Wall St fell and so will the ASX this morning when the gates open at 10am.
ASX SPI 200 futures were down 0.7% to 7,295 as of 7.20am AEDT.
All three major US stock benchmarks closed lower as the oil price rose sharply. The Dow Jones Industrial Average and Nasdaq Composite each closed around 1.3% lower, while the S&P 500 fell 1.2%.
Most of the S&P 500's 11 sectors booked losses, however, energy enjoyed a modest 1.74% rise.
Investors are continuing to weigh hawkish comments from Federal Reserve officials, including one from Cleveland Fed president Loretta Mester, who said the Fed may need to do "some" 50 basis point rate hikes this year to combat high inflation.
Here’s what we saw (source Commsec):
- The Euro fell from highs near US$1.1040 to lows near US$1.0965 and was near US$1.1005 at the US close.
- The Aussie dollar rose from lows near US74.50 cents to highs near US75 cents and was near session highs at the US close.
- Global oil prices rose by around 5%. Refinitiv noted that "disruptions to Russian and Kazakh crude exports via the Caspian Pipeline Consortium pipeline added to worries over tight global supplies". Oil supplies by the CPC may halt completely for up to two months due to damage caused by a major storm and continued bad weather.
- The Brent crude price rose by US$6.12 a barrel or 5.3% to US$121.608 a barrel.
- The US Nymex crude price rose by US$5.66 or 5.2% to US$114.93 a barrel.
- Base metal prices rose by up to 15% on Wednesday with nickel up the most and zinc up 6.1%. Copper and tin rose by 1.8%.
- The gold futures price rose by US$15.80 or 0.8% to US$1,937.30 an ounce.
- Spot gold was trading near US$1,946 an ounce at the US close.
- The iron ore futures price rose by US44 cents or 0.3% to US$148.92 a tonne.
Australian market
A couple of good reports
1. JB Hi-Fi Limited has released its quarterly results highlighting “heightened customer demand and strong sales growth”.
"This sales growth, combined with disciplined cost control and stock availability and sales mix benefits in gross margins, particularly in The Good Guys, drove strong operating leverage across the group," the company says.
"Whilst the group is pleased with the start to the second half, in view of the ongoing disruption arising from COVID-19 and other local and global uncertainties, it doesn’t currently consider it appropriate to provide FY22 sales and earnings guidance."
Australian 3Q comparable sales for January 1 to March 23 were up 10.5%, NZ up 2.9% and The Good Guys up 5.1%.
2. Brickworks Limited is set to record more than $1 billion in annual group revenue for the first time. The building materials maker has reported a 720% lift in net profit in the first half.
The company recorded a $581 million record profit number for the six months through the end of January.
Brickworks' underlying profit jumped 269% to $330 million, as its property division assets enjoyed a boost in valuation.
Underlying group earnings before interest, tax and depreciation from continuing operations rose 200% on the prior corresponding period, to $488 million. Revenue was 24% higher at $535 million.
The revaluation of property trusts during the period, led to a profit of $228 million, due to a "significant increase" in the market value.
"We have seen strong demand and sustained growth in the value of our Property Trust over a number of years," managing director Lindsay Partridge says.
"The pandemic has only fuelled this growth, by accelerating industry trends towards online shopping and increasing the importance of well-located distribution hubs and sophisticated supply chain solutions."
US markets
US sharemarkets fell yesterday as oil prices rose. Declines were led by financials and healthcare, both down by 1.8%. Speeches by Federal Reserve officials cemented market views that the next rate hike will be 50 basis points.
Shares in Adobe slid 9.3% after the Photoshop maker forecast downbeat second-quarter revenue and profit.
Euro/US energy deal
The US Government and European Union are closing in on a deal that will decrease reliance on Russian energy sources.
President Joe Biden’s national security adviser Jake Sullivan noted an agreement could be enacted as quickly as Friday that would ensure supplies of American natural gas and hydrogen for Europe.
“A major priority for both the president and his European allies is to reduce the dependence of Europe on Russian gas, full stop, and the practical road map for how to do that – what steps have to be taken, what the United States can contribute, what Europe has to do itself,” Sullivan told reporters aboard Air Force One on Wednesday.
“This has been the subject of intense back-and-forth over the course of the past few days and weeks,” Sullivan said, “and we will have more to say on this subject, specifically on Friday.”
A heavy focus would be on diversifying European supplies of natural gas. “You can expect that the US will look for ways to increase LNG supplies, surge LNG supplies to Europe, not just over the course of years, but over the course of months as well,” Sullivan said.
War crimes
The US has now formally accused Russia of war crimes in Ukraine, as President Biden heads to Belgium and Poland to announce further sanctions and looks to discuss how to end the war.
The war crimes assessment is based on "numerous credible reports of indiscriminate attacks and attacks deliberately targeting civilians, as well as other atrocities".
"Based on information currently available, the US Government assesses that members of Russia’s forces have committed war crimes in Ukraine," Biden said, noting attacks on apartment buildings, schools, hospitals, critical infrastructure, civilian vehicles, shopping centres and ambulances.
Thousands of people have now been killed.
"As with any alleged crime, a court of law with jurisdiction over the crime is ultimately responsible for determining criminal guilt in specific cases.”
European markets
European share markets were weaker with traders reportedly taking profits after five days of gains.
Investors are awaiting meetings between US and European leaders. Data showed that annual UK inflation lifted from 5.5% to a new 30-year high of 6.2% in February.
Energy stocks rose 2% in response to higher oil prices. Banks fell by 2.1%.
The pan-European STOXX 600 index fell by 1%. The German Dax index fell by 1.3%. And the UK FTSE index eased by 0.2%.
In London trade, shares in Rio Tinto rose by 1.6% and BHP shares lifted by 2.8%%.
Rubles for gas
Russian President Vladimir Putin has said that Moscow will only accept payments in rubles for gas deliveries to “unfriendly countries” – a statement that strengthened the ruble for the first time since the conflict began and sanctions were put in place.
“I have decided to implement a set of measures to transfer payment for our gas supplies to unfriendly countries into Russian rubles,” Putin said during a televised government meeting.
Russia will continue supplying the volume of gas outlined in its contracts.
The new payment system has been ordered to be instated within a week, while exports were being affected.
“It is clear that delivering our goods to the European Union, the United States and receiving dollars, euros, other currencies no longer makes sense to us,” Putin said.
The Ukraine denounced Russia’s economic war and its moves to strengthen the ruble.
“But the West could hit Russia with an oil embargo that would cause the Russian economy to plunge,” Ukrainian presidential advisor Andriy Yermak said on Telegram.
“This is now a key economic battle, and the West must collectively win it,” he added.
German Economy Minister Robert Habeck said Putin’s demand was “a breach of contract”.