Global Markets Report - 5 October
Australian shares are set to oper higher as tech stocks lifted on Wall Street, helped by US bonds retreating from record highs. US investors remain focused on a potential government shutdown.
Australia
Australian shares are set to oper higher as tech stocks lifted on Wall Street, helped by US bonds retreating from record highs. US investors remain focused on a potential government shutdown.
ASX futures were up 0.4% or 31 points as of 8:00am on Thursday, suggesting a higher open.
U.S. stocks finished higher on Wednesday as yields on long government bonds retreated from 16-year highs, helping lift the S&P 500 to its best day in three weeks.
The Dow Jones Industrial Index gained about 125 points, or 0.4%, ending near 33,128, according to preliminary FactSet data. The boost, however, failed to push the blue-chip index back into the green for the year, a day after its gains for 2023 were erased.
The S&P 500 index rose 0.8%, marking its biggest daily climb since September 14, according to FactSet data. The Nasdaq Composite Index shot up 1.4%.
In commodity markets, Brent crude oil fell 5.3% to US$86.10 a barrel while gold was flat at US$1,821.41.
In local bond markets, the yield on Australian 2 Year government bonds was up at 4.14% while the 10 Year yield was also up at 4.66%. US Treasury notes were higher, with the 2 Year yield at 5.05% and the 10 Year yield at 4.73%.
The Australian dollar was higher at 63.22 US cents from its previous close of 63.00 US cents. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, was lower at 100.57.
Asia
Markets in mainland China are closed this week for a holiday.
Hong Kong shares closed lower, tracking losses across regional markets as sentiment was pressured by surging U.S. Treasury yields. The benchmark Hang Seng Index ended 0.8% lower at 17195.84. Auto and retail stocks led losses. BYD dropped 3.2% and XPeng declined 3.9%. Alibaba shed 1.6% and Meituan was off 2.8%. Chinese property companies continued to weigh on the market amid concerns over default risks. Longfor Group fell 3.2% and China Vanke was down 2.6%. Insurance stocks ended higher, with AIA Group gaining 1.55% and China Life Insurance rising 0.5%.
Japanese stocks ended broadly lower, hit by growing concerns about higher borrowing costs, as the 10-year Japanese government bond yield reached a new decade high. Sumitomo Realty & Development dropped 6.4%, Nissan Motor lost 6.3% and Panasonic Holdings shed 5.8%. The Nikkei Stock Average fell 2.3% to 30526.88. The 10-year Japanese government bond yield rose 4.5 basis points to 0.805%, the highest level since August 2013. Economic data and Treasury yields are in focus, along with the U.S. government spending debate.
Indian shares are lower, dragged by declines in auto and financial stocks, as concerns about higher borrowing costs weigh on markets across Asia following stock selloffs on Wall Street. Maruti Suzuki is down 1.9% and Axis Bank sheds 1.9%. Among individual movers, Titagarh Rail Systems is up 2.7% after it won a INR8.57 billion contract for a Surat Metro project. Investors are focusing on quarterly business updates from companies. The benchmark Sensex falls 0.7% to 65048.54.
Europe
European stocks traded mixed as continuing jitters about inflation and higher interest rates hit crude-oil prices and energy shares. The Stoxx Europe 600 dropped 0.1%, the CAC 40 was unchanged and the DAX advanced 0.1%. Brent crude retreated 3.8% to $87.44 a barrel and US light crude lost 4% to $85.66, hitting the likes of BP, Eni, Repsol, Shell and TotalEnergies, as well as oil-industry equipment and service suppliers. "Concerns over the effects higher rates could have on global economic activity have seen crude prices take a tumble, even as Russia and Saudi Arabia confirmed they would continue recent output cuts into the end of the year," CMC Markets analyst Michael Hewson writes.
FTSE 100 closed down 0.8% on Wednesday on weakness in crude oil and metals prices, as copper prices slid to their lowest levels this year, and Brent crude prices fell to one-month lows, CMC Markets' U.K. chief market analyst, Michael Hewson, says in a research note. As such, some of the major drags on the London blue-chip index were oil majors BP and Shell dropping 3.2% and 2.2%, respectively. On the plus side, Tesco lead the way after upgrading its full-year guidance on profit and cash flow after a solid set of interim results. The index finished down 7,412.45 points.
North America
U.S. stocks finished higher on Wednesday as yields on long government bonds retreated from 16-year highs, helping lift the S&P 500 to its best day in three weeks.
The Dow Jones Industrial Index gained about 125 points, or 0.4%, ending near 33,128, according to preliminary FactSet data. The boost, however, failed to push the blue-chip index back into the green for the year, a day after its gains for 2023 were erased.
The S&P 500 index rose 0.8%, marking its biggest daily climb since September 14, according to FactSet data. The Nasdaq Composite Index shot up 1.4%.
U.S. bond yields have surged since late September when the Federal Reserve indicated that rates likely will stay higher for longer than initially anticipated as it works to keep inflation in check. The sharp bond-market repricing has made buyers reluctant to step in, sending yields higher and creating ripples in financial markets. The 10-year Treasury fell 6.6 basis points Wednesday to 4.735%, while the 30-year Treasury yield shed 6 basis points to 4.876%, after briefly topping 5% late Tuesday.
Investors remain focused on political upheaval in Washington and the prospect of a November government shutdown. Friday also brings the monthly jobs report for September, which is expected to show a cooling labor market, but still a low 3.7% unemployment rate.
