The S&P 500 and the Dow Jones Industrial Average both finished Thursday in positive territory.
ASX futures were 23 points or 0.3 per cent higher at 6820 at 8:00am AEDT on Friday, indicating a rise at the open.
US stocks were able to pare back some of their losses Thursday afternoon, with the S&P 500 and Dow Jones Industrial ultimately finishing in the green as investors continued to recalibrate around the prospect of higher-for-longer interest rates. The S&P 500 rose 0.3 percent, after dropping 1 percent earlier. The Nasdaq Composite was recently 0.3% lower after having been at a loss of more than 2%. The Dow industrials gained 0.5 percent.
The market is “trading the relatively stronger economics, such as this morning’s jobless-claims number, and we’re trading as if this is the data that’s going to force the Fed to continue to accelerate on raising rates,” said Thomas Hayes, chairman of Great Hill Capital. “The bears will have control until the 13th,” when the next inflation report is released, Mr. Hayes said.
In commodities markets, Brent crude fell 3.63% to $US92.17 a barrel, gold slipped 0.85% to US$1,696.55.
The local bond market saw yield on Australian 2 Year government bonds lift to 3.02%, while the 10 Year rose to 3.68%. In overseas markets the yield of 2 Year US Treasury notes moved up to 3.51% and the yield on the 10 Year US Treasury notes was up at 3.26%.
The Australian dollar dropped to 67.78 US cents from 68.45 US cents at Tuesday’s close. The Wall Street Journal Dollar Index, which gauges the dollar against 16 other currencies, rose to 101.31.
Asia
Chinese shares fell, led by liquor makers and airlines, after the capital of Sichuan province, Chengdu, ordered a lockdown to halt an outbreak of Covid-19. Air China, China Southern Airlines and China Eastern Airlines slipped 4.3% to 4.6%, while index heavyweight Kweichow Moutai and Wuliangye Yibin declined over 2%. Electric-vehicle suppliers also turned lower, including a 5.5% tumble for Tianqi Lithium and a 3.2% decline for battery maker CATL. The Shanghai Composite Index declined 0.5% to 3184.98, down for a third consecutive session. The Shenzhen Composite Index slipped 0.7% and the ChiNext Price Index ended down 1.4%.
Hong Kong’s Hang Seng Index fell 1.8% to 19597.31, resuming declines in recent days triggered by new Covid-19 lockdowns in China and continued fears over Fed plans for interest-rate increases. Casino shares fell back after data from Macau that showed gross gaming revenue in August was down 51% on the year. Shares of Sands China fell 3.1 percent, while shares of Galaxy Entertainment declined 2.5 percent. BYD Co. fell further after Warren Buffett’s Berkshire Hathaway reduced its stake, losing 4.0%. Tech stocks also slumped, including Meituan sliding nearly 5.8% and Alibaba Group dropping 2.2%. China Overseas Land added 1.2% among gainers.
The Nikkei Stock Average fell 1.5% to 27661.47, declining from the opening as energy and shipping stocks weighed. Energy shares fell in line with oil prices, which have been pressured by fears over demand and expectations for a further global economic slowdown. Shares of Eneos Holdings fell 1.8 percent, while Idemitsu Kosan and Cosmo Energy Holdings both tumbled 3.6 percent. In the shipping sector, Kawasaki Kisen Kaisha lost 3.1% and Nippon Yusen and Mitsui O.S.K. Lines both dropped 3.0%. Traders will keep a close watch on the yen after the currency hit its lowest against the greenback in 24 years. Late in New York, the dollar traded at 139.32 yen, against 138.95 late Wednesday. The 10-year JGB yield climbed 2 basis points to 0.240%.
Europe
European indexes finished the day down. The Stoxx Europe 600 Index is lower by 7.46 points or 1.80% today to 407.66, Germany’s DAX is lower by 204.73 points or 1.60% to 12630.23, and France’s CAC 40 is lower by 90.79 points or 1.48% to 6034.31.
The FTSE 100 fell 1.9 percent Thursday in London, and markets across Europe also declined.
“Markets have yet to see any silver lining in the cloud and the beginning of September has ushered in no hint of any change in the all-pervading gloom of the present time." More declines in the U.S. and Asia, and with the rally of early August a distant memory, provided the catalyst for selling in Europe,” Russ Mould of AJ Bell said.
Thursday was the worst day for the British index since July 5. Mining groups were some of the worst hit, with Anglo American dropping 3.8%, Rio Tinto sinking 3.4% and Glencore 2.4% lower. Consumer goods maker Reckitt Benckiser also tanked 5.2% after Chief Executive Laxman Narasimhan said he would leave.
North America
US stocks pared their losses Thursday afternoon, with the S&P 500 and Dow Jones Industrial ending higher in uneven trading, as investors continued to recalibrate around the likelihood of higher-for-longer interest rates.
The S&P 500 gained 0.3 percent, recovering from a 1 percent intraday drop. The Nasdaq Composite fell 0.3 percent lately after earlier shedding more than 2 percent. The Dow industrials gained 0.5%.
Gold, oil and other commodities were down, and bond yields reached their highest levels since June, lifted by the strength in the dollar, which sent the U.S. currency to its highest level in two decades.
The market is focused on a lot of this reporting with the economy relatively strong, snap on reports like the jobless claims this morning and it’s expecting that that’s going to force the Fed to continue with aggressive rate hikes, said Thomas Hayes, chairman of hedge fund Great Hill Capital. “Bears will be in charge ahead of the 13th,” when the next inflation report is scheduled, Mr. Hayes said.
Comments from the Federal Reserve chairman, Jerome H. Powell, last week that only reinforced his insistence that interest rates must proceed higher to tame inflation even if the economy is battered as a result have sent stocks tumbling. The recent setbacks have wiped away many of the gains in a summer rally that had lifted both stocks and bonds off their lows.
The drop has occurred as investors re-evaluate hopes that the Fed would pivot from its campaign of big interest-rate increases. Instead, many are preparing for a longer period of higher interest rates, although expectations of when the Fed will begin cutting interest rates are probably still too optimistic, said David Donabedian, chief investment officer of CIBC Private Wealth US.
“There was just too much Fed optimism. The notion that the Fed was nearing the end of the tightening process and was going to start to cut rates by the spring never added up to much to us,” he said.
Bed Bath & Beyond declined 8.6% after the company announced that it would close approximately 20 percent of its namesake stores, reduce its workforce and sell stock in an effort to raise money to help turn the business around.
Commodities
In commodities, oil resumed its selloff and slid for a third day, as concerns over global demand gathered. Futures for U.S. crude dipped 3.3% to $86.61.
New Covid-19 lockdowns in China are undermining oil demand and intensifying concerns about weakening global growth. The Chinese city of Chengdu, home to 21 million people, was the latest to impose curbs, telling residents they could not leave their homes from Thursday afternoon, and announcing plans to hold citywide Covid testing through Sunday.
