Opening Call: The Australian share market is to open higher.
U.S. stocks sank and oil prices rose as the White House said Russia could invade Ukraine at any time. The yield on the 10-year Treasury slipped to 1.94%. The WSJ Dollar Index advanced to 89.9. Gold prices settled higher.
Australia’s S&P/ASX 200 lost 1.0%, paring its weekly gains amid a sell-off of tech stocks. The benchmark snapped a three-day winning streak following losses by U.S. indexes. The materials sector was the only gainer, rising 0.3% on strength among iron-ore miners. The ASX 200 climbed 1.4% for the week.
U.S. stocks and bond yields sank, as growing tensions between Russia and Ukraine sent investors flocking to safer assets. All three major U.S. stock indexes finished the day lower, capping another volatile week on Wall Street. Just days ago, it seemed possible that indexes would extend their weekly winning streak to three. But concurrent concerns about rising inflation and geopolitical turbulence sent stocks tumbling in the final two days of the week.
The White House said it believes Russia could invade Ukraine at any time and urged Americans to leave the country as soon as possible. Investors, in turn, fled from stocks and sought safety in government bonds. The S&P 500 tumbled 1.9%. Its combined two-day loss over Thursday and Friday amounted to 3.7%, the index’s largest two-day percentage decline since October 2020.
The technology-heavy Nasdaq Composite slid 2.8%. The Dow Jones Industrial Average lost 1.4%. All three major indexes ended the week with losses. The S&P 500 and Nasdaq Composite lost 1.8% and 2.2%, respectively, for the week. The Dow ended with a weekly loss of 1%.
“There were a lot of looming things that are suddenly on everyone’s radar and they are all contributing to the intensified volatility,” said John Lynch, chief investment officer at Comerica Wealth Management. “The market has been counting on diplomacy and to a large extent ignoring the threat” on the Ukranian border.
Gold futures ended higher, posting weekly gains as the yellow metal found support after a continued surge in inflation. Gains were extended in electronic trade after the bell after the White House warned that a Russian invasion of Ukraine could happen “any day now.”
Gold futures for April delivery rose 0.3% to close at $1,842.10 an ounce on Comex, for a 1.9% weekly rise. After the bell, gold, a traditional haven during periods of geopolitical uncertainty, extended its rise, trading around $1,860 an ounce in recent action.
“Gold could rally above the $1,900 level if troop movements occur,” said Edward Moya, senior market analyst at Oanda, in a note. “Gold traders would not want to be short heading into the weekend.”
Oil futures posted another round of multi-year highs after the White House warned that a Russian invasion of Ukraine was potentially imminent. Crude had been buoyed earlier in the session after the International Energy Agency, in its monthly report, warned that signs of a shortfall in output by the Organization of the Petroleum Exporting Countries and its allies was worsening.
Oil-field-services company Baker Hughes reported that the number of U.S. oil rigs rose by 19 for the week to 516, while gas rigs rose by two to 118. The oil-rig count is up 210 from the same time last year, while gas rigs are up by 28.
West Texas Intermediate crude for March delivery rose 3.6% to close at $93.10 a barrel on the New York Mercantile Exchange, leaving the U.S. benchmark with a 0.9% weekly rise and the highest finish for a front-month contract since September 2014, according to Dow Jones Market Data. April Brent crude gained 3.3% to end at $94.44 a barrel on ICE Futures Europe, leaving it up 1.3% for the week and at its highest since September 2014.
Major currencies ended mixed against the US dollar in European and US trade. The Euro fell from highs near US$1.1415 to near US$1.1330 and was near US$1.1350 at the US close. The Aussie
dollar rose from near US71.10 cents to US71.80 cents and retraced to US71.35 cents at the US close. And the Japanese yen rose from near 116.15 yen per US dollar to JPY115.03 and was near JPY115.40 in afternoon US trade.
European sharemarkets were weaker on Friday. Technology stocks fell the most, down 2.2% in response to higher bond yields. Car makers were mixed with Volvo down 4.7% while BMW rose
2.7% and Mercedes advanced 6.7%. The pan-European STOXX 600 index fell by 0.6% but added 1.6% over the week – the biggest gain since late December. The German Dax index fell by 0.4% and the UK FTSE index lost just 0.2%. In London trade, shares in Rio Tinto fell by 1.4% while BHP lost 2.4%.
Earlier Friday, Chinese stocks retreated, with losses among biotech and renewable energy-related sectors. There was still an overhang on markets from the recent inclusion of more than 30 Chinese entities on a U.S. “unverified list” that subjects them to tighter export controls, Nomura said. The Shanghai Composite Index snapped a four-day winning streak, slipping 0.7%. The Shenzhen Composite Index weakened 1.7% and the ChiNext Price Index slumped 2.8%, taking its losses this week to 5.6%.