Opening Call: The Australian share market is to open lower.
U.S. stocks finished in mixed territory, with the Dow industrials and S&P 500 setting record highs. The 10-year Treasury note yield fell to 1.272% from 1.297% on Friday. The WSJ Dollar Index rose 0.09% to 87.29. U.S. oil prices settled at a one-week low as China data fed worries over a demand slowdown. Gold futures posted back-to-back gains to the highest their settlement in more than a week.
Australia’s S&P/ASX 200 index closed 0.6% lower, retreating from a record high amid weakness in the heavyweight financial and materials sectors. The sectors, which together comprise almost 50% of the ASX 200 by market capitalization, fell 1.3% and 1.0%, respectively. The energy sector gave up 3.4% against a backdrop of weaker oil prices.
U.S. stocks mostly pulled higher after data showed a slowdown in China’s economy. The S&P 500 traded up 0.3% to hit its 49th all-time closing high of 2021. The Dow Jones Industrial Average rose 0.3%, to a new record. The tech-heavy Nasdaq Composite Index lost 0.2%. The highly infectious Delta variant has taken a toll on the economic recovery in China, where data showed growth in industrial, consumer and investment activity slowed in July.
Gold futures climbed for a second straight session, marking their highest settlement in more than a week, as disappointing U.S. economic data provided support for the haven metal. December gold rose nearly 0.7% to settle at $1,789.80 an ounce after touching a high at $1,791.30. Prices for the most active contract logged the highest finish since Aug. 5, FactSet data show. Prices for gold moved higher after data from the New York state region, the Empire State factory index, showed a drop to 18.3 in August from 43 in the prior month.
Oil futures fell, with the commodity under pressure after a round of weak China data underscored the potential damage to demand from the spread of the Delta variant of the coronavirus that causes Covid-19.
West Texas Intermediate crude for September delivery fell 1.7% to settle at $67.29 a barrel on the New York Mercantile Exchange. October Brent crude, the global benchmark, declined 1.5%, finishing at $69.51 a barrel on ICE Futures Europe.
The factors pressuring oil prices include “rising Covid-19 cases, lower economic activity in China, and delayed economic recovery elsewhere,” said Manish Raj, chief financial officer at Velandera Energy. The Delta variant, and other emerging strains, are “on top of every oil trader’s mind.”
Major currencies were mostly weaker against the US dollar in European and US trade. The Euro fell from highs near US$1.1792 to lows near US$1.1766 and was near US$1.1775 at the US close. The Aussie dollar eased from highs near US73.44 cents to lows near US73.19 cents and was near US73.35 cents at the US close. But the Japanese yen firmed from near 109.44 yen per US dollar to
JPY109.10 and was near JPY109.25 at the US close.
European share markets were weaker on Monday. The pan-European STOXX 600 index fell by 0.5%, snapping a 10-day winning streak with retail shares 2.5% lower. The German Dax index lost 0.3% with Lufthansa shares down 3.6% after Germany’s finance agency announced plans to sell up to a quarter of its 20% stake in the airline. The UK FTSE index shed 0.9% with London-listed shares in Rio Tinto (-2.1%) and BHP (-1.8%) both lower.
Japan’s Nikkei Stock Average ended 1.6% lower, dragged by especially sharp declines in electronics and machinery stocks, as the yen, strengthened amid concerns about the pace of the U.S. economic recovery.
Chinese stocks ended the session mixed, as the market extended a broad downturn from late last week following the release of a string of economic data on Monday that missed expectations. The benchmark Shanghai Composite Index edged up 1.05 points. The Shenzhen Composite Index and the ChiNext Price Index fell 0.6% and 1.3%, respectively, both extending a losing streak for the third session.