ASX futures had fallen 25 points or 0.3 per cent to 7298 by 7.00 am on Tuesday, the indication pointed towards a negative start with a shortened trading week this week.
US stocks reversed course and went higher Monday as government-bond yields fell back and investors seized on the chance to scoop up shares of battered technology and other growth stocks.
The S&P 500 rose 24.34 points, or 0.6 percent, to close at 4,296.12 after falling nearly 1.7 percent at one point earlier in the session. The Dow Jones Industrial Average rose 238.06 points, or 0.7%, to 34049.46.
The tech-heavy Nasdaq Composite Index gained 165.56 points, or 1.3%, to 13004.85. Twitter shares jumped 5.7%, after the social-media company agreed to Elon Musk’s $44 billion takeover offer.
All three indexes opened lower after Chinese shares plummeted in their worst selloff in more than two years as Beijing maintains a hardline pursuit of a zero-Covid strategy, even as more major cities face rising cases. Oil prices dropped, briefly falling under $100 a barrel, before staging an afternoon rally.
Domestic share market closes sharply lower on Friday on fears the Global Economy will have a hard landing and higher cost of capital.
The benchmark S&P/ASX200 index was awash in red on Friday, dropping 119.5 points, or 1.57 per cent, to finish at 7473.3. Miners pushed the exchange lower, with all sectors down bar a resilient healthcare stocks and a flat consumer staples index.
The sour sentiment is mainly on the back of cues from the US that the central bank would front the curve in lifting interest rates to contain inflation, which includes a potential 0.5 per cent hike in May. There are also mounting fears of a sharp economic decline in the US and beyond, burdening stock markets globally.
The All Ordinaries index dropped 118.9 points, or 1.51 per cent, to close at 7768.2 on Friday.
The market was dragged lower by the big iron ore miners in Australia. BHP stocks dropped 4.36 per cent to end the day at $48.49. Rio Tinto was down 2.37 per cent.
Oz Minerals reported a dip in copper production in the March quarter due to a series of adverse weather events and the pandemic, resulting in a 6.33 per cent drop in its shares to $24.55.
The S&P/ASX200 was set this week to score a fresh point in new record territory — the previous record was 7624.8 points in August last year — before Friday’s sell-off removed all of its post-Easter gains.
Healthcare stocks were a rare bright spot on the exchange, with its index gaining 0.54 per cent. The company, which is in the throes of a $20 billion takeover from private equity giant KKR, shed 1.66 per cent to $84.37 on Friday.
Giant biotech CSL, which has been raising funds in the US debt market, closed up 1.45 per cent.
In commodities, iron ore prices fell 9.8% to US$135. Gold futures fell 1.7% to $US 1899.75 per tonne. Brent crude oil slid 5.3% to $US 101.00 a barrel.
The Australian 10-Year bond yield was at 3.13% in local currency bond markets.
At 7.00am, down from the previous close of 73.69.
Asia
Chinese shares dropped sharply, as broad-based selling, with steep losses among nonferrous metals and electronics, weighed on sentiment as the economic effects of Covid-19 linger.
The Shanghai Composite Index fell 5.1 percent, closing at 2928.51, its steepest one-day decline since February 2020, and its lowest closing level since June 2020.
Ganfeng Lithium dropped 9.1% and Zijin Mining fell 6.3%, while Luxshare Precision lost 7.5%.
Other prominent losers included China Merchants Bank, which dropped 8.6% after the country’s anti-corruption overseer put its former chief executive, Tian Huiyu, under investigation. Jiangsu Hengrui Medicine fell 10% after it released lower 2021 net profit.
The Shenzhen Composite Index fell 6.5%, while the ChiNext Price Index slumped 5.6%.
Hong Kong stocks ended the session deep in the red, following heavy losses in China’s A share market and Wall Street’s selloff on Friday. The key Hang Seng Index dropped 3.7% to close at 19869.34, its lowest closing point in more than a month. Consumer stocks were the biggest laggards, with Haidilao plunging 16% and Anta Sports falling 8.3%. The Hang Seng TECH Index fell 4.9%.
Japanese stocks closed down, led lower by declines in tech and electronics shares dented by ongoing worries over the Fed's pace of tightening.
SoftBank Group shed 7.8%, while electric-motor maker Nidec Corp. slid 6.7%. Shimizu Corp. lost 7.5% after the general contractor lowered its net-profit forecast for the fiscal year ended March, blaming surging material costs.
The Nikkei Stock Average lost 1.9% to 26590.78. Earnings are in focus. The yield on the 10-year Japanese government bond was unchanged at 0.245%.
Europe
European markets are lower on fears for global economic growth but speculation over US interest-rate rises supports the dollar.
The Stoxx Europe 600 dropped more than 1%, the FTSE 100 and DAX declined more than 1% and the CAC 40 lost 2% despite the election of French President Emmanuel Macron.
The FTSE 100 dropped 1.9 percent on Monday, as global bourses responded to fears of a possible Covid-19 lockdown in Beijing, the Chinese capital.
News of more restrictions in China could produce a cocktail of additional inflationary pressure, as supply chains are impacted, and weaker economic growth, AJ Bell's Russ Mould said in a note.
Mining and oil companies registered the biggest losses in London. Anglo American fell 6.8% after Chilean regulators had advised against a go ahead for the next phase of its Los Broncos copper project. Peerships, including Glencore, Rio Tinto and Antofagasta, also fell, alongside oil majors Shell and BP.
North America
US stocks turned higher Monday as government-bond yields dropped and investors sought to snatch up shares of beaten-down technology and other growth stocks.
The S&P 500 rose 24.34 points, or 0.6 percent, to 4,296.12 after tumbling by almost 1.7 percent earlier in the session. The Dow Jones Industrial Average rose 238.06, or 0.7%, to 34049.46.
The tech-focused Nasdaq Composite Index gained 165.56 points, or 1.3%, to 13004.85. Shares in Twitter climbed 5.7 percent after the social-media company accepted Elon Musk’s $44 billion takeover bid.
The three indexes had all opened in the red after shares in China plunged in their biggest selloff in over two years as Beijing adheres to a zero-Covid strategy as cases rise in major cities. Oil prices declined, even briefly dropping below $100 a barrel, before staging a rally in the afternoon.
A drop in bond yields indicates to investors that the Federal Reserve might not soon raise interest rates as much as they had feared, investors said.
“Rates had been a weight on the market,” said Jack Ablin, chief investment officer of Cresset Capital. “And now what we’re seeing is the opposite of that trend.”
The yield on the benchmark 10-year Treasury note receded to 2.825% Monday from 2.905% Friday as investors sought safer assets to hold. Yields and prices go in opposite directions.
“I think a lot of growth stocks have been beaten up too bad,” said Brian Price, head of investment management for Commonwealth Financial Network. “A lot of what we are seeing might be a reversal of that. Longer-term rates it has just come so far.
“The market is taking a step back here and thinking whether they shouldn’t have jumped so soon. And lower interest rates typically benefit growth stocks.”
Twitter rose $2.77 to $51.70. Microsoft gained $6.69, or 2.4%, to $280.72, and Google parent Alphabet rose $68.77, or 2.9%, to $2,461.48
The S&P 500’s energy sector was the biggest decliner, down 3.3%. Schlumberger dropped $2.96, or 7.1 percent, to $38.69. Halliburton fell $2.36, or 6.3 percent, to $35.33. Apache's parent company, APA, fell $1.63, or 4%, to $39.08.
Investors are concerned that the strict rules China has instituted to fight Covid-19 will further undermine global supply chains. But investors said the prolonged lockdowns, combined with a slowdown in China’s economy, also could slow global demand for oil.
Restrictions on movement in China were also able to sap demand for oil. Brent crude, the international benchmark for oil, dropped 4.1 percent to $102.32 a barrel. And oil prices are still elevated compared to history because of fears that Russia’s invasion of Ukraine could disrupt energy markets.
In other corporate news, Coca-Cola shares gained 69 cents, or 1.1 percent, to $65.94. The company reported higher sales for the most recent quarter as demand remained strong despite price increases. Advanced Micro Devices rose $2.55, or 2.9 percent, to $90.69 after an analyst at Raymond James upgraded the chip maker’s shares.
Higher inflation has prompted the Federal Reserve to redouble its efforts to squelch it. The week before, the Fed chairman, Jerome Powell, signaled that the central bank is prepared to tighten monetary policy more aggressively and said it will likely raise interest rates by half a percentage point when it meets in May.
