Britain’s commodity-heavy FTSE 100 rose 3.2 per cent, the least among European peers as energy and mining stocks fell after a strong rally.
The local currency advanced back above US73¢; the Bloomberg spot dollar index tumbled 0.9 per cent. Bitcoin surged more than 8 per cent to $US42,242.90 near 6.55am AEDT on bitstamp.net.
The yield on the US 10-year note rose 10 basis points to 1.94 per cent near 3pm in New York.
- On Wall St at 2.55pm: Dow +2% S&P 500 +2.7% Nasdaq +3.4%
- In New York: BHP -0.1% Rio -0.7% Atlassian +9.2%
- Tesla +3.8% Apple +3.4% Netflix +5.1% Alphabet +5.1%
On Wall Street, shares rebounded. Information tech paced nine of the S&P 500’s industry sectors higher with a 3.9 per cent bounce. Financials, communication services, materials and consumer discretionary also were at least 3 per cent higher.
The NYSE Fang + Index was more than 4 per cent higher.
“It appears that traders are becoming a little optimistic a compromise could happen,” Oanda’s Edward Moya wrote, even as Russia continues to attack targets in Ukraine.
Oil plunged from record highs reached earlier this week with benchmark crude down 7 per cent at midday in New York and 12 per cent lower by 1.45pm.
“We favour production increases and will be encouraging OPEC to consider higher production levels,” Yousef al-Otaiba, the UAE’s ambassador to Washington, said in a statement on Wednesday, which was first reported by the Financial Times.
It was unclear whether the UAE had consulted with other OPEC+ members and there was no immediate comment from Saudi Arabia’s oil ministry.
Today’s agenda
Local: Consumer inflation expectations March; NZ February card spending retail
Overseas data: European Central Bank policy decision; US February CPI
Market highlights
ASX futures up 11 points or 0.2 per cent to 7048 near 6.45am AEDT
- AUD +0.7% to 73.16 US cents
- Bitcoin on bitstamp.net +8.7% to $US42,242.90 as of 6.55am AEDT
- On Wall St at 2.55pm: Dow +2% S&P 500 +2.7% Nasdaq +3.4%
- In New York: BHP -0.1% Rio -0.7% Atlassian +9.2%
- Tesla +3.8% Apple +3.4% Netflix +5.1% Alphabet +5.1%
- In Europe: Stoxx 50 +7.4% FTSE +3.3% CAC +7.1% DAX +7.9%
- Spot gold -3.1% to $US1986.29/oz at 1.47pm New York time
- Brent crude -12% to $US112.71 a barrel
- US oil -11.5% to $US109.52 a barrel
- Iron ore -2.9% to $US157.55 a tonne
- 2-year yield: US 1.68% Australia 1.23%
- 5-year yield: US 1.88% Australia 2.02%
- 10-year yield: US 1.94% Australia 2.31% Germany 0.21%
- US prices as of 2.59pm in New York
From today’s Financial Review
The benign geopolitical world order is over: Russia’s aggression in Ukraine and China’s assertiveness in the Indo-Pacific signal an end to the benign geopolitical world order, says Andrew Shearer.
Commodity crisis bigger than 1970s oil shock: The crisis in energy, metals and ag markets which has pushed some prices to records is far more wide-reaching than the oil shock of the 1970s.
Earnings season: ‘The best REIT reporting season’ in 10 years: Consensus price targets increased by 2.1 per cent on average across the real estate investment trust sector through the recently concluded reporting season.
United States
Five members of the US House Judiciary Committee have asked the US Department Of Justice to investigate Amazon for “potentially criminal conduct” by the company and some of its senior executives.
The number of available positions decreased slightly to 11.3 million in the month from an unprecedented 11.4 million in December, the Labor Department’s Job Openings and Labour Turnover Survey, or JOLTS, showed Wednesday.
Some 4.3 million Americans voluntarily left their jobs in January, the fewest in three months, suggesting a moderation in labour-market churn. Fewer people quit their jobs in retail trade, construction and information. The so-called quits rate, which measures voluntary job leavers as a share of total employment, decreased to 2.8 per cent.
Europe
The STOXX 600 broke a four-day losing streak during which it lost about 7 per cent, hit by the threat of a Russian oil imports ban. On Tuesday, German and Italian shares closed 20 per cent below their recent highs – a decline investors call a “bear market”.
Hard-hit banks, automakers and travel and leisure stocks rose more than 7 per cent each.
“The fact that Western governments seem to be carrying out an economic war against Russia, rather than military conflict, has helped the overall sentiment,” said David Madden, market analyst at Equiti Capital.
The German DAX, which has suffered the most among regional indexes due to the companies’ exposure to Russian energy supplies, marked its biggest percentage gain since March 2020.
“DAX is up as a mixture of bargain hunting and short covering,” added Madden.
Euro zone banks rallied almost 10 per cent, but still remain down 13 per cent for the year amid uncertainty about the European Central Bank’s policy tightening plans as well as an economic hit from the Ukraine crisis.
The ECB is set to meet on Thursday, with chief Christine Lagarde likely to prove that a lid can be kept on euro-area inflation, which has already leapt to a bigger-than-expected 5.8 per cent – the highest figure in the bloc’s two decades.
Asia
Chinese shares ended lower on Wednesday, as investors remained on edge over concerns the commodity prices’ rally would have a wider impact on the world’s second-largest economy, while new domestic coronavirus cases also weighed on risk sentiment.
China’s blue-chip CSI300 index ended 0.9 per cent lower at 4226.35, the lowest close since June 30, 2020, after falling as much as 4.6 per cent in the afternoon trade. The Shanghai Composite index was down 1.1 per cent at 3256.39.
Shares of companies exposed to Tsingshan Holding Group, the Chinese nickel producer squeezed by the surge in the metal’s prices, tumbled with Zhejiang Huayou Cobalt slumping nearly 10 per cent.
In Hong Kong, the Hang Seng Index slipped 0.7 per cent to 20,627.71, after hitting the lowest level since June 28, 2016 in the afternoon. The Hang Seng China Enterprises index fell 0.7 per cent to 7189.58.
Currencies
The world’s biggest bond market is flashing signals that the risk of a US recession is increasing — even before the Federal Reserve raises interest rates.
The Treasury yield curve has collapsed to near inversion — a situation when short-term rates exceed those with longer tenors, which has often preceded a downturn.
The move has intensified just before the Fed’s all-but-certain rate liftoff next week, with a surge in commodity prices raising the spectre of inflation being more persistent than anticipated. Forward markets already show traders preparing for two- and 10-year rates to be inverted in a year.
The last time the curve inverted was in 2019, after a string of Fed rate hikes. It was the gap between three-month and 10-year yields — the spread focused on by academic research linking the curve to recessions — that first went below the zero line in March 2019, with the two-to-10-year yield gap inverting about five months later. The pandemic-sparked recession hit the US in 2020.
Commodities
Brent crude futures could surge to $US240 a barrel this summer if Western countries continue to sanction Russian oil exports, according to industry consultants Rystad Energy.
Wider sanctions on Russian oil would create a 4.3-million barrel a day hole that “cannot simply be replaced by other sources of supply,” Rystad Energy’s head of oil markets, Bjornar Tonhaugen, wrote in a note. The supply collapse would be the largest potential oil supply shortage since the 1990 Gulf War, when oil prices doubled, he said.
The higher prices rise, the higher the “chances of the global economy entering a recession” in the fourth quarter, according to Tonhaugen.
Jennifer Hewett: Oil and gas spike into the energy transition: The energy price spikes of the past few weeks have sharpened the contradictions in the timing of the transition to renewable energy.
Australian industry will still need gas in 2050: Wood Mackenzie: Demand for gas on the east coast could crash by 60 per cent by 2050 if the rapid growth in renewables eats into the profitability of gas power generation.
Chinese stainless steel futures dropped on Wednesday, after opening more than 7 per cent higher, as cautious investors assessed the uncertainties caused by surging prices of raw material nickel.
The most-active stainless steel contract on the Shanghai Futures Exchange, for April delivery, dropped as much as 4.2 per cent to 20,655 yuan ($US3270.11) a tonne, after hitting 24,785 yuan per tonne earlier during the session. The contract closed down 2.3 per cent.
“Current stainless steel prices have deprived from its own supply and demand fundamentals,” said Fu Zhiwen, analyst with Huatai Futures.
The Baltic Exchange’s dry bulk sea freight index hit its highest in nearly three months on Wednesday, helped by a jump in rates across its vessel segments.
The overall index, which factors in rates for capesize, panamax, supramax and handysize shipping vessels, rose 206 points to 2558 points, its highest since December 15.
Australian sharemarket
Tech lifts shares, gold rally gathers pace: The technology sector soared on Wednesday after RBA Governor Lowe stuck to the rate hike expectation and inflation script.
