Global Fundamental Analysis 16/07/2021

Global Fundamental Analysis 16/07/2021, FP Markets

Opening Call: The Australian share market is to open lower.

U.S. stocks were mostly lower but remained near record highs in a choppy session. The yield on the 10-year Treasury slipped to 1.31%, as inflation worries continued to wane. The WSJ Dollar Index rose to 87.2. Oil prices fell again as major global oil producers began to raise output. Gold prices reversed early losses to reach their highest level in nearly a month.

Australian Market

Australia’s S&P/ASX 200 slipped 0.3% as Sydney’s Covid-19 lockdown continues, and Victoria state prepares for an expected snap lockdown. Nearly every sector ended in the red. Still, the utility sector added 0.7%, while the heavyweight materials sector posted a 1.4% gain. Technology stocks were the day’s weakest, closing down 1.2%.

US Market

U.S. stocks ended mixed after commentary from the Federal Reserve’s chief on the outlook for the economy and monetary policy. The Dow Jones Industrial Average gained 0.2%. The S&P 500 edged 0.3% lower, while the Nasdaq Composite dropped 0.7%.  

The major indexes are hovering near all-time highs on signs of the economy rebounding and stronger-than-expected corporate earnings. But some money managers say stocks may struggle to grind higher in the coming weeks because an uptick in Covid-19 infections could threaten the global reopening.

Concerns over how long higher inflation will linger and its impact on future earnings, as well as worry that the Federal Reserve may reduce its level of support, is also weighing on sentiment.

materias primas

Gold futures recovered early losses to stretch their streak of gains to the third session in a row, settling at a nearly one-month high.  

Investors looked to the latest U.S. economic data and Federal Reserve Chairman Jerome Powell’s congressional testimony to help gauge the next direction for the metal’s prices but appeared to find little reason to make any big moves.  

August gold futures edged up 0.2% to settle at $1,829 an ounce, marking another finish at the highest level since June 16, based on the most active contract.

Oil Futures

Oil futures fell, dragging U.S. prices down to their lowest finish in nearly a month, a day after data showed a rise in U.S. fuel inventories, adding to concerns about supplies following reports that the United Arab Emirates and Saudi Arabia reached a compromise that would allow a further relaxation of output curbs beginning next month.  

Worries that the spread of the Delta coronavirus variant has also contributed to weakness in oil prices as the variant is leading to renewed lockdowns in some countries, particularly in Asia, dulling demand for energy. 

West Texas Intermediate crude for August delivery fell 2% to settle at $71.65 a barrel on the New York Mercantile Exchange — the lowest front-month contract finish since June 18, according to Dow Jones Market Data.

September Brent crude lost 1.7% to settle at $73.47 a barrel on ICE Futures Europe, the lowest settlement since July 7.

Forex

Major currencies were mixed against the US dollar in European and US trade. The Euro fell from near US$1.1850 to US$1.1795 and was near US$1.1810 at the US close. The Aussie dollar fell from
US74.80 cents to near US74.10 cents and was near US74.20 cents at the US close. And the Japanese yen held between 109.70 yen per US dollar and JPY110.05 and was near JPY109.80 at the US close.

European Markets

European share markets were weaker on Thursday. Investors are concerned about the outlook for global growth after UK Covid-19 cases recorded the biggest increase in six months. The oil & gas
sector lost 2.7% and travel lost 1.6%. But encouragingly UK payrolls rose by 356,000 in June – the most since the pandemic began. The pan-European STOXX 600 index fell by 1.0%. The German Dax index fell by 1% while the UK FTSE fell by 1.1%. In the London trade, shares in Rio Tinto rose by 0.9% and shares in BHProse 0.1%.

Asian Markets

Earlier Thursday, Chinese stocks ended higher, recovering from morning losses after official second-quarter GDP data showed that the world’s second-largest economy grew 7.9% on the year. While the growth pace was significantly slower from the first quarter’s 18.3% rise, analysts said it remained on track for China to meet its annual target.

Recent monthly data also suggested a continued rebound in domestic demand. The benchmark Shanghai Composite Index rose 1.0%, while the Shenzhen Composite Index added 0.4%. The ChiNext Price Index closed 1.4% higher.

Hong Kong stocks also closed higher, also benefiting from China’s GDP data. The benchmark Hang Seng Index rose 0.8% as financial companies and property developers led the upturn.  

Japan’s Nikkei Stock Average, however, lost 1.2%, weighed by energy-related companies amid a stronger yen versus the U.S. dollar. Markets will likely focus on the Bank of Japan’s meeting Friday amid speculation that the central bank could lower the GDP outlook for 2021, Oanda said.

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