The S&P 500 and the Nasdaq on Thursday booked their worst sessions in about three months as a powerful climb in government bond yields rippled through Wall Street, forcing a broad reassessment of assets perceived as risky, like stocks. The yield on the 10-year U.S. Treasury note was up 3.8 basis points at 3.196% and earlier topped 3.23% to trade at its highest since 2011. This comes a day after its largest one-day rise since March 2017. Investors dumped bonds as economic indicators pointed to continued strength in the economy. A higher yield can dampen enthusiasm for stocks, as it offers higher returns for income-seeking investors, without the risk or volatility typically associated with equities.
Investors will keep a close eye on Friday's monthly U.S. payrolls report after the sell-off in bonds that's been in part triggered by data underscoring the strength of the American economy. Federal Reserve Chairman Jerome Powell also stoked the surge in yields this week when he said the central bank could eventually boost its benchmark past the neutral level.
Shares of materials and resources companies were firmer, with Aluminium companies being notable gainers thanks to the closure of the world's largest alumina refinery in Brazil. Alumina is the key ingredient used to make aluminum. BHP was up 0.62% to $35.63.
Shares of banks and financial players were up on following gains by financial stocks in the U.S, with the big four banks gaining between 1.1 and 0.11%. ANZ was up 0.9 per cnt and Westpac was up 0.7%.
Energy shares turned around well to ignore a 3% slide in oil prices overnight, with Santos, Woodside Petroleum, Caltex, and Oil Search all in the green, rising between 0.2 and 0.7%. The focus instead is on the 15% lift in the commodity since August ahead of US sanctions on Iran which are set to hit next month. The oil price is currently at four-year highs.
Beach Energy was down 3% after the SA based petroleum company has cut its production and profit guidance for FY19 after agreeing to sell some of its Victoria assets for $344m in cash. Oil and gas explorer Beach Energy said it would sell a 40% stake in its Victorian Otway gas assets for $344 million and trimmed its earnings and production guidance. Beach said the stake would be sold to a unit of Eyal Ofer's OG Energy, part of the privately held Ofer Global group of companies.
ECONOMIC NEWS: Australian retail sales recover in August -- Australian retail sales rose 0.3% to $26.87 billion in seasonally adjusted terms in August 2018, according to the Australian Bureau of Statistics (ABS). The modest lift followed an unchanged reading in July. Thanks to a low base effect created by a 0.6% decline in August 2017, the monthly increase saw annual growth in sales lift to 3.8%, the fastest increase since May 2017.
CURRENCY: Australian Dollar was tad higher against greenback and other major currencies on Friday. The Australian dollar was quoted at $0.7081, compared to $0.7066 on Thursday.
OFFSHORE MARKET NEWS, US stock market closed down on Thursday, as a recent jump by U.S. treasury yields raised concerns about the outlook for interest rates. The Dow Jones Industrial Average tumbled 200.91 points or 0.8% to 26,627.48, the Nasdaq plunged 145.57 points or 1.8% to 7,879.51 and the S&P 500 slumped 23.90 points or 0.8% to 2,901.61.
The major European markets ended down on Thursday. The German DAX Index fell by 0.4%. The U.K.'s FTSE 100 Index and the French CAC 40 Index slumped by 1.2% and 1.5%, respectively.
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