Opening Call: The Australian share market is to open lower.
U.S. stocks rose after the Federal Reserve signalled it will remain accommodative to the U.S. economy for some time to come. The yield on the 10-year Treasury ticked higher to 1.63%, but yields were well off their intraday peaks. The WSJ Dollar Index fell to 86.1.
Oil prices fell after another build in U.S. inventories. Gold prices settled lower, but then rose on the Fed’s comments.
Australia’s S&P/ASX 200 slipped 0.5%, pulled down by its heavyweight financial and materials sectors. The benchmark index pared early losses through the afternoon, but only telecommunications, tech and utilities were able to finish more than 0.1% higher.
U.S. stocks rose after the Federal Reserve vowed to keep its easy-money policies in place until the U.S. economy is further recovered from the effects of the Covid-19 pandemic.
The S&P 500 added 0.3%, and the Dow Jones Industrial Average climbed 0.6%. The tech-heavy Nasdaq Composite advanced 0.4%, reversing losses earlier in the session.
All three indexes turned higher at the release of the central bank’s 2 p.m. ET statement. Investors are focused on any sign the monetary stimulus that has supported markets during the pandemic could begin to subside. With unemployment still elevated, Fed officials are taking a cautious approach that supports the economy, said George Catrambone, head of America’s trading at asset manager DWS Group.
Gold futures settled lower, pressured in part by strength in U.S. Treasury yields, then moved up after the Federal Reserve said it doesn’t plan to raise interest rates until the end of 2023.
Against this backdrop, gold for April delivery was at $1,741.90 an ounce in electronic trading shortly after the Fed news. The precious metal had lost 0.2% earlier to settle at $1,727.10 an ounce.
Oil futures ended with a loss after the U.S. government reported a fourth consecutive weekly climb in domestic crude inventories and the International Energy Agency deemed a “supercycle,” or sustained rise in prices for the commodity, unlikely in its latest forecast.
The Energy Information Administration reported that U.S. crude inventories rose by 2.4 million barrels for the week ended March 12. On average, analysts polled by S&P Global Platts forecast a climb of 400,000 barrels for crude stocks.
West Texas Intermediate crude for April delivery fell 0.3% to settle at $64.60 a barrel on the New York Mercantile Exchange. May Brent crude lost 0.6% at $68 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$1.1886 to highs near US$1.1983 and was near US$1.1980 at the US close. The Aussie dollar rose from lows near US76.99 cents to highs near US78.09 cents and was near US78.00 cents at the US close. The Japanese yen rose from near 109.31 yen per US dollar to JPY108.74 yen and was near JPY108.85 at the US close.
European sharemarkets were mixed on Wednesday. The panEuropean STOXX 600 index lost 0.5% with basic materials (-2.1%) stocks down most. Shares of BMW jumped 6.2% after it forecast
significant pre-tax profit growth in 2021. The German Dax index gained 0.3%, but the UK FTSE index fell by 0.6%. In London trade, shares in Rio Tinto (-2.7%) and BHP (-2.4%) both fell.
Earlier Wednesday, China’s major stock benchmarks ended mixed as investors digested swings in global equities and stubbornly high Treasury yields, with a firm eye on the start of the Fed’s policy meeting later in the day. The Shanghai Composite Index lost less than 0.1%, while the Shenzhen Composite Index added 1.0% and the ChiNext Price Index gained 1.2%. Sectors which had retreated from previous rallies broadly rose.
Hong Kong’s Hang Seng Index ended little changed. Consumer stocks led the gains, while property developers were a mixed bag.
The Nikkei Stock Average was also little changed, as gains in railway and pharmaceutical stocks helped offset losses in steel and energy shares. Investors are focusing on the potential easing of Covid-19 containment measures following reports that the government is considering ending the state of emergency for Tokyo on March 21.