Opening Call: The Australian share market is to open lower.
U.S. stocks rose slightly, led by energy and consumer-discretionary shares. The yield on the 10-year Treasury edged higher to 1.58%. The WSJ Dollar Index saw a moderate rise to 85.2. Oil prices rose for a fourth straight session as inventories of crude oil, gasoline and distillates all fell more than expected. Gold prices continued their rise, turning positive for the year.
Australia’s S&P/ASX 200 lost 0.3% as weakness in commodity stocks ended the benchmark’s four-day winning streak. The tech sector, however, enjoyed strong gains on the day.
U.S. stocks rose as investors grew more comfortable that the Federal Reserve and other central banks would maintain their economic support despite a near-term bout of inflation.
The S&P 500 gained 0.2%, as the broad market index posted modest gains after declining Tuesday. The Nasdaq Composite rose 0.6%. The Dow Jones Industrial Average gained less than 0.1%. Today marked the 125th anniversary of the launch of the Dow.
Investors have worried that higher inflation would cause Fed officials to dial back the monetary policy that pulled markets back from the Covid-19 selloff last year. While officials in recent days have indicated they may begin discussing scaling back measures, they have stressed that there are no imminent plans to change policy.
“All these signals from the Federal Reserve are that there’s no rush to turn off liquidity,” said Savvas Savoury, chief economist at Toscafund Asset Management.
Gold futures settled above a price that had been viewed as a point of resistance for bullion for weeks, and turned positive for the year to date, perhaps pointing to a near-term bullish outlook for the precious metal, according to traders. June gold futures climbed by 0.2% to settle at $1,901.20 an ounce.
Oil futures finished higher, as price support from across-the-board declines in U.S. petroleum inventories outweighed concerns over the prospects for a return of Iranian crude supplies to the global market.
The Energy Information Administration reported that U.S. crude inventories fell by 1.7 million barrels for the week ended May 21.
West Texas Intermediate crude for July delivery rose 0.2% to settle at $66.21 a barrel on the New York Mercantile Exchange.
Front-month July Brent crude, the global benchmark, climbed 0.3% at $68.87 a barrel on ICE Futures Europe.
Major currencies were weaker against the US dollar in European and US trade. The Euro fell from highs near US$1.2255 to lows near US$1.2181 and was near US$1.2195 at the US close. The Aussie dollar fell from highs near US77.86 cents to lows near US77.31 cents and was near US77.40 cents at the US close. And the Japanese yen eased from near 108.79 yen per US dollar to JPY109.17 and was near JPY109.15 at the US close.
European share markets were flat on Wednesday. The pan-European STOXX 600 index was little changed, with travel and leisure stocks adding 1.2% while banks dropped 1.1%. The German Dax index fell by just 0.1%. The UK FTSE index was broadly unchanged, but retailer Marks & Spencer shares lifted 8.5% on its profit recovery forecast. London-listed shares in Rio Tinto (+0.2%) and BHP (+0.6%) both closed higher.
Earlier Wednesday, Chinese stocks ended the session mixed, as property stocks and home-electrical-appliance makers gained, while semiconductor shares weighed. The Shanghai Composite Index rose 0.3%, extending Tuesday’s 2.4% jump. The Shenzhen Composite Index slipped 0.1%, while the ChiNext Price Index lost 0.9%.
Hong Kong’s Hang Seng Index gained 0.9%, supported by property and casino stocks. IG said it expects the index to trade in a limited range for now. Casino stocks led to gains.
Japan’s Nikkei Stock Average added 0.3% as gains in railway and e-commerce stocks helped offset losses in steel and financial shares. Covid-19 infection trends remained in focus after mass vaccination programs started earlier this week.