The S&P 500 came within 2 points of falling 20 per cent from its late-September closing high, a threshold commonly used to define a bear market.
“The market is extremely oversold where we left it” on Monday, Brett Ewing, chief market strategist at First Franklin Financial Services in Tallahassee, Florida, told Reuters.
“You cannot make the assumption that this correction is over, but today’s action is definitely a very positive signal.”
Also helping sentiment somewhat was White House economic adviser Kevin Hassett responded to a question about whether Jerome Powell’s job as chairman of the Federal Reserve was safe: “Yes, of course, 100 per cent.”
Today’s Agenda
No local data this week
Overseas data: China industrial profits November; US FHFA house prices October, New home sales November, Consumer confidence December
Market Highlights
Australian dollar +0.3% to 70.58 US cents as of 5.31am AEDT
On Wall St at 2.52pm: Dow +2.7% Nasdaq +3.8%
S&P 500 +2.7% at 2.37pm
In New York, BHP +2.7% Rio +2.1% Atlassian +7.3%
European markets closed for Christmas break
Spot gold +0.2% to $US1271.51 an ounce at 1.20pm New York time
Brent crude +6.6% to $US53.82 a barrel
US oil +7.2% to $US45.59 a barrel
Iron ore to $US71.39 a tonne
Dalian iron ore +0.7% to 494 yuan
LME closed for Christmas break
Comex copper +1.2% to $US269.20 a pound
2-year yield: US 2.58% Australia 1.94%
5-year yield: US 2.62% Australia 1.93%
10-year yield: US 2.78% Australia 2.36% Germany 0.24%
US-Australia 10-year yield gap as of 5.25am AEDT: 42 basis points
From the Financial Review
An optimist’s guide to investments in 2019: Equities look better value after recent falls but investors need to keep an eye on six key factors that may extend the global cycle in the new year.
Facebook can’t fake it any longer: Facebook used to be a fun place where friends shared cat videos and swapped memes, then we discovered it had teeth and claws. Now the social network has hired teams to try and tame the beast.
United States
Market risks rise for US economy: El-Erian: In recent weeks, the US economy has become more vulnerable to the possibility of policy mistakes and market accidents.
Trump’s favourite barometre flashing red: Nir Kaissar: The stock market is calling the White House to account, and it won’t be easily distracted.
The S&P 500 was on track to break a four-session streak of declines. But it was still on pace for its biggest monthly percentage drop since October 2008, during the throes of the financial crisis.
Ten of 11 major S&P 500 sectors were in positive territory, with the technology sector, beaten up during the recent pullback, up 3.8 per cent.
Advancing issues outnumbered declining ones on the NYSE by a 3.81-to-1 ratio; on Nasdaq, a 3.53-to-1 ratio favoured advancers.
Europe
Most European markets remain closed for the Christmas break.
Asia
China stocks slipped on Wednesday amid lingering worries about the economy and caution over persisting US political uncertainties, as a federal government shutdown and President Donald Trump’s hostile stance towards the Federal Reserve unnerved investors.
The blue-chip CSI300 index fell 0.5 per cent, to 3002.03, while the Shanghai Composite Index lost 0.3 per cent to 2498.29 points.
Japan’s Nikkei, which plummeted into bear market territory the previous day, ended higher after seesawing on Wednesday, helped by short-covering.
The Nikkei share average closed 0.9 per cent higher at 19,327.06, barely shaking off Tuesday’s 5 per cent plunge – the steepest single-day decline in over two years.
The searing sell-off left the benchmark down about 21 per cent from a 27-year peak scaled in early October, meaning it’s still in bear market territory entered during the previous session.
Nikkei seesawed in afternoon trade, dropping into the red and at one point losing more than 1 per cent, before pulling back up in late trading to end the session in positive territory.
The broader Topix finished 1.1 per cent higher at 1431.47, but remained down 25.1 per cent from a high of 1911.31 hit in late January.
Currencies
The head of the US Federal Reserve faces no risk of losing his job and President Donald Trump is happy with his Treasury secretary, a White House official said in an apparent attempt to calm Wall Street nerves frayed by Trump’s criticism of the Fed.
Asked on Wednesday if Fed chairman Jerome Powell’s job was safe, White House economic adviser Kevin Hassett told reporters: “Yes, of course, 100 per cent.”
Hassett also said Trump was happy with Treasury Secretary Steven Mnuchin, who in recent days has talked with top US bankers and convened a call with a working group of regulators who aim to keep financial markets running smoothly.
“I am highly confident that the president is very happy with Secretary Mnuchin,” Hassett told Fox Business Network.
Commodities
Oil surged higher along with US equities.
Recent selling “has felt less fundamentally driven and more a function of the overall market meltdown as increased equity volatility and growing macro concerns have weighed on a number of asset classes,” wrote analysts at Tudor, Pickering & Holt.
Funds have incurred heavy losses in oil markets this year, with the average commodity trading adviser fund, or CTA, down by 7.1 per cent on the year through mid-December, according to Credit Suisse data. Funds took big bets on oil’s rally, only to see the commodity drop by more than 40 per cent since the October highs.
The head of Russian oil company Rosneft, Igor Sechin, predicted an oil price of $US50 to $US53 in 2019, far short of the four-year high of $US86 for Brent crude reached earlier this year.
Chinese copper closed marginally higher on Wednesday after two sessions of declines, with prices capped by concerns over slowing economic growth, which is expected to curb demand for industrial metals.
The most-traded copper contract on the Shanghai Futures Exchange closed up 130 yuan, or 0.3 per cent, at 48,040 yuan ($US6979.21) a tonne.
Dalian coke futures fell on Wednesday for a third session amid concerns over weak demand for the steelmaking raw material, with Beijing vowing not to relax its anti-pollution campaign that has forced steel mills to reduce output or even halt operations.
Chinese iron ore and rebar contracts, however, edged up on hopes that steel demand will pick up, with mills expected to replenish stocks ahead of the Lunar New Year which falls in early February.
The most-active coke futures for May delivery on the Dalian Commodity Exchange fell as much as 2.2 per cent to 1878 yuan ($US272.82) a tonne, before settling at 1892.5 yuan, their lowest close in three weeks.
Coking coal edged down 0.3 per cent to 1171.5 yuan a tonne.
Australian Sharemarket
Australian shares snapped a four day losing streak on Monday, rallying from a 1 per cent fall at the open to end the final trading session before Christmas in the green.
The S&P/ASX 200 Index closed 26.2 points, or 0.5 per cent, higher at 5493.8 while the broader All Ordinaries climbed 26.3 points, or 0.5 per cent to 5559.6. It was a shortened Christmas Eve trading session with markets closing at 2.10pm.
with Reuters, Bloomberg, AAP
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