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Global Fundamental Analysis 08/08/2022

Global Fundamental Analysis 08/08/2022, FP Markets

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

U.S. stocks closed mixed as markets weighed a robust jobs report’s effect on the Federal Reserve. Treasury yields jumped sharply, with the 10-year Treasury note yield rising to 2.838% from 2.674 Thursday. The WSJ Dollar Inde rose 0.75% to 98.38. Oil closed slightly higher, paring some of the week’s losses. And gold futures ended lower on the dollar’s rebound.

Australian Market

Australia’s S&P/ASX 200 index closed 0.6% higher on surging mining stocks. Shares of lithium, gold and iron-ore miners all rose. With the heavyweight financial sector edging just 0.1% higher, the materials sector’s 1.9% rise offset losses elsewhere. Energy stocks slipped amid lower oil prices, while the tech sector gave up 1.25%.

US Market 

U.S. stocks finished close to flat after a surprisingly strong jobs report cast doubt on the Federal Reserve being able to shift away from interest-rate increases anytime soon. The S&P 500 dropped 0.2%, making up most of its losses from early in the trading day. The Dow Jones Industrial Average was up 0.2% and the Nasdaq Composite Index declined 0.5%. The U.S. labor market added 528,000 jobs in July – more than doubling what analysts had estimated and returning payrolls to their prepandemic level.

“Today’s jobs report is the exact opposite of a slowing economy,” said Thomas Tzitzouris, head of fixed-income research at Strategas. “This report means it’s going to be very difficult to support the view of rate cuts happening anytime before the end of next year.”

Commodities

Gold futures finished lower, coming off a one-month peak as the U.S. jobs report showed employers hired far more workers than expected in July, pushing Treasury yields and the dollar higher. December gold dropped 0.9% to finish at $1,791.20 per ounce on Comex. Based on the most-active contract, gold gained 0.5% for the week, according to Dow Jones Market Data. “Today’s labor market report is bad news for gold bulls, with next week’s (consumer price index) report the next key test,” said Michael Hewson, chief market analyst at CMC Markets, in a note.

Oil Futures

Oil futures bounced to a higher close, but suffered sharp weekly losses as a much stronger-than-expected U.S. jobs report failed to fully dispel fears of a global economic slowdown. West Texas Intermediate crude for September delivery rose 0.5% to close at $89.01 a barrel on the New York Mercantile Exchange, leaving it with a 9.7% weekly loss. October Brent crude, the global benchmark, rose 0.9% to settle at $94.92 a barrel on ICE Futures Europe. Brent suffered an 8.7% weekly loss.

“A robust nonfarm payroll is welcome news for the U.S., economy and that is helping oil pare some of this week’s losses. Europe also posted better-than-expected industrial production data from both Germany and France. Despite all the global economic slowdown worries, the oil market is still tight,” said Edward Moya, senior market analyst at Oanda, in a note.

Forex

Major currencies were weaker against the US dollar in European and US trade. The Euro fell from highs near US$1.0235 to around US$1.0140 and was near US$1.0180 at the US close. The Aussie
dollar fell from near US69.75 cents and US68.70 cents and was near US69.10 cents at the US close. And the Japanese yen fell from near 132.88 yen per US dollar to JPY135.50 and was near JPY134.97 at the US close.

European Markets

European sharemarkets eased on Friday as investors weighed up strong US jobs growth and mixed earnings results. Miners rose 1.1% and oil stocks rose 0.6%. Shares in Lufthansa rose 4% after ground staff reached a pay deal. The pan-European STOXX 600 index fell by 0.8%. The German Dax index lost 0.7% and the UK FTSE index fell by 0.1%. In London trade, shares of Rio Tinto rose
by 2.0% while BHP shares rose by 1.9%.

Asian Markets

Earlier, in Asia, Japan’s Nikkei Stock Average ended 0.9% higher, led by gains in companies which posted strong results, as concerns eased about the costs of energy and borrowing. Chinese stocks ended higher, rising in line with regional markets and supported by gains in local banking stocks. China’s upcoming July balance of trade data will be in focus.

Oanda’s senior market analyst Jeffrey Halley said in a note that the trade data “is unlikely to shake the tree too much,” and that “far greater risk lies in the geopolitical sphere, and the property sector slow-moving trainwreck, as well as the usual Covid-zero risks.” The benchmark Shanghai Composite Index rose 1.2%, the Shenzhen Composite added 1.4% and the ChiNext Price Index advanced 1.6%.

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