Opening Call: The Australian share market is to open lower.
U.S. stocks closed lower amid Federal Reserve minutes and earnings reports. The 10-year Treasury note yield rose to 1.27%, compared with 1.26% on Tuesday. The WSJ Dollar Index rose 0.06% to 87.83. U.S. oil prices posted their lowest settlement since May. Gold futures settled lower but moved up after the release of the Fed minutes.
Australia’s S&P/ASX 200 index closed 0.1% lower after a record number of new Covid-19 cases in the country’s most populous state. The benchmark had been 0.3% higher despite a negative lead from ASX futures but steadily declined after New South Wales reported 633 cases. The ASX 200 is down 1.7% for the week.
U.S. stocks turned lower, kept in check by some mixed earnings reports and the latest minutes from the Federal Reserve. The Dow Jones Industrial Average dropped 1.1%. The S&P 500 also fell 1.1%, while the Nasdaq Composite was down 0.9%. Minutes from the Federal Reserve’s late July meeting showed officials have debated their timeline for pulling back on asset purchases, with most arguing the economic recovery has advanced enough that the Fed could begin the tapering process sometime this year.
Gold futures settled lower, then moved up after minutes from the Federal Reserve’s late-July meeting suggested the central bank’s rollback of crisis-era accommodations could begin later this year.
December gold fell 0.2% to settle at $1,788.20 an ounce following a 0.1% decline on Tuesday. Prices for the most active contract settled Monday at their highest since early August. In electronic trading shortly after the Fed minutes release, gold futures moved up to trade at $1,789.20 an ounce.
Gold increased slightly as the Fed “suggested a tapering of bond purchases later this year, though rate hikes are still not expected in the near future,” said Jason Teed, co-portfolio manager of the Gold Bullion Strategy Fund.
Oil futures posted their lowest settlement since May, with concerns about Covid’s impact on energy demand pressuring prices even as U.S. government data revealed a more than three million-barrel weekly decline in domestic crude inventories.
West Texas Intermediate crude for September delivery fell 1.7% to settle at $64.93 a barrel on the New York Mercantile Exchange. October Brent crude, the global benchmark, lost 1.2% to $68.23 a barrel on ICE Futures Europe.
The EIA numbers showed a decline in crude and distillate inventories and a small increase in gasoline stocks, which should be “bullish, indicating that U.S. oil demand is not significantly affected by rising Covid case numbers,” said Michael Lynch, president of Strategic Energy & Economic Research.
Major currencies were mixed against the US dollar in European and US trade. The Euro rose from lows near US$1.1693 to highs near US$1.1733 and was near US$1.1710 at the US close. The Aussie dollar eased from highs near US72.65 cents to lows near US72.27 cents and was near US72.35 cents at the US close. And the Japanese yen eased from near 109.53 yen per US dollar to JPY110.05 and was near JPY109.75 at the US close.
European sharemarkets were mixed on Wednesday. The pan-European STOXX 600 index rose by 0.1% with utility stocks up 1.4% but the miners down 2.3%. The German Dax index rose by 0.3%, but the UK FTSE index lost 0.2%. In London trade, shares in Rio Tinto fell by 2.6% and shares in BHP dropped 5.9%.
Japan’s Nikkei Stock Average rose amid yen weakness as well as gains in U.S. stock futures and regional equity markets, with the Nikkei Stock Average closing 0.6% higher.
Chinese stocks ended the session higher, as the market recovered slightly from Tuesday’s steep losses on concerns over the country’s slowing economic growth due to local pandemic outbreaks and regulatory tightening weighing on businesses.
The benchmark Shanghai Composite Index added 1.1%. The Shenzhen Composite Index and the ChiNext Price Index both rose 0.8%, snapping a multi-day losing streak since last week.
Financial companies including banks, brokerages and investment firms, led the upturn, on rising expectations that Beijing would introduce more policy support ahead.