Global Fundamental Analysis 03/08/2021

Global Fundamental Analysis 03/08/2021, FP Markets

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

U.S. stocks reversed their early gains to finish modestly lower. The 10-year Treasury note yield fell 6.6 basis points to 1.173%, its lowest finish since Feb. 11. The WSJ Dollar Index fell 0.07% to 86.93. U.S. oil prices ended more than 3% lower. Gold prices ended higher to start in August as the dollar and yields retreated.

Australian Market

Australia’s S&P/ASX 200 index closed 1.3% higher at a record, propelled by Square’s $29 billion deal to acquire buy-now-pay-later company Afterpay. All sectors ended higher, with technology stocks doing the heavy lifting with a 6.5% gain, followed by financials, which ended the session 1.9% higher. Afterpay finished 19% higher, with fellow buy-now-pay-later companies Zip and Sezzle rising 9.0% and 3.7%, respectively. The major banks were up between 1.8% and 2.4%, while Macquarie climbed 0.6%.

US Market

The S&P 500 gave up its early gains and slipped to start August as investors weighed a strong earnings season with growing uncertainty about the Delta variant and economic outlook.  

The S&P 500 retreated 0.2% and the Dow Jones Industrial Average lost 0.3%. The tech-heavy Nasdaq Composite gained 0.1%. Earnings and economic data have led investors to keep piling into stocks, putting major indexes within striking distance of records.

Still, some are cautious that the highly contagious Delta strain of coronavirus, a prolonged spell of inflation and China’s efforts to rein in tech firms could lead to bouts of volatility.

Commodities

Gold futures settled higher, starting August on an upbeat note for the precious metal as a retrenchment in the U.S. dollar and a further pullback in 10-year Treasury yields helped pave the way for bullion buying.  

December gold, the most active contract, rose 0.3% to close at $1,817.70 an ounce after bullion on Friday rose nearly 0.9% for the week and scored a 2.6% monthly advance, its third such gain of the past four months.

Oil Futures

Oil futures started August on a down note, under heavy pressure after disappointing data on activity in China and the U.S., worries about the spread of the Delta variant of the coronavirus that causes Covid-19, and rising output by OPEC+ producers.  

West Texas Intermediate crude for September delivery fell 3.8% to $71.15 a barrel on the New York Mercantile Exchange. October Brent crude, the global benchmark, declined 3.5% to $72.80 a barrel on ICE Futures Europe.

Forex

Major currencies were firmer against the US dollar in European and US trade. The Euro rose from lows near US$1.1863 to highs near US$1.1895 and was near US$1.1870 at the US close. The Aussie dollar lifted from lows near US73.41 cents to highs near US73.81 cents and was near US73.60 cents at the US close. And the Japanese yen rose from near 109.73 yen per US dollar to JPY109.18 and was near JPY109.30 at the US close.

European Markets

European sharemarkets advanced on Monday. The pan-European STOXX 600 index lifted by 0.6% with retail shares adding 1.6%. The German Dax index edged higher by 0.2%, held back by a US
regulatory probe into insurer Allianz (-7.8%). The UK FTSE gained 0.7% with British aero-engineer Meggitt’s shares up 56.7% after US firm Parker-Hannifin said it would buy the UK rival in a deal valued at US$8.76 billion. In London trade, shares in Rio Tinto rose by 1.9% and BHP shares lifted by 1.1%.

Asian Markets

Japan’s Nikkei Stock Average ended 1.8% higher, led by gains in companies posting strong earnings results despite concerns about tightened Covid-19 measures. Chinese stocks strengthened from last week’s losses, as gains in carmakers and liquor shares outweighed steelmakers’ losses. The Shanghai Composite Index added 2.0%, the Shenzhen Composite Index rose 2.2% and the ChiNext Price Index closed 1.5% higher.

  • Global Fundamental Analysis 03/08/2021, FP Markets
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