Opening Call: The Australian share market is to open higher.
U.S. stocks slipped as investors weighed economic data for clues about the interest-rate outlook. The yield on the 10-year Treasury rose to 3.21%. The WSJ Dollar Index softened to 96.9. Oil prices continued higher on hopes for growing demand. Gold prices edged lower as a potential ban on Russian gold wasn’t seen as moving the market.
Australia’s S&P/ASX 200 closed 1.9% higher, marking its biggest percentage gain since January. The benchmark index jumped at the open following a strong lead by U.S. equities, and continued to rise. All 11 sectors gained, although large-cap stocks outperformed.
U.S. stocks slipped, with major indexes unable to maintain last week’s momentum on easing expectations for the path of the Federal Reserve interest-rate increases. The S&P 500 bounced, settling 0.3% lower. The Dow Jones Industrial Average fell 0.2%, while the technology-focused Nasdaq Composite Index retreated 0.7%.
Traders described a quiet trading day, with low trading volumes and investors in a holding pattern, with few moving around money. “It’s very sleepy,” said Justin Wiggs, managing director in equity trading at Stifel Nicolaus, contrasting the anemic volumes with those last week.
“Friday’s close was a bit frenetic,” he added, referring to FTSE Russell’s rebalancing of its stock benchmarks last week, adding and deleting companies from indexes tied to trillions of dollars of investments.
Gold futures ended lower as the Group of Seven nations prepared to ban imports of the yellow metal from Russia. Gold futures for delivery in August fell 0.3% to settle at $1,824.80 per ounce after touching an intraday high of $1,842.80. Analysts at Commerzbank said a G-7 ban on Russian gold imports would be largely symbolic, since Russian gold has already been barred from the London trading hub by the London Bullion Market Association.
In terms of an impact on global gold prices, “that’s going to be negligible,” said Fawad Razaqzada, market analyst at City Index and FOREX.com. “There are plenty of countries that could step in to meet any shortfall in physical gold supply,” he said. “In fact, the industry has already taken steps to restrict Russian gold imports, making the G7 announcement just a formality.”
Oil prices added to Friday’s gains as investors bid up the market amid signs that demand is rising and could be strong for the July 4th Weekend despite inflationary pressures. Also, the Department of Energy said the government’s Strategic Petroleum Reserve fell by another 1 million barrels a day last week to 498 million barrels, the first time it has fallen below 500 million since May 1986.
West Texas Intermediate crude for August delivery rose 1.8% to settle at $109.57 a barrel on the New York Mercantile Exchange, the highest front-month finish since June 21, FactSet data show. August Brent crude, the global benchmark, added 1.7% to $115.09 a barrel on ICE Futures Europe.
Major currencies were mixed against the US dollar in European and US trade. The Euro rose from lows near US$1.0550 to highs near US$1.0615 and was near US$1.0580 at the US close. The Aussie dollar rose from lows near US69.10 cents to highs near US69.50 cents and was near US69.20 cents at the US close. And the Japanese yen eased from 134.70 yen per US dollar to JPY135.50 and was near JPY135.47 at the US close.
European sharemarkets posted gains on Monday. Mining stocks led gains, up 1.8% after China eased Covid restrictions. Reuters reported “Shanghai’s top party boss declared victory over COVID-19 after the city reported zero new local cases for the first time in two months.” Industrials rose 1.2% and healthcare rose 0.6% The panEuropean STOXX 600 index rose by 0.5%. The German Dax index rose by 0.5% and the UK FTSE index rose by 0.7%. In London trade, shares of Rio Tinto rose by 1.4% and BHP gained 3.3%.
Earlier Monday, China stocks ended the session higher, in line with a broad equities upturn in Asia, as fears of aggressive tightening from the Fed eased a little. The benchmark Shanghai Composite Index rose 0.9% and the Shenzhen Composite Index closed 1.1% higher. The ChiNext Price Index underperformed the other two indexes, edging up 0.2%.
Consumer goods and services companies led the gains amid a host of consumption stimulus measures from the Chinese government. Hong Kong’s Hang Seng Index climbed 2.4% as tech companies led gains. Xiaomi jumped 12%, Alibaba Health soared 11% and Sunny Optical gained 9.6%. The Hang Seng TECH Index advanced 4.7%. Japanese stocks were led higher by gains in electronics and tech stocks. Industrial robot maker Fanuc gained 4.1% and SoftBank Group climbed 3.7%. The Nikkei Stock Average rises 1.4% at 26871.27.