Opening Call: The Australian share market is to open higher.
U.S. stocks retreated from yesterday’s records after a report showed accelerating inflation. The yield on the 10-year Treasury climbed to 1.42% and the WSJ Dollar Index jumped to 87.4. Oil prices rose amid forecasts for a decline in U.S. inventories. Gold benefited from inflation fears.
Australia’s S&P/ASX 200 closed flat after giving back its early gains. Gains amid the industrials, utilities and materials sectors were offset by financial and energy stocks. Icar Asia jumped 60% on a takeover proposal.
U.S. stocks fell and bond yields rose, as investors made sense of another hot inflation report and mixed earnings out of some big banks.
Trading across the market grew more volatile as the session wore on, knocking the S&P 500 and Nasdaq Composite back into the red along with the Dow Jones Industrial Average.
Tech stocks gave up more than half of their gains, sapping major indexes of a crucial source of support, while most other sectors traded lower, including financial stocks following investors’ muted reception to the first batch of quarterly earnings reports.
Besides earnings, investors focused their attention on fresh inflation data showing consumer prices rose at their fastest pace in more than a decade.
The S&P 500 and Nasdaq Composite both fell 0.4%. The Dow Jones Industrial Average declined 0.3%.
Gold futures finished higher, with prices finding support following data showing rising U.S. inflation and dovish comments from a key Federal Reserve member, amid persistent concerns about the spread of the Covid-19 Delta variant.
“Going forward, gold may remain somewhat volatile as markets will likely have a difficult time digesting domestic inflation and reopening data while also considering the potential threats of COVID worldwide,” said Jason Teed, co-portfolio manager of the Gold Bullion Strategy Fund QGLDX. August gold futures rose 0.2% to settle at $1,809.90 an ounce.
Oil futures settled higher, with U.S. prices at their highest in more than two years. Prices found support on expectations for another decline in U.S. crude inventories, despite worries that the spread of the Delta variant of the coronavirus that causes Covid-19 may lead to economic restrictions and lower energy demand, analysts said.
West Texas Intermediate crude for August delivery rose 1.6% to settle at $75.25 a barrel on the New York Mercantile Exchange. That was the highest front-month contract finish since early October 2018, according to Dow Jones Market Data.
September Brent crude, the global benchmark, gained 1.8% to $76.49 a barrel on ICE Futures Europe, the highest since July 5.
Major currencies were weaker against the US dollar in European and US trade. The Euro fell from highs near US$1.1860 to lows near US$1.1770 and was near session lows at the US close. The Aussie dollar fell from highs near US74.90 cents to lows near US74.25 cents and was near US74.45 cents at the US close. And the Japanese yen eased from 110.19 yen per US dollar to JPY110.65 and was near JPY110.57 at the US close.
European share markets were flat on Tuesday. The pan-European STOXX 600 index was broadly unchanged after hitting all-time highs in the session. European Central Bank President Christine Lagarde said on Tuesday it would not repeat its past mistake of tightening policy too early. Banks lost 1.2% with auto & parts and oil & gas also down but technology rose 0.9%. The German Dax index fell by less than 0.1% as did the UK FTSE index. In the London trade, shares in both Rio Tinto and BHP were down by 0.4%.
Earlier Tuesday, Chinese stocks finished the session in mixed territory, weakening from Monday’s strong gains. The benchmark Shanghai Composite Index rose 0.5%, while the Shenzhen Composite Index added 0.3%. The ChiNext Price Index, however, dropped 0.6%. The loss came after the index rose to a six-year high on Monday. Gains were concentrated in the food-and-beverage sector, while electronics makers weighed on the market.
Hong Kong stocks advanced for the third straight session. The benchmark Hang Seng Index added 1.6%, after slumping to a year-to-date low last week. Chinese tech giants led the upturn, as the sector rebounded from earlier declines triggered by regulatory uncertainties.
The Nikkei Stock Average climbed 0.5%, led by gains in energy and financial stocks, as hopes continue for a global economic recovery trumped concerns over the domestic economic outlook.