Opening Call: The Australian share market is to open lower.
U.S. stocks fell, breaking a five-day winning streak for the S&P 500 and Nasdaq and knocking those indexes off yesterday’s record highs. The yield on the 10-year Treasury was flat, after an auction of $62 billion in 7-year Treasury notes produced mediocre results. The WSJ Dollar Index rose to 87.79. Oil prices dropped after a choppy trading session that followed three straight days of sharp increases. Gold prices edged higher.
Australia’s S&P/ASX 200 slipped 0.5%, pulled down by negative reactions to corporate earnings amid the country’s worsening Covid outbreak. Nine of 11 sectors lost ground as the benchmark pared gains made after strengthening for three sessions. The four biggest losers on the index all reported earnings. The ASX 200 is up 0.4% this week.
U.S. stocks fell, taking a pause after major indexes climbed to records earlier in the week. The S&P 500 slipped 0.6% following five consecutive sessions of gains. The Nasdaq Composite dropped 0.6% and the Dow Jones Industrial Average declined 0.5%. Heading into the end of the week, money managers say their focus is largely on comments expected from Federal Reserve officials on Friday that could offer cues on the central bank’s plans for tapering stimulus measures. Some investors are betting that the Fed may slow those plans if there are signs that the economic recovery is faltering.
Fresh data showed that the U.S. economy grew 6.6% on an annualized basis in the second quarter, an upward revision from the initial print last month. Meanwhile, weekly jobless claims came in at 353,000, a slight increase from the previous week’s pandemic low. Economists were expecting the level to be relatively unchanged.
Gold futures shook off early losses, finding support around the $1,780 mark to finish higher, as investors looked to the Jackson Hole economic policy symposium for hints on the timing of Federal Reserve plans to unwind of Covid-era policies.
The yellow metal saw “some profit-taking but has already found support around $1,780,” said Craig Erlam, senior market analyst at Oanda, in a market update. December gold futures rose 0.2% to settle at $1,795.20 an ounce. It traded as low as $1,781.30 and touched a high at $1,800.40.
Crude oil futures settled lower, taking a breather after three consecutive winning sessions, with investors assessing the outlook for demand ahead of the end of summer driving season in the U.S. Crude oil is “being pulled back by lingering fears of the Delta variant, ” said Tradition Energy’s Cunningham. West Texas Intermediate crude for October delivery fell 1.4% to settle at $67.42 a barrel on the New York Mercantile Exchange. October Brent crude, the global benchmark, declined 1.6% to settle at $71.07 a barrel on ICE Futures Europe.
Based on trading in the front-month contracts, WTI remains up nearly 9% for the week, while Brent is up over 9%. Natural-gas futures, meanwhile, rallied to post their highest finish since late 2018, as a smaller-than-expected weekly rise in U.S. supplies of the fuel fed concerns over tight supplies and a storm system looked to threaten energy operations in the Gulf of Mexico.
Major currencies were mostly weaker against the US dollar in European and US trade. The Euro fell from highs near US$1.1779 to lows near US$1.1745 and was near US$1.1755 at the US close. The Aussie dollar eased from highs near US72.67 cents to lows near US72.32 cents and was near US72.40 cents at the US close. But the Japanese yen rose from near 110.22 yen per US dollar to JPY109.95 and was near JPY110.00 at the US close.
European share markets closed lower on Thursday. The pan-European STOXX 600 index fell by 0.3% with mining shares down by 1.5%. Hungarian budget airline Wizz Air was the worst performer on the index, dropping 3.8%. The German Dax and the UK FTSE indexes both slid 0.4%. London-listed shares in Rio Tinto (-2.0%) and BHP (-1.5%) both declined.
Earlier Thursday, Chinese stocks fell for the first time this week. The benchmark Shanghai Composite Index dropped 1.1% after gaining for the past three consecutive sessions. The Shenzhen Composite Index lost 1.5%, while the ChiNext Price Index dove 2.5%. Liquor makers led the declines, as the sector retreated from a recent recovery. The industry has been under pressure in recent months as investors turned cautious over China’s slowing economic rebound momentum. Hong Kong’s Hang Seng Index dropped 1.1%, extending Wednesday’s decline as investors sold off companies that recently reported earnings.
China Evergrande resumed its downward slide with a 7.2% drop after saying it expects the first-half net profit to weaken. The Nikkei Stock Average, however, advanced 0.1%, as gains in chip-related stocks and airlines helped offset losses in retail and chemical shares. The broader Topix index ended flat. Political developments are being watched closely after local media reported that the ruling Liberal Democratic Party has decided to hold an election on Sept. 29 to pick its party head.