Global Fundamental Analysis 04/06/2021

Global Fundamental Analysis 04/06/2021, FP Markets

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

U.S. stocks dropped as technology shares retreated. The 10-year Treasury yield ticked up to 1.63% from 1.59% on Wednesday. The WSJ Dollar Index rose 0.63% to 85.64. U.S. oil futures slipped as U.S. crude supplies dropped, although gasoline stocks unexpectedly climbed. Gold prices fell to their lowest level in more than two weeks as the dollar strengthened.

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Australian Market

Australia’s S&P/ASX 200 index ended 0.6% higher, extending its record amid continuing strength among energy stocks. Nearly every sector gained as the benchmark set its fourth record of 2021 and its first back-to-back records since before the Covid pandemic. The energy sector added 3.3% amid higher oil prices.

US Market

U.S. stocks fell as fresh weekly data showed a continued recovery in the labour market and traders kept a close eye on any potential policy shifts from the Federal Reserve.  

The S&P 500 fell 0.4% after ticking up 0.1% on Wednesday. The Dow Jones Industrial Average slipped 0.1%, while the Nasdaq Composite lost 1%, dragged down by the tech stocks that propelled the market higher during the pandemic.

Investors have been watching the economic recovery — and signs of a corresponding jump in inflation — and gauging how it will affect the Federal Reserve’s monetary policy. The rosy economic reports added to the concerns.  

The Nikkei Stock Average closed 0.4% higher as gains in semiconductor and food stocks help offset losses in steel and metal stocks.

Commodities

Gold prices dropped, losing their grip on the key $1,900 level to mark the lowest settlement in more than two weeks, as the U.S. dollar strengthened following a jump in U.S. private-sector payrolls data for May.  

U.S. private-sector employment surged by 978,000 in May, according to the ADP National Economic Report. That was well above the rise of 680,000 forecasts by economists surveyed by The Wall Street Journal.  

Gold for August delivery fell 1.9% to settle at $1,873.30 an ounce. The most active contract fell under the key technical level of $1,900, and finished at its lowest since May 18, FactSet data show. On Wednesday, prices settled at $1,909.90, the highest since Jan. 7.

Oil Futures

U.S. government data showed a weekly decline of more than five million barrels in domestic crude inventories, but gasoline stockpiles saw a surprise increase, prompting prices for crude oil to end just pennies lower for the session.  

West Texas Intermediate crude for July delivery fell 0.03% to settle at $68.81 a barrel on the New York Mercantile Exchange. August Brent crude, the global benchmark, lost 0.06% to $71.31 a barrel on ICE Futures Europe. On Wednesday, WTI saw the highest close for a front-month contract since Oct. 22, 2018, while Brent saw its highest finish since May 21, 2019, according to Dow Jones Market Data.

Forex

Major currencies were weaker against the US dollar in European and US trade. The Euro fell from highs near US$1.2204 to lows near US$1.2117 and was near US$1.2125 at the US close. The Aussie dollar fell from highs near US77.40 cents to lows near US76.47 cents and was near US76.60 cents at the US close. And the Japanese yen fell from 109.63 yen per US dollar to near JPY110.30 at the US close.

European Markets

European sharemarkets were mixed on Thursday. The pan-European STOXX 600 index fell by just 0.1% with basic resources stocks down 1.9% but autos shares were up 1.5%. The IHS Markit’s
‘final’ Eurozone composite purchasing managers’ index lifted from 53.8 to 57.1 in May (survey: 56.9). The German Dax index added 0.2%. But the UK FTSE index was down by 0.6%. In London trade shares in Rio Tinto (-2.1%) and BHP (-1.9%) both fell.

Asian Markets

Chinese stock markets finished the session lower as the market continued to weaken after a broad rally in recent weeks. The benchmark Shanghai Composite Index fell 0.4%.

The Shenzhen Composite Index shed 0.3% while the ChiNext Price Index dropped 1.3%. The renewable-energy sector led the downturn, with solar-energy glass makers suffering deep losses amid worse-than-expected glass price declines in recent weeks.

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