Wall Street seesaws, oil slips, ASX set to rise
Stan Choe
Updated ,first published
Hopes for a possible end to the war with Iran sent stocks higher on Wall Street on Wednesday, while oil prices also fell.
The S&P 500 Index rose 0.5 percent in its last decline after the United States announced its plan to stop the war against Iran. The Dow Jones gained 305 points, or 0.7 percent, while the Nasdaq composite gained 0.8 percent. The Australian share market is poised for a rally, with futures pointing to a gain of 25 points, or 0.3 per cent, at the open. The ASX rose 1.9 per cent on Wednesday. The Australian dollar was weaker at 69.62¢ at 5.14am AEDT.
However, the moves were shaky and the S&P 500 briefly came close to erasing its entire rise, which reached 1.2 percent in the morning hours. Financial markets have fluctuated sharply since the start of the war more than three weeks ago, and many of those reversals have occurred from hour to hour as uncertainty about how long the war will last continues to prevail.
That uncertainty continued on Wednesday: Iran’s foreign minister, Abbas Araghchi, said in an interview with Iranian state television that his government was not in talks to end the war and “we are not planning any negotiations.”
Iran also launched further attacks on Israel and Gulf Arab countries; this includes an attack that caused a massive fire at Kuwait International Airport while he was also attacked. The US military deployed paratroopers and more marines to the area.
But optimism was still evident in financial markets around the world. Stock indexes in London, Paris and Shanghai rose more than 1 percent. The Tokyo Nikkei 225 jumped 2.9 percent.
The price of a barrel of Brent crude oil delivered in June fell 3 percent to $97.26. Hopes have risen that a cooling off in the war will allow oil and natural gas to flow more freely from the Persian Gulf to customers around the world. Many oil tankers are currently stranded outside the Strait of Hormuz off the coast of Iran, and this blockage has driven the price of Brent crude oil down to around $120 per barrel at times.
Treasury yields in the bond market also declined. This could help moderate the rise in mortgage and other borrowing rates since the start of the war. This could reduce the pressure on the economy.
The yield on the 10-year Treasury note fell to 4.32 percent from 4.39 percent late Tuesday, but remained well above the 3.97 percent level just before the war.
Even gold, one of the investment world’s biggest losers throughout the war, rose. It settled at $4,552.30 per ounce, up 3.4 percent.
The price of gold briefly approached US$5,400 earlier this month. That was before Treasury yields rose due to concerns that higher oil prices would push up inflation and prevent the Federal Reserve from lowering interest rates. When bonds pay more interest, they make gold less attractive, which returns nothing to its investors.
On Wall Street, Arm Holdings gained 16.4 percent after the British company announced a suite of chips for data centers and artificial intelligence technology.
Robinhood Markets rose 5 percent to lead U.S. stocks after its board authorized a program to send up to $1.5 billion to shareholders by buying back the company’s shares.
Terns Pharmaceuticals rose 5.7 percent after Merck said it would acquire the oncology company in an all-cash deal worth $6.7 billion. Merck rose 2.6 percent.
On the losing side of Wall Street was On Holding. The Swiss company, which sells ten shoes, lost 11.2 percent of its value after its CEO Martin Hoffmann said he had resigned.
In Hong Kong, Pop Mart International Group tumbled 22.5 percent after the company behind the popular Labubu dolls reported a big jump in profit and revenue, but the growth fell short of analysts’ expectations.
The stock prices of the parent companies of YouTube and Instagram remained relatively stable after a jury found them liable in a first-of-its-kind case aimed at holding social media platforms accountable for harming children who use their services. Alphabet increased by 0.2 percent and Meta Platforms increased by 0.3 percent.
Overall, the S&P 500 rose 35.53 points to 6,591.90. The Dow Jones Industrial Average rose 305.43 to 46,429.49, and the Nasdaq composite index rose 167.93 to 21,929.83.
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