&P 500 declined 0.1%. The Dow Jones Industrial Average fell 0.3% and the Nasdaq Composite Index edged up less than 0.1%. The producer-price index, an inflation metric, rose by an annual rate of 11% in April.
That marked a decline from the previous month, but was still ahead of the predictions of economists “Markets, on the margin, have shifted their probability toward a hard landing and toward further tightening from the Fed,” said Karim Chedid, an investment strategist at BlackRock. The decline in longer-dated bond yields suggests that growth expectations have fallen, he said.
Gold futures closed sharply lower, booking their worst day in about a week, as inflation woes pushed a roaring U.S. dollar higher, pressuring the metal. June gold fell 1.6%, settling at $1,824.60 an ounce. It was its lowest settlement value since Feb. 7, 2022, according to Dow Jones Market Data. “You are right now looking at gold trading near dangerous technical levels,” said Edward Moya, senior analyst at Oanda. “$1,800 doesn’t look that far away.”
The U.S. oil benchmark eked out a gain in choppy trade, as the commodity market tries to find its footing amid a supply and demand tug of war. West Texas Intermediate crude for June delivery rose 0.4% to close at $106.13 a barrel on the New York Mercantile Exchange.
July Brent crude, the global benchmark, rose 0.6%, to settle at $108.08 a barrel on ICE Futures Europe. The Organization of the Petroleum Exporting Countries cut its forecast for annual world oil demand to 3.4 million barrels a day in 2022, down 300,000 barrels a day from its April forecast.
Major currencies were mostly weaker against the US dollar in European and US trade. The Euro fell from highs near US$1.0513 to lows near US$1.0354 and was near US$1.0375 at the US close. The Aussie dollar fell from highs near US69.01 cents to lows near US68.28 cents and was near US68.55 cents at the US close. But the Japanese yen firmed from 129.64 yen per US dollar to JPY127.51 and was near JPY128.30 at the US close.
European sharemarkets fell on Thursday. The pan-European STOXX 600 index slid by 0.8% with basic resources stocks down 2.9%. The German Dax index lost 0.6% and the UK FTSE index shed
1.6%. The UK economy shrank by 0.1% in March but expanded by 0.8% for the first quarter of 2022 (survey: +1%). In London trade, shares in Rio Tinto and BHP both fell by 2.9%.
Earlier, in Asia, Japan’s Nikkei Stock Average fell 1.8% amid concerns about a Federal Reserve tightening. Rising U.S. inflationary pressure may prompt the Fed to move more aggressively on rate increases, which could result in an economic recession if the bad loop persists, CMC Markets analyst Tina Ting said in an e-mail. M3 slid 10%, NTT Data dropped 9.85% and Lasertec lost 9.1%. Meanwhile, Olympus climbed 11% after projecting a 33% rise in fiscal-year net profit.
Chinese stocks ended mixed, tracking broad declines among Asian equities as investors digested higher-than-expected U.S. inflation data. The Shanghai Composite Index edged 0.1% lower, while the Shenzhen Composite Index rose 0.2% and the ChiNext Price Index added 0.2%. Developments surrounding China’s Covid-19 policies will remain in focus. “China’s Covid-zero policy will continue crimping growth … nor has China’s property developer debt woes gone away, with news that major developer Sunac has missed a foreign currency bond payment,” Oanda senior market analyst Jeffrey Halley said in a note.