Wall St reversed its four-session fall to finish higher overnight, while the ASX should continue its positive run today.
ASX SPI 200 futures are trading up 27 points, or 0.4%, to 7,064 in the morning, after being up more than 40 points earlier.
US stocks ended sharply higher, despite the potential economic fallout of the Russia-Ukraine war that has caused investor volatility.
The Dow Jones Industrial Average rose around 653 points, or 2%, to end near 33,285, while the S&P 500 gained 2.6% to finish near 4,278. The Nasdaq Composite jumped 3.6% close near 13,256.
Foreign ministers from Russia and Ukraine plan to meet today in Turkey, which may have gone some way to improve sentiment.
Europe also enjoyed strong gains, which sent the major benchmarks in France and Germany up more than 7% and the UK’s FTSE 100 up 3.3%.
Oil futures retreated, pulling back from nearly 14-year highs amid volatile activity across financial markets.
There could be some relief at the pump with the United Arab Emirates urging fellow OPEC states to boost output.
“We favour production increases and will be encouraging OPEC to consider higher production levels,” UAE ambassador to Washington Yousef al-Otaiba said, in a statement obtained by AFP.
“The UAE has been a reliable and responsible supplier of energy to global markets for more than 50 years, and believes that stability in energy markets is critical to the global economy,” the statement added.
US Secretary of State Antony Blinken told a news conference Wednesday that “it is an important thing to stabilise global energy markets, to make sure that there remains an abundant supply of energy around the world.”
Gulf countries would look to avoid a price war and keep control over the market.
Here’s what we saw (source Commsec):
- The Euro rose from lows near US$1.0909 to highs near US$1.1094 and was near US$1.1065 at the US close.
- The Aussie dollar rose from lows near US72.73 cents to highs near US73.36 cents and was near US73.25 cents at the US close.
- Global oil prices plunged as much as 17% on reports that the UAE will call on fellow OPEC members to boost crude production.
- The Brent crude price fell by US$16.84 a barrel or 13.2% to US$111.14 a barrel, the biggest one day decline since April 2020.
- The US Nymex crude price dropped by US$15.00 or 12.1% to US$108.70 a barrel, the biggest fall since November 2021.
- Base metal prices slumped, including aluminium down 4.3% despite continued worries about Russian supply, as cautious investors slashed positions in the wake of a halt in nickel (flat) trading.
- Tin was down by 9.3% with zinc 4.8% lower.
- The gold futures price fell by US$55.10 or 2.7% to US$1,988.20 an ounce.
- Spot gold was trading near US$1,992 an ounce at the US close.
- Iron ore fell by US$4.70 or 2.9% to US$157.55 a tonne as investors factored in a likely drop in China's steel output in February and inflation risks in the country.
Australian market
Speaking at the Australian Financial Review Platinum 80 dinner, Federal Treasurer Josh Frydenberg has warned that Australians face a higher cost of living as the price to standing up to aggressors.
“The message to Russia and others is clear: there will be swift and significant economic costs imposed on those countries that choose to violate our fundamental international rules and norms.
“But we must not be naive about the costs these necessary actions will also impose on the West.
“These costs will flow initially in the form of higher commodity prices and, in turn, higher inflation. Already, European gas prices have nearly tripled, thermal coal prices have nearly doubled and global oil prices have risen by more than a third since the invasion began.”
Frydenberg said Russia’s invasion of Ukraine heightened the risks posed by China.
“It is no secret that Australia has itself been subjected to economic coercion in recent years,” the Treasurer said of China’s trade bans.
“While these acts put the world on notice, Russia’s act of outright aggression is ushering in a new economic era.”
The treasurer highlighted three key responses to deal with this new era: a united front by liberal democracies against such behaviour; safeguarding supply chains of critical products; and spending more on defence.
On the third point, the government this morning announced it would spend $10 billion on a new fleet of nuclear submarines, and expansion of the armed forces.
“The more dangerous and unpredictable strategic environment we now face will require from liberal democracies a sustained and substantial increase in defence spending,” Frydenberg said.
US markets
US share markets were higher yesterday, with sentiment lifted by a pullback in oil prices.
Investors piled into beaten-down stocks.
Mega cap growth stocks led gains with Netflix Inc (NASDAQ:NFLX) 5% higher, Microsoft Corp 4.6% higher and Tesla Inc (NASDAQ:TSLA) gaining 4.2%.
General Electric (NYSE:GE) shares rose 3.5% as the company authorised a US$3 billion share buyback program.
Shares of Bank of America (NYSE:BAC) jumped 6.4% with salesforce.com Inc shares up 5.8%. The Dow Jones index closed up by 654 points or 2% after being up 825 points at session highs.
The S&P 500 index lifted 2.6%, posting its best day since June 2020.
The Nasdaq index added 460 points or 3.6%, its best trading session since November 2020.
Amazon stock split
Amazon.com Inc (NASDAQ:AMZN) will split its stock for the first time in more than 20 years. Over that time, shares gained more than 4,500%, pushing per-share prices to nearly $2,800. Amazon expects to repurchase $10 billion in shares.
Amazon expects to split shares 20-to-1, contingent on a shareholder vote at its annual meeting on May 25.
The company plans to execute the split on or about June 3 for shareholders of record as of May 27.
Shares were more than 7% higher in after-hours trading following the announcement.
It is expected the split will make Amazon more palatable as a possible addition to the blue-chip Dow Jones Industrial Average, which avoids companies with high per-share prices.
European markets
Closed higher yesterday.
The pan- European STOXX 600 index rose by 4.7%, notching its best day since March 2020.
Auto stocks added 9.5% with crude oil prices down sharply.
The German Dax index added 7.9%, also marking its best percentage gain since March 2020.
The UK FTSE index was up by 3.3%. In London trade, shares in Rio Tinto PLC (LSE:RIO) fell by 1.2% while shares in BHP were lower by 1.1%.