Opening Call: The Australian share market is to open lower.
U.S. stocks ended lower on mixed economic data and the impact of the Delta variant. The 10-year Treasury note yield rose to 1.38%, compared with 1.33% on Thursday. The WSJ Dollar Index rose 0.32% to 87.77. U.S. oil futures declined but posted a fourth straight weekly gain. Gold futures fell a third straight session to lose more than 2% for the week.
Australia’s S&P/ASX 200 index closed 0.8% lower, as tumbling commodity stocks wiped out the last of the benchmark’s gains for the week. The materials sector suffered its heaviest one-day fall since May 2020, dropping 4.0% amid lower iron-ore prices. The energy sector fell 1.3%, paring strong gains from earlier in the week. The ASX 200 lost less than 0.1% for the week.
U.S. stocks fell and bond yields rose as fresh data on consumer sentiment was slightly below expectations, raising fresh questions about the pace of economic growth and the inflation outlook. The S&P 500 dropped 0.9%, pushing the index into the red for the week. The Nasdaq Composite Index also lost 0.9% and the Dow Jones Industrial Average declined 0.5%.
The moves in stocks and bonds show investors grappling with mixed economic data in the U.S. and China, the spread of the Covid-19 Delta variant and concerns about inflation. A report from the University of Michigan showed consumer sentiment subdued and about where it was in August, with inflation expectations still high.
Gold futures ended lower, with prices tallying a third consecutive session loss and a second weekly decline in a row, as the U.S. dollar strengthened ahead of the Federal Reserve’s policy meeting next week. Gold for December delivery declined by 0.3% to settle at $1,751.40 an ounce, following a 2.1% decline on Thursday.
Prices, based on the most active contract, logged their lowest settlement since Aug. 10, FactSet data show. “Gold had a bad week and its price action may be its way of front running an increasing likelihood that the relation trade is coming back to finish off 2021,” said Michael Armbruster, managing partner at Altavest.
Oil futures declined, pulling back from seven-week highs as crude production in the Gulf of Mexico makes a slow comeback from Hurricane Ida, but U.S. and global benchmark crude prices scored solid weekly gains for a fourth week in a row.
West Texas Intermediate crude for October delivery on the New York Mercantile Exchange settled at $71.97 a barrel. November Brent crude, the global benchmark, declined by 0.4% at $75.34 a barrel on ICE Futures Europe. “Crude oil production that was shut by Hurricane Ida continues to be restored, so refinery demand is being increasingly met from producers, trimming a bit the price premiums of previous days,” said Nishant Bhushan, oil markets analyst at Rystad Energy, in a daily note.
Major currencies were weaker against the US dollar in European and US trade. The Euro fell from highs near US$1.1786 to lows near US$1.1723 and was near US$1.1730 at the US close. The Aussie dollar eased from highs near US73.21 cents to lows near US72.60 cents and was near US72.65 cents at the US close. And the Japanese yen fell from 109.82 yen per US dollar to JPY110.07 and was near JPY109.95 at the US close.
European sharemarkets closed lower on Friday with the panEuropean Stoxx 600 index down by 0.9% and 1% for the week. The German Dax index lost 1% and the UK FTSE index slid 0.9%. Shares of mining giant Anglo American tumbled 8.1% after price target downgrades from both UBS and Morgan Stanley. In London trade, shares in Rio Tinto shed 3.6% and shares in BHP lost 4.8%.
Japan’s Nikkei Stock Average ended 0.6% higher, led by gains in shipping and tech stocks as hopes continue that a new ruling-party chief will introduce fresh fiscal stimulus and other policy measures to support the economy amid the pandemic.
Chinese stocks finished higher, as liquor makers and the pharma sector strengthened, offsetting losses by coal miners and steelmakers. Coal miners and steelmakers’ recent rallies lost steam, with Shaanxi Coal down 6.9%, China Coal Energy slipping 5.6% and Baoshan Iron & Steel declining 5.1%. The Shanghai Composite Index rose 0.2% but lost 2.4% for the week. The Shenzhen Composite Index gained 0.3% for the session, while the ChiNext Price Index was 2.1% higher.