Opening Call: The Australian share market is to open lower.
U.S. stocks closed higher as investors welcomed the Federal Reserve’s decision to speed its tapering. The yield on the 10-year Treasury note rose to 1.46%, up from 1.44% on Tuesday. The WSJ Dollar Index fell 0.18% to 90.22. U.S. oil futures ended higher after the Fed policy update. And gold futures ended near a two-week low.
Australia’s S&P/ASX 200 index closed 0.7% lower, finishing at its session low, with losses in almost every sector. The volatile tech sector was the worst performer, as the benchmark followed the negative lead from global equities. The heavyweight financial and materials sectors, which together account for almost half of the ASX 200’s market capitalization, fell 0.2% and 0.9%, respectively. Gold stocks effectively gave back gains from the prior two sessions.
U.S. stocks turned higher after Federal Reserve officials approved plans to more quickly wind down the central bank’s pandemic stimulus efforts. The S&P 500 rose 1.6%, reversing earlier declines and ending the day near a record. The Dow Jones Industrial Average added about 1.1%. The Nasdaq Composite Index surged 2.15%.
Accommodative monetary policy has helped propel U.S. indexes to dozens of records since the arrival of the coronavirus pandemic sent stocks swooning in early 2020. But surging consumer prices have intensified the focus by Fed officials on curbing inflation. Investors are eager for the central bank to shed light on its plans for ending asset purchases and raising rates.
Gold futures notched back-to-back declines, settling at their lowest levels in about two weeks, then lost even more ground after the Federal Reserve announced plans to speed up its tapering of bond purchases and raised the potential for three interest-rate hikes next year.
February gold fell 0.4% to settle at $1,764.50 an ounce ahead of the Fed news, marking another settlement at the lowest for a most-active contract since Dec. 2, FactSet data show. In electronic trading after the Fed announcement, prices moved even lower to $1,761.40.
Oil futures settled higher, finding support from risk-on sentiment as U.S. benchmark stock indexes climbed in the wake of the Federal Reserve’s move to speed up tapering of asset purchases and to boost the number of interest-rate hikes planned for next year.
West Texas Intermediate crude for January delivery tacked on 0.2% to settle at $70.87 a barrel on the New York Mercantile Exchange after spending part of the session trading below $70. February Brent crude, the global benchmark, rose 0.2% to end at $73.88 a barrel on ICE Futures Europe.
Major currencies were mostly stronger against the US dollar in European and US trade. The Euro rose from lows near US$1.1224 to highs near US$1.1298 and was near US$1.1290 at the US close. The Aussie dollar lifted from lows near US70.96 cents to highs near US71.75 cents and was near US71.70 cents at the US close. But the Japanese yen eased from 113.63 yen per US dollar to JPY114.24 and was near JPY114.05 at the US close.
European sharemarkets were mixed on Wednesday. The pan-European STOXX 600 index lifted 0.3% with technology shares up 1.3%. The German Dax index added 0.2%. But the UK FTSE index
slid 0.7% after data showed UK consumer price inflation soared to a decade high of 5.1% over the year to November (survey: +4.8%). London-listed shares in Rio Tinto (-2.2%) and BHP (-1.8%) both fell.
Japan’s Nikkei Stock Average edged 0.1% higher amid a wait-and-see mode ahead of the FOMC meeting outcome. Toyota Motor advanced 3.6% after announcing plans to sell 3.5 million battery EVs annually by 2030, while companies related to the automaker —including Toyota Tsusho — climbed 5.8% and Denso rose 4.2%. Meanwhile, shipping stocks fell on concerns about the Covid-19 Omicron variant.
Chinese shares closed lower after China released a series of mixed economic data for November. The Shanghai Composite Index fell 0.4%, the Shenzhen Composite Index declined 0.6%, and the ChiNext Price Index fell 0.9%. Weaker-than-expected retail sales weighed on sentiment in consumer stocks. Substantial pressure on both household consumption and private investment in China suggests that Beijing might need to provide more policy easing as it shifts its focus from derisking and deleveraging to stabilizing growth, HSBC said.