Opening Call: The Australian share market is to open higher.
U.S. stocks finished sharply lower as Russia was said to continue its troop buildup near Ukraine. The yield on the 10-year Treasury note declined to 1.96%, from 2.04% on Wednesday. The WSJ Dollar Index fell 0.04% to 89.59. U.S. oil prices ended lower on progress in Iran nuclear talks. And gold prices settled above $1,900, buoyed by a mix of concerns over Ukraine and inflation.
Australia’s S&P/ASX 200 index closed 0.2% higher, paring gains amid renewed concerns about Russia’s intentions over Ukraine. Commodity and health stocks rose, with gold miners leading the way. Tech, telecoms and consumer stocks all weighed on the index.
Intensifying geopolitical tensions weighed on stocks, taking away major indexes’ gains for the week. The S&P 500 fell 2.1%, while the Dow Jones Industrial Average slid 1.8%. The tech-focused Nasdaq Composite Index dropped 2.9%. The losses were broad-based, with nine out of 11 of the S&P 500’s groups declining. The S&P, Dow and Nasdaq are now on track to notch weekly losses.
Stocks have come under pressure from the escalation in tensions between Russia and Western allies over Ukraine. The White House warned that a Russian invasion could be imminent, and diplomatic efforts have so far been inconclusive.
Gold futures jumped to settle above $1,900 an ounce for the first time since June of last year, as a flare-up in tensions between Russia and Ukraine renewed concerns about a wider military conflict. April gold rose 1.6% to settle at $1,902 an ounce. That marked the highest settlement for the most-active contract since June 2, 2021, FactSet data show.
Gold above $1,900 is “obviously based on the Russia-Ukraine tensions, so I do expect a pull-back when and if peace breaks out,” said Brien Lundin, editor of Gold Newsletter. However, this situation is really a “a mix of ‘cold war and hot inflation,’ because beneath the geopolitical issues are powerful fundamentals that had been driving gold higher since late January,” he said.
Oil futures ended lower, pressured by signs of progress toward restoring a nuclear agreement with Iran that may bring more oil to the world market. West Texas Intermediate crude for March delivery fell 2% to settle at $91.76 a barrel on the New York Mercantile Exchange. April Brent crude lost 1.9% at $92.97 a barrel on ICE Futures Europe.
The oil market is obviously extremely tight and prices “could already be in triple-figure territory if not for the nuclear talks between the U.S. and Iran,” said Craig Erlam, senior market analyst at OANDA, in a market update.
Major currencies were firmer against the US dollar in European and US trade. The Euro rose from lows near US$1.1341 to highs near US$1.1385 and was near US$1.1360 at the US close. The Aussie dollar rose from lows near US71.69 cents to highs near US72.17 cents and was near US71.85 cents at the US close. And the Japanese yen rose from near 115.37 yen per US dollar to JPY114.85 and was near JPY114.95 at the US close.
European sharemarkets closed lower on Thursday as RussiaUkraine tensions escalated. The pan-European STOXX 600 index fell by 0.7% with travel and leisure stocks down 1.7%. Shares of Swedish software firm Sinch plunged 23.2% on disappointing earnings. The German Dax index shed 0.7% and the UK FTSE index slid 0.9%. In London trade, shares in Rio Tinto fell by 2.1% and BHP lost 0.9%.
Japanese stocks ended lower amid continued geopolitical tensions over Ukraine and as the yen strengthened. Traders said stocks fell and the USD/JPY weakened after a report from Sputnik, a Russian government-backed news outlet, that Ukrainian armed forces fired mortars and grenades in the Luhansk region. The Nikkei Stock Average fell 0.8%. Chinese shares closed higher, helped by gains in financial stocks.
The Shanghai Composite Index edged up 0.1%, the Shenzhen Composite Index rose 0.2%, and the ChiNext Price Index advanced 0.8%. Financial stocks gained amid expectations that Beijing will step up stimulus to boost economic growth. Developments relating to the China-Hong Kong border reopening will likely be in focus after China’s Xi told Hong Kong to take all necessary steps to contain Covid-19, KGI Securities said, which investors think could mean an acceleration in the resumption of normal travel between the two.