Opening Call: The Australian share market is to open higher.
U.S. stocks ended lower as investors weighed a possible Ukraine war and rate hikes. The yield on the 10-year Treasury note rose to 2.00%, from 1.95% Friday. The WSJ Dollar Index rose 0.21% to 90.08. U.S. oil prices settled at their highest since 2014 and gold prices ended at a three-month high on Russia-Ukraine tensions.
Australia’s S&P/ASX 200 index closed 0.4% higher after a volatile session. Energy stocks jumped as oil prices neared eight-year highs and bank stocks resumed their recent rally. Shares of gold miners rose amid the geopolitical uncertainty although weakness in iron-ore and lithium stocks pulled the materials sector lower.
U.S. stocks fell as investors assessed the possibility of war between Russia and Ukraine and the prospect of interest-rate increases by the Federal Reserve. The Dow Jones Industrial Average was down 0.5% while the S&P 500 declined 0.4%. The technology-heavy Nasdaq Composite Index was flat, down less than 1 point. After weeks in which the brewing conflict appeared to have little impact on Wall Street, U.S. stocks tumbled Friday after the White House warned that Russia could invade Ukraine at any moment.
“The market has woken up to the risk there over the past week or so,” said Jon Adams, a portfolio manager at BMO Global Asset Management. “The challenge is that it’s very hard to assess the risks of a war between Russia and Ukraine, because it’s such an unpredictable situation.” The Nikkei Stock Average fell 2.2% amid escalating Russia-Ukraine tensions. Market participants are digesting the potential implications of these tensions as well as a more hawkish Fed rate-increase trajectory, OCBC Treasury Research said.
Gold futures climbed, ending at a nearly three-month high, as fears of a potentially imminent Russian invasion of Ukraine sparked demand for safe-haven assets. April gold rose 1.5% to settle at $1,874 an ounce. Most-active gold futures haven’t settled at a level this high since Nov. 17, FactSet data show.
“Comments from U.S. officials at the end of last week suggesting that an invasion of Ukraine by Russia was imminent, threw markets into a tailspin,” said David Russell, director of marketing at GoldCore. Equities sold off heavily and oil prices continued to rise, “giving gold the impetus to break upside resistance” at the $1,855 to $1,860 level.
Oil futures headed higher, with prices reaching their highest settlements in more than seven years as traders weigh developments tied to the Russia-Ukraine crisis, which may disrupt an already tight global crude-oil market. West Texas Intermediate crude for March delivery rose 2.5% to settle at $95.46 a barrel on the New York Mercantile Exchange – the highest front-month contract finish since Sept. 3, 2014, according to Dow Jones Market Data.
April Brent crude, the global benchmark, rose 2.2% at $96.48 a barrel on ICE Futures Europe for the highest settlement since Sept. 29, 2014. For now, “the crude market is likely to remain on edge as any geopolitical news could spark additional volatility,” said Brian Swan, senior commodity analyst at Schneider Electric, in a daily note.
Major currencies were mixed against the US dollar in European and US trade. The Euro fell from highs near US$1.1350 to around US$1.1280 and was near US$1.1295 in afternoon US trade. The
Aussie dollar rose from near US70.86 cents to US71.42 cents and was near US71.20 cents in afternoon US trade. And the Japanese yen eased from near 115 yen per US dollar to JPY115.73 and was
near JPY115.56 in afternoon US trade.
European sharemarkets were weaker on Monday as investors monitored the tensions in Ukraine. Travel and banking led the falls with banks down 3.3%. Commerzbank fell by 2.7% after Germany’s finance minister said the government would not keep its stake in the lender in the long run. Russian-exposed banks also fell with Societe Generale down 6.1%. The pan-European STOXX 600 index fell by 1.8% – the biggest fall since January 24. The German Dax index fell by 2.0% and the UK FTSE index lost 1.7%. In London trade, shares in Rio Tinto fell by 0.1% while BHP lost 0.7%.
The Chinese stock exchanges closed lower, tracking broad declines among other Asian equities on concerns over tensions between Ukraine and Russia. The Shanghai Composite Index fell 1.0%, the Shenzhen Composite Index was 0.4% lower, and the ChiNext Price Index closed 0.5% lower. Construction stocks were among the worst performers amid concerns over weak sentiment in China’s property market.