Opening Call: The Australian share market is to open higher.
Australia’s S&P/ASX 200 index closed 1.1% higher as tech and financial stocks climbed following the Federal Reserve’s interest-rate rise. The tech sector led gains for the second day running, illustrated by the 10% jump in Block’s ASX-listed securities. EML Payments rose 7.2% amid positive analyst reactions to its move into European employee-benefits provision. Retail banks CBA, NAB and ANZ each put on around 1.3%, although Westpac fell slightly as Jefferies and Morgan Stanley expressed concerns about costs.
U.S. stock indexes rose as traders refocused on the Ukraine war, which has driven up energy prices and threatened to hamper the global economy’s recent growth. The S&P 500 was up 1.2%, finishing near its high on the day. The tech-heavy Nasdaq Composite Index rose 1.3% and the Dow Jones Industrial Average added 1.2%. All 11 of the S&P 500’s sectors were in the green. Some of the biggest market moves were in oil, which has been highly volatile because the war stands to curtail Russia’s role as a major oil supplier.
Investors said they were focusing on the resumption of cease-fire talks between Ukraine and Russia but reports citing little progress weighed on sentiment. “This shows that we’re not at the end of this conflict – that the commodity price situation is not going to improve – which makes it tougher for sentiment,” said Esty Dwek, chief investment officer at FlowBank.
Gold futures ended nearly 2% higher to post their first gain in five sessions, buoyed by a drop in the U.S. dollar. April gold rose 1.8% to settle at $1,943.20 an ounce. Investors deemed the first Federal Reserve interest-rate hike since 2018 as not much of a headwind to bullion in the near term, given high inflation in the E.U. and U.S. and the desire for a safe haven due to the war in Ukraine.
“Investor concerns of continued high levels of inflation, even as the Fed begins tightening, will likely continue to support gold prices,” said Jeff Klearman, portfolio manager at GraniteShares, adding that although real yields are rising, they remain negative, also providing support for gold prices.
Oil prices settled back above the $100 mark amid escalating violence in Ukraine and growing expectations for a significant loss of crude supplies from Russia. West Texas Intermediate crude for April delivery climbed nearly 8.4% to settle at $102.98 a barrel. May Brent crude, the global benchmark, jumped 8.8% to $106.64 a barrel. Victoria Scholar, head of investment at Interactive Investor, said that a “stark assessment” from the International Energy Agency on Wednesday that the market could lose three million barrels of Russian oil a day from April has prompted supply worries, driving prices upwards.
Major currencies were mixed against the US dollar in European and US trade. The Euro fell from highs near US$1.1093 to lows near US$1.1000 and was near US$1.1055 at the US close. The Aussie dollar rose from lows near US73.60 cents to highs near US74.17 cents and was near US74.15 cents at the US close. And the Japanese yen eased from near 118.71 yen per US dollar to JPY119.39 and was near JPY119.17 at the US close.
European sharemarkets were firmer on Friday. Investors digested talks between the US and Chinese leaders. Supporting sentiment was news that Russia paid US$117 million in interest on
two sovereign dollar bonds. The pan-European STOXX 600 index rose by 0.9%. The German Dax index rose by 0.2%. And the UK FTSE index added 0.3%. In London trade, shares in Rio Tinto rose by 0.5% and BHP shares gained 0.4%.
Japanese stocks ended broadly higher, led by sharp gains in electronics stocks thanks to the yen’s recent weakening and declines in crude oil prices. SoftBank Group gained 5.9% thanks to a rally in Chinese tech stocks. The Nikkei Stock Average rose 3.5%. Chinese stocks ended higher as sentiment continued to be buoyed by top policy makers’ promises of market-friendly policies, including milder regulation of the heavyweight tech sector.
The benchmark Shanghai Composite Index rose 1.4% while the Shenzhen Composite Index gained 2.2%. The tech-heavy ChiNext Price Index continued to outperform the other two benchmarks, ending 2.9% higher. Property companies, home-appliance makers and interior-decoration stocks led the upturn, riding on officials’ show of support for the real-estate sector, as well as the government’s suspension of a planned expansion of property tax trials.