Opening Call: The Australian share market is to open higher.
U.S. stocks ended mixed as the risk appetite for investors faded. The 10-year Treasury yield declined 0.06 percentage point to 1.52%. The WSJ Dollar Index rose 0.45% to 86.71.
U.S. oil prices settled sharply lower as the Federal Reserve’s shift in tone lifted the U.S. dollar. Gold prices dropped nearly 5% after the Fed upped its inflation forecasts and signalled higher interest rates.
Australia’s S&P/ASX 200 index closed 0.4% lower, ending a four-day run of record finishes amid continuing weakness from mining stocks. Positive Australian employment data helped the ASX pare losses after the benchmark dropped as much as 0.6% inside the first hour. Gold miners were also weak. The financial sector added 0.8% amid gains by banks and insurers.
U.S. stocks flitted between small gains and losses, kept under pressure by declines among shares of materials and financial companies.
The Dow Jones Industrial Average fell 0.6%. The S&P 500 was down less than 0.1% and the Nasdaq Composite rose 0.9%, boosted by gains among technology stocks. Investors’ risk appetite ebbed after Federal Reserve officials Wednesday gave the clearest signals yet of their plans to gradually pull back the monetary policies that helped propel markets to record highs.
Gold prices suffered their biggest one-day percentage drop of the year as a hawkish turn by the Federal Reserve lifted the U.S. dollar, sending prices for bullion to their lowest settlement in nearly seven weeks.
Gold for August delivery fell nearly 4.7% to settle at $1,774.80 an ounce. On Wednesday, prices for the contract edged up by 0.3% on Comex and snapped a three-session losing streak, but prices began falling shortly after the Fed announcement. Prices for most-active gold futures settled at the lowest since April 30, according to FactSet data.
Oil futures dropped, with prices pulling back from the highest finish in more than two years as the U.S. dollar strengthened in the wake of a hawkish shift in tone by the Federal Reserve.
West Texas Intermediate crude for July delivery lost 1.5% to settle at $71.04 a barrel on the New York Mercantile Exchange. It eked out a gain of just 3 cents Wednesday to settle at the highest since October 2018. August Brent crude, the global benchmark, fell 1.8% to $73.08 a barrel on ICE Futures Europe. On Wednesday, Brent logged its highest settlement since April 2019.
Major currencies were mostly weaker against the US dollar in European and US trade. The Euro fell from highs near US$1.2005 to lows near US$1.1890 and was near US$1.1905 at the US close. The Aussie dollar fell from highs near US76.35 cents to lows near US75.40 cents and was near US75.50 cents at the US close. But the Japanese yen lifted from near 110.75 yen per US dollar to JPY110.17 and was near JPY110.27 at the US close.
European sharemarkets were mixed on Thursday. Mining stocks fell the most, down 2.5%. Fears of higher interest rates drove the US dollar higher, pushing commodity prices lower. But banks stocks rose 0.4%. The pan-European STOXX 600 index fell by 0.1% from record highs. It was the first fall in 10 days. But while the German Dax rose by 0.1%, the UK FTSE index fell by 0.4%, dragged down by mining stocks. In the London trade, shares in Rio Tinto fell by 2.3% while shares in BHP lost 3.3%.
Japan’s Nikkei Stock Average closed 0.9% lower, weighed by precision instruments and steel shares.
Chinese stocks ended the session higher, supported by electronics and IT sectors, while construction-material shares weakened. The Shanghai Composite Index snapped a three-session losing streak, rising 0.2%. The Shenzhen Composite Index gained 1.2% and the ChiNext Price Index, which measures emerging industries and startups, added 2.0%.