Opening Call: The Australian share market is to open higher.
U.S. stocks closed sharply higher after the Federal Reserve raised interest rates. The yield on the 10-year Treasury note was at 2.18% versus 2.16% on Wednesday. The WSJ Dollar Index fell 0.58% to 91.33. U.S. oil prices held below $100 a barrel as U.S. supplies rose and demand destruction concerns emerged. And gold settled lower, then saw volatile trade after the Fed announcement.
Australia’s S&P/ASX 200 index closed 1.1% higher, with every sector gaining amid expectations of interest-rate rises at home and overseas. The heavyweight financial and materials sectors, which together comprise about 51% of the ASX 200 by market capitalization, added 1.05% and 0.4%, respectively. Tech stocks led gains, pulling the beleaguered sector 3.3% higher. Block’s ASX-listed securities were the second best-performing ASX 200 component, jumping 7.0% in the wake of the Nasdaq Composite’s outperformance in the U.S.
U.S. stocks climbed in a volatile session after the Federal Reserve officially said it would raise interest rates for the first time since 2018. The S&P 500 finished the day up 2.2%. The tech-focused Nasdaq Composite Index advanced 3.8% and the Dow Jones Industrial Average rose 1.6%. The Fed raised interest rates by a quarter-percentage-point as officials look to keep the economy from overheating and reduce inflation.
“It seems very much like they wanted to send a message that they’re fighting inflation and they’re going to fight it fast and get it under control ,” said Kathy Jones, chief fixed income strategist at the Schwab Center for Financial Research.
Gold futures finished lower, then saw volatile moves in electronic trading after the Federal Reserve announced the first interest-rate hike since 2018. April gold lost 1.1% to settle at $1,909.20 about a half hour before the Fed news, then turned lower in electronic trading to touch lows below the $1,900 mark. Traders and investors could see a “buy the rumor, sell the fact” response to the announcement, which would favor “upside in stocks, gains for gold and silver, as well as EURUSD upside and a drop in U.S. 10-year yields,” said Giles Coghlan, chief analyst at HYCM, in emailed
Oil futures settled lower, with U.S. and global benchmark prices holding below the $100 mark, after U.S. government data revealed the first rise in domestic crude supplies in three weeks and traders showed concern that high fuel prices will lead to lower demand. West Texas Intermediate crude for April delivery fell nearly 1.5% to settle at $95.04 a barrel on the New York Mercantile Exchange – the lowest front-month contract settlement since Feb. 25, according to Dow Jones Market Data.
May Brent crude, the global benchmark, fell 1.9%, at $98.02 a barrel on ICE Futures Europe. The oil market appears “increasingly anxious around the sustainability of current demand trends, particularly as consumers are expecting some of the highest prices at the (gasoline) pump on record during a seasonal period when discretionary travel should be picking up,” said Robbie Fraser, global research & analytics manager at Schneider Electric, in a note.
Major currencies were mostly higher against the US dollar in European and US trade. The Euro rose from lows near US$1.0950 to highs near US$1.1044 and was near US$1.1035 at the US close. The Aussie dollar rose from lows near US72.02 cents to highs near US72.96 cents and was near US72.85 cents at the US close. But the Japanese yen fell from near 118.18 yen per US dollar to JPY119.05 and was near JPY118.65 at the US close.
European sharemarkets closed higher on Wednesday amid renewed optimism of progress in talks between Russia and Ukraine. The pan-European STOXX 600 index rose by 3.1%. Technology
stocks jumped 6.5%. The German Dax index lifted by 3.8% and the UK FTSE index added 1.6%. In London trade, shares in Rio Tinto rose by 4% and BHP shares gained 2.6%.
Japan’s Nikkei Stock Average rose 1.6%, as the decline in crude oil prices spurred risk-on sentiment. The overnight slide in oil prices powered Wall Street’s relief rally which extended into Asia, Oanda said. The Nikkei’s gains were relatively broad-based, with SoftBank Group climbing 5.95%, Fujitsu rising 5.4% and Shimano up 4.9%. Airline stocks were also higher. Chinese stocks ended sharply higher, rebounding from a rout over the past two days, as investor sentiment picked up on supportive comments from top officials.
At a meeting chaired by Vice Premier Liu He, President Xi Jinping’s top economic adviser, policy makers said the U.S. and China are working to form a “concrete cooperation plan” over accounting oversight of U.S.-listed Chinese companies. Worries over potential ADR delistings for these firms have been a major trigger of the latest selloff. The benchmark Shanghai Composite Index jumped 3.5% while the Shenzhen Composite Index rose 3.6%. The tech-heavy ChiNext Price Index was the big winner, gaining 5.2%.