Opening Call: The Australian share market is to open lower.
U.S. stocks dropped, posting a full week of declines that were marked by worry over the Delta variant and the possibility the Fed may start unwinding some stimulus measures. The yield on the 10-year Treasury rose to 1.34% after data showed inflation remains elevated. The WSJ Dollar Index rose to 87.26, helping push gold prices lower. Oil prices finished a holiday-shortened week on a strong note, posting their third weekly increase in a row.
Australia’s S&P/ASX 200 closed 0.5% higher, bouncing from its worst daily performance since February but still finishing lower for the week. Materials, tech and energy stocks led gains, a day after being punished heavily. Nine of the top 10 performing ASX 200 components were mining or mining-services firms. The ASX 200 lost 1.5% over the week.
U.S. stocks fell, finishing up a choppy week with losses. The S&P 500 dropped 0.8%. The Dow Jones Industrial Average also fell 0.8%, while the technology-focused Nasdaq Composite dropped 0.9%.
Stocks remain close to record highs but turned volatile in September after climbing for much of the summer. Money managers point to an array of factors behind choppiness. They include high valuations and the prospect that the Federal Reserve may soon start to unwind some of the stimuli it lavished on markets near the start of the coronavirus crisis.
The spread of the Delta variant has added to investor jitters by raising the prospect of a coronavirus-induced slowdown in the economy this fall, said Jane Foley, head of foreign exchange strategy at Rabobank. “There are good reasons to make investors a little bit nervous,” she said.
Gold prices fell back below the key $1,800-an-ounce mark, settling with a weekly loss, their first in five weeks. The ICE U.S. Dollar Index was slightly higher and Treasury yields also inched up Friday, “so gold had a double headwind,” said Michael Armbruster, managing partner at Altavest. December gold futures fell 0.4% to settle at $1,792.10 an ounce after touching an intraday high of $1,806. Prices for the most active contract lost 2.3% for the week.
Oil futures rose for the session totally again for the week, as traders assessed China’s decision to release crude from its strategic reserve and continued to monitor the slow return of production in the Gulf of Mexico following Hurricane Ida.
U.S. benchmark prices have been “trending sideways” between about $67 and $71 for about a week now and Friday’s action “appears to be a normal bounce within that range,” said Colin Cieszynski, chief market strategist at SIA Wealth Management.
West Texas Intermediate crude for October delivery rose 2.3% to settle at $69.72 a barrel on the New York Mercantile Exchange, lifting the U.S. benchmark up by 0.6% for the week, according to Dow Jones Market Data. November Brent crude, the global benchmark, climbed 2.1% to settle at $72.92 a barrel on ICE Futures Europe, up 0.4% for the week.
Major currencies were weaker against the US dollar in European and US trade. The Euro fell from highs near US$1.1850 to lows near US$1.1808 and was near US$1.1814 at the US close. The Aussie dollar fell from highs near US74.10 cents to lows near US73.50 cents and was near US73.55 cents at the US close. And the Japanese yen held between 109.78 yen per US dollar and JPY109.98 and was near JPY109.93 at the US close.
European sharemarkets were mixed on Friday. The pan-European Stoxx 600 index fell by 0.3% to be down 1.0% on the week. The German Dax index eased by 0.1%. But the UK FTSE index rose by 0.1% despite data showing that the economy grew just 0.1% in July. News of a phone call between Chinese leader Xi Jinping and US President Joe Biden supported Asian-focussed stocks including miners. In London trade, shares in Rio Tinto rose by 2.0% and shares in BHP rose by 1.1%.
Earlier Friday, Chinese stocks advanced, supported by tourism-related and electronics companies. The Shanghai Composite Index gained 0.3%, hitting its highest closing level in more than six years. Consumer spending could get a boost during the upcoming Mid-Autumn Festival and Golden Week holidays, Northeast Securities said, as the latest wave of Covid-19 in China seems to be under control. Electronics shares broadly strengthened amid strong demand prospects. The Shenzhen Composite Index and the ChiNext Price Index both climbed by 0.3%.
Hong Kong shares also rose amid broad-based gains, as technology companies got a boost from reports that China will only slow down, and not suspend, approvals of new video games. The sentiment was also lifted by the announcement of the Hong Kong-China Wealth Management Connect program, which contributed to the broad gains. The benchmark Hang Seng Index ended 1.9% higher and the Hang Seng Tech Index closed with a 2.9% gain.
The Nikkei Stock Average advanced 1.2% to reach its highest settlement since Feb. 16. Electronics and brokerage stocks led gains, as hopes continued for fiscal stimulus. Any comments from candidates for the ruling Liberal Democratic Party’s leadership election are being closely watched.