Wall Street’s S&P 500 closed higher on Friday after a volatile week that saw the US Federal Reserve raise rates and the key 10-year US Treasury bond yield hit 5%.
A rally in semiconductor stocks supported the index and the tech-centric Nasdaq (+0.4%), but the narrower, blue-chip Dow closed down 0.2%. Slightly lower oil prices also helped.
European markets endured a rugged end to the week. Germany’s Dax dropped 1.6%, the UK’s FTSE fell 1.5% and the broad Eurostoxx 600 closed 1.2% lower.
The ASX looks set to open lower as well. ASX 200 futures were pointing to a decline of around 0.7% when trading closed on Saturday morning (AEST).
Over the week, the S&P 500 finished marginally lower.
“It’s almost as if everybody got to the end of the week and got exhausted from all the activity this week and decided to just play it close to the vest here,” Horizon Investment Services CEO Chuck Carlson told Reuters.
“A lot of investors are trying to figure out not just the short-term implications, but longer-term implications of what the Fed may be embarking on and how that’s going to impact equities and fixed-income investments.”
There was also a “reluctance to be positioned in any directional way going into the weekend in an environment where exogenous events could potentially set up some crazy trading patterns on Monday”, Mr Carlson added.
Inflation concerns remained prominent as crude prices settled above $US100 per barrel, but they eased back from session highs after China, at the request of Saudi Arabia, asked Iran to limit attacks by Houthi rebels on Saudi oil infrastructure.
Soaring oil prices have sent US diesel prices to record levels, which is likely to translate into broader inflationary pressures affecting farming and shipping costs.
The fears about inflation, and the shortening of the odds for another rate hike in October, saw US Treasury bond yields rise, with the two-year yields (the bond most closely tied to Federal Reserve interest rate movements) hitting the highest point in more than two years.
The yield on the benchmark US 10-year Treasury note was last up 5.3 basis points at 5%. It reached 5.041% on Tuesday, the highest since 2007.
Despite this, and a generally stronger US dollar, the Aussie dollar eked out a small gain against the greenback.
Gold edged higher, while copper also continued to rise, notching its fourth consecutive session of gains on the London Metal Exchange.
With Reuters
