The Australian sharemarket is expected to open higher on Thursday, with ASX futures pointing to a 28-point, or 0.3%, gain despite another weak session on Wall Street.
Investors will be balancing persistent concerns over elevated oil prices, global bond yields and geopolitical tensions against a busy domestic earnings calendar and the release of Australian employment data.
Thursday brings another heavy round of corporate results, with Fortescue Ltd (ASX:FMG), SkyCity Entertainment Group Ltd, Medibank Private Ltd (ASX:MPL), Super Retail Group Ltd, Zip Co Ltd (ASX:ZIP, OTC:ZIZTF), Brambles (ASX:BXB) Ltd and Northern Star Resources Ltd (ASX:NST) among the companies due to report.
Investors will also be watching Australia's July labour-market data, due before midday, for indications of the strength of the domestic economy and implications for the interest-rate outlook.
ASX extends losing streak
The S&P/ASX 200 finished Wednesday 16.2 points, or 0.2%, lower at 9,053.8, while the broader All Ordinaries fell 19 points, or 0.2%, to 9,255.2.
The decline marked a 6th consecutive negative session as higher oil prices and concerns over global government debt and bond yields weighed on investor sentiment.
Healthcare was the standout sector, advancing 2.6% as CSL Ltd continued its post-results recovery and reached a 6-month high of $166.48.
Financial stocks remained under pressure as the major banks extended recent weakness, while the resources sector delivered a mixed performance. BHP Ltd lost momentum following Tuesday's post-results rally, although Rio Tinto Ltd (LSE:RIO, ASX:RIO, OTC:RTNTF) and Fortescue edged higher.
Technology was the weakest sector, dropping more than 3% after semiconductor stocks sold off in the US. WiseTech Global Ltd sank almost 9% after the Australian Competition and Consumer Commission executed a search warrant at the company's offices.
Earnings also drove substantial company-specific moves. Santos Ltd (ASX:STO), Stockland Corp Ltd and Mirvac Group Ltd advanced following their results, while Temple & Webster Group Ltd, Breville Group (ASX:BRG) Ltd, Whitehaven Coal Ltd and Hansen Technologies Ltd traded lower.
Wall Street retreats as AI stocks slide
US equities moved further away from record highs as another sell-off in artificial intelligence-linked stocks weighed heavily on the technology sector.
The S&P 500 fell 0.7%, recording its 3rd consecutive modest decline since reaching an all-time high last Thursday. The Dow Jones Industrial Average slipped 0.2%, while the Nasdaq Composite dropped 1.3%.
Semiconductor and memory stocks led the decline. Micron Technology fell 7%, Nvidia lost 2.3% and Broadcom declined as investors continued to reassess valuations across stocks that have been major beneficiaries of the AI investment boom.
Higher bond yields remain an additional constraint on equities. The US 10-year Treasury yield eased to around 4.70% from 4.72%, but remains well above the 3.97% level recorded before the war with Iran began.
Markets remain concerned that high oil prices will add to inflation pressures, while expanding government debt and borrowing requirements are also keeping longer-term yields elevated.
There were nevertheless several strong individual performers.
Moderna surged 177% and Merck gained 12.6% after the companies reported encouraging initial results from a study of their jointly developed cancer vaccine in melanoma patients.
Estée Lauder rose 16.3% following better-than-expected quarterly earnings, while Target gained 4.3%, Lowe's added 2% and Toll Brothers climbed 4% after each beat profit expectations.
European markets struggle for direction
European equities finished mixed and close to unchanged as investors attempted to stabilise markets following Tuesday's sharp sell-off.
The Stoxx Europe 600 remained near a 2-week low, while Germany's DAX slipped around 0.2% and France's CAC 40 added about 0.2%. The FTSE 100 and Spain's IBEX 35 were broadly flat.
European markets continue to contend with rising government bond yields, elevated crude oil prices and geopolitical tensions in the Persian Gulf.
The yield on the German 10-year Bund climbed to 3.22%, its highest level since May 2011, increasing pressure on equity valuations, particularly in rate-sensitive sectors including technology, software and real estate.
Inflation has also returned to the forefront, with markets increasingly considering the possibility of further European Central Bank tightening as higher energy costs threaten renewed price pressures.
Currencies
The US dollar weakened against most major currencies as Treasury yields eased, providing support for the euro, Japanese yen and Australian dollar.
- The Australian dollar gained more than 0.5% against the greenback.
- The yen was among the strongest performers as markets assessed the prospect of further Bank of Japan tightening and intervention risks.
- The euro also strengthened as the weaker US dollar combined with expectations that persistent Eurozone inflation could keep the European Central Bank in a tightening stance.
- USD/JPY traded around 159.10 as the yen strengthened.
Commodities
Oil prices continued higher as geopolitical tensions and uncertainty surrounding shipping through the Strait of Hormuz remained key concerns for energy markets.
- Brent crude traded around US$91.28-US$93.60 a barrel, while West Texas Intermediate was around US$85.31 a barrel.
- Oil had risen for a 4th consecutive session as traders continued to price the risk of prolonged disruption in the Middle East.
- Gold also strengthened sharply as the softer US dollar and easing Treasury yields supported demand for the precious metal.
- Gold traded as high as around US$4,523.02 an ounce, representing a gain of more than 4% from the previous session in the source data.
- Iron ore was comparatively subdued, trading around US$95.17-US$95.28 per tonne and slipping about 0.12%, with demand conditions in Asian steel markets remaining relatively steady.