Global Fundamental Analysis 03/03/2021

Global Fundamental Analysis 03/03/2021, FP Markets

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

U.S. stocks fell amid increased volatility. The yield on the 10-year Treasury slipped to 1.40% after one senior Fed official suggested the central bank was closely eyeing last week’s bond-market volatility. The WSJ Dollar Index fell to 85.7. Oil prices slipped below $60 amid expectations OPEC+ will decide to boost output at their meeting this week. Gold prices ended a five-day skid to edge higher.

Australian Market

Australia’s S&P/ASX 200 lost 0.4% following early gains. The benchmark rose as much as 1.0% a half-hour into the session, before steadily falling from thereafter the RBA held its cash rate and said it could extend its quantitative-easing program.

US Market

U.S. stocks dropped, halting Monday’s blockbuster rally as investors continued to grapple with volatility in both shares and bonds.  

The S&P 500 settled 0.8% lower, pulling back after it surged 2.4% Monday to log its best day since June. The broad benchmark index was weighed down, in part, by a continued decline in technology stocks, which also sent the Nasdaq Composite tumbling 1.7%.  

The Dow Jones Industrial Average lost about 0.5% after swinging between gains and losses throughout the day.  

Investors say their focus is squarely on central bank officials for cues on how monetary policy may shift down the road. That will determine their appetite for government bonds and for inflation-adjusted returns. A flood of easy money by the Federal Reserve since the pandemic hit last spring has helped subdue returns on bonds and fueled a rally in stock markets for much of the past year.

Commodities

Gold futures ended higher, on the heels of a five-session decline that pushed prices to their lowest level in over eight months.  

“Gold’s beatdown might be over” now that the global outlook might be showing some weak points, said Edward Moya, senior market analyst at Oanda. The global bond market selloff could very well resume, but “central banks are lining up to voice their concern over surging bond yields,” he said.  

Gold for April delivery on Comex rose 0.6% to settle at $1,733.60 an ounce, after trading as low as $1,704.60.

Oil Futures

Oil futures fell, with U.S. prices settling below the $60 mark for the first time in more than a week, as traders bet that the Organization of the Petroleum Exporting Countries and its allies will decide later this week to restore some output in April.  

West Texas Intermediate crude for April delivery fell by 1.5% to settle at $59.75 a barrel on the New York Mercantile Exchange. Front-month contract prices ended at their lowest since Feb. 19, according to Dow Jones Market Data.  

May Brent crude, the global benchmark, declined by 1.6% at $62.70 a barrel on ICE Futures Europe after tapping an intraday high of $64.13. The settlement was the lowest since Feb. 12.

Forex

Major currencies were stronger against the US dollar in European and US trade. The Euro rose from lows near US$1.1991 to highs near US$1.2094 and was near US$1.2085 at the US close. The Aussie dollar rose from lows near US77.36 cents to highs near US78.37 cents and was near US78.25 cents at the US close. And the Japanese yen rose from 106.94 yen per US dollar to JPY106.67 yen and was near JPY106.75 at the US close.

European Markets

European sharemarkets rose on Tuesday. The pan-European STOXX 600 index gained 0.2% with mining stocks up 1.4%. German manufacturer Kion Group (+6.5%) was the strongest performer.
Eurozone inflation rose by 0.2% in February (survey: +0.2%). The German Dax index lifted 0.2% and UK FTSE index climbed 0.4%. In London trade shares in Rio Tinto (+2.1%) and BHP (+1.9%) both rose.

Asian Markets

Earlier Tuesday, Chinese stocks fell, extending last week’s losses. The benchmark Shanghai Composite Index fell 1.2%, while the Shenzhen Composite Index edged down 0.7%.

The ChiNext Price Index lost 0.9%. Oil and petrochemical stocks led the session declines amid slipping oil prices.  

Hong Kong’s Hang Seng Index reversed early gains to drop 1.2%, tracking mainland stocks that closed lower on news that China’s top banking regulator has said he’s worried about a number of risks, including a property bubble. Casino operators were among the worst performers.  

The Nikkei Stock Average settled 0.9% lower, weighed by falls in transportation stocks as the government mulls how soon it can lift the Covid-19 state of emergency for Tokyo.

  • Global Fundamental Analysis 03/03/2021, FP Markets
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