Wall Street reversed its Wednesday woes to rebound strongly overnight.
With that in mind and with ASX SPI 200 futures trading 0.7% higher to 7,270 as of 8.15am AEDT, the ASX is set to follow suit and open higher.
Here’s what we saw:
- The Aussie dollar rose from lows near US70.84 cents to highs near US71.13 cents and was near US70.90 cents at the US close.
- Global oil prices were higher after OPEC and its allies (OPEC+) stuck to its policy of incrementally boosting output. Commsec reports that “since August, the group has been adding an additional 400,000 barrels per day of output to global supply each month”.
- Brent crude rose by US80 cents or 1.2% to US$69.67 a barrel.
- The US Nymex crude price added US93 cents or 1.4% to US$66.50 a barrel.
- Base metal prices were mixed on Thursday. Aluminium dropped 2.5% after inventories in warehouses tracked by the London Metal Exchange jumped by 18% due to a rise in Malaysian stockpiles and orders to withdraw the metal declined.
- Copper was up 1%.
- The gold futures price dropped by US$21.60 or 1.2% to US$1,762.70 an ounce.
- Spot gold was trading near US$1,768 an ounce at the US close.
- Iron ore fell US$3.05 or 3% to US$98.35 a tonne.
Speaking of OPEC+, the alliance led by Saudi Arabia and Russia had to this point resisted pressure to boost output to rein in surging energy prices.
When Omicron reared its head, analysts expected the group to freeze January production as countries imposed travel restrictions and other measures that would hurt oil prices.
However, the 13 members of OPEC and their 10 allies have made the decision to stay the course on a modest increase in output of 400,000 barrels per day every month, as has occurred since May.
Prior to this, the US, China, India and Japan decided to dip into strategic reserves to curb crude prices, after a price surge undermined economic recovery.
"We suspect that the US-led coordinated release of oil reserves … was one reason why OPEC+ decided to push ahead with their plan to raise oil output," said commodities economist Edward Gardner from Capital Economics.
"The group might not want to provoke further action from the large oil consumers," he said.
OPEC’s decision sent prices into the red, with WTI and Brent falling to their lowest levels since late August at $US62 and $US65 per barrel, respectively, before recovering to $US67 and $US70.
The US welcomed the decision by OPEC+ members.
"Together with our recent coordinated release from the (strategic petroleum reserves), we believe this should help facilitate the global economic recovery," said White House spokeswoman Jen Psaki.
Australian market
The Australian market will likely follow Wall St’s lead and head higher today, finishing off a volatile week on a positive note.
On the news front …
CSL addresses acquisition rumours
Health care giant CSL says it "regularly assesses strategic opportunities that can improve its business" in response to rumours the Australian company is in talks to acquire European firm Vifor Pharma.
"There is no certainty that any transaction will result from CSL's consideration of such opportunities and, if any transaction does result, when such a transaction would occur," CSL says in a statement.
"CSL will keep the market informed in accordance with its continuous disclosure obligations and otherwise does not intend to comment on such matters."
Meanwhile, Vifor Pharma is yet to reject the speculation.
"Vifor Pharma Group systematically reviews options that can strengthen its market position and/or accelerate the growth of the company both organically and through partnerships and acquisitions," the Swiss-based company said.
Is a 2022 rate hike on the cards?
After the last of the four majors raised its fixed interest rates this week, there is now speculation that the Reserve Bank of Australia (RBA) will follow suit next year.
"To get a rate hike by the end of the year, you need all the numbers to print in the right zone both on wages and on core inflation. And that’s a possibility, absolutely,” JBWere chief investment officer Sally Auld told Bloomberg.
"I think it'll be the fourth quarter of next year or first quarter 2023."
Australian indices (at time of writing)
- ASX 200 gained 0.35% to 7,250.20.
- ASX24 futures gained 0.7% to 7,270.
- S&P/ASX Small Ordinaries gained 0.39% to 3,411.40.
- All Ordinaries rose 0.48% to 7,571.90.
US markets
Wall Street rebounded yesterday, with the three major indices all trading higher.
The winners were Boeing, which jumped by 7.5% after China cleared the 737 Max aircraft to fly.
Delta Air Lines (NYSE:DAL) gained 9.3% marking a good day for some travel stocks.
Visa (NYSE:V) was 4.3% higher, Mastercard (NYSE:MA) surged 4.5% and American Express climbed 4.5%.
Apple lost out on the recovery, with its shares falling by 0.6% on reports of a slowing in iPhone 13 demand.
US Treasury yields lifted on Thursday as Federal Reserve officials gave their support for speeding-up bond tapering and discussed the potential for more interest rate hikes next year.
US indices
- Dow Jones gained 1.8% to 34,639.79.
- S&P 500 rose 1.4% to 4,577.1.
- Nasdaq rose 0.8% to 15,381.32.
European markets
It was a reversal of trade pattern from yesterday, with European indices lower.
The market shed more than 1% as countries ramped up restrictions to curb the spread of the Omicron virus variant.
Travel and leisure stocks were down 2.6%.
In London trade, shares in Rio Tinto rose by 0.6% and BHP shares lifted 1.2%.
European indices
- STOXX 600 fell 1.15% to 465.44.
- German Dax fell 1.4% to 15,263.11.
- UK FTSE fell 0.6% to 7,129.21.