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Global Fundamental Analysis 05/01/2023

Global Fundamental Analysis 05/01/2023, FP Markets

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

U.S. stocks closed a choppy session higher as investors weighed mixed economic data and Federal Reserve minutes showing officials expect no rate cuts this year. The yield on the 10-year Treasury fell to 3.69%. The WSJ Dollar Index slipped to 97.05, helping gold prices climb. Oil prices tumbled on lingering worries over demand.

Australian Market

Australia’s S&P/ASX 200 closed 1.6% higher, rallying from its worst start to a calendar year since 2019 to post its largest one-day gain in almost two months. Ten of 11 sectors rose despite a soft lead from U.S. equities, with only the energy sector falling amid lower oil prices.

US Market 

U.S. stocks meandered back and forth before ending higher, as traders weighed fresh economic data that fanned fears of a looming recession. The S&P 500 rose nearly 0.8% by the end of the trading day while the Dow Jones Industrial Average increased 0.4%. The tech-focused Nasdaq Composite Index climbed almost 0.7%. All three opened in the green before briefly turning negative in midmorning trading after manufacturing activity dropped to its lowest level since May 2020.

The Labor Department also said that job openings topped estimates in November, a sign that demand for labor remained strong in the final months of 2022. Investors remain on edge as policy makers balance inflation-fighting goals against recession risks. Traders expect central banks to continue lifting borrowing costs to contain inflation that appears to have peaked-but that nonetheless remains well above targets.

“The equity rally is built on the idea that central banks can create something they’ve never done in the past: a soft landing,” said Florian Ielpo, head of macro at Lombard Odier Investment Managers. “It still makes us worried that something could go wrong and that something could have a very detrimental impact on our portfolio. Cautiousness remains the key word going into this year.”

Commodities

Gold prices posted a fourth straight session climb, settling at their highest in nearly seven months, with gains driven in part by a weaker U.S. dollar. Gold futures for February delivery advanced 0.7% to settle at $1,859 per ounce on Comex, with prices for the most-active contract marking their highest finish since June 10, FactSet data show. Gold’s winning streak continued as the dollar and Treasury yields declined, while recession fears and hopes for more central-bank buying bolstered prices of the yellow metal.

“A macroeconomic landscape characterized by heightened recession risks and central banks concluding their tightening cycles bodes well for gold this year, with the next major barrier to watch on the upside being the $1,875 region,” said Marios Hadjikyriacos, senior investment analyst at XM.

Oil Futures

Oil futures settled at their lowest in more than three weeks, extending a slide that analysts tied to fears over the outlook for global economic growth and surging Covid cases in China. West Texas Intermediate crude for February delivery fell 5.3% to settle at $72.84 a barrel on the New York Mercantile Exchange.

March Brent crude declined 5.2% to $77.84 a barrel on ICE Futures Europe, with prices also ending at their lowest in more than three weeks. “We continue to see lower prices in the first half of 2023 as negative economic activity grips the world economy,” said Peter Cardillo, chief market economist at Spartan Capital Securities.

Forex

No news.

European Markets

No news.

Asian Markets

Earlier Wednesday, Chinese shares ended mixed, with the gains from property stocks and financials offsetting losses by chip makers and the energy sector. The Shanghai Composite Index closed 0.2% higher and the Shenzhen Composite Index edged up 0.1%. The ChiNext Price Index ended 0.9% lower.

Hong Kong stocks ended higher, building on the positive start to 2023. The benchmark Hang Seng Index jumped 3.2%, reaching its best closing level since July. Japan’s Nikkei Stock Average lost 1.4% on the first trading day of 2023, dragged by falls in shipping and healthcare stocks, as uncertainty continues over policy tightening by central banks.

  • Global Fundamental Analysis 05/01/2023, FP Markets
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