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Global Fundamental Analysis 10/01/2023

Global Fundamental Analysis 10/01/2023, FP Markets

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

U.S. stocks ended mixed, with investors focused on Federal Reserve policy. The yield on the 10-year U.S. Treasury note declined to 3.53%. The WSJ Dollar Index fell 0.61% to 96.05. Oil prices ended higher on hopes for increased China demand. And gold futures settled at an eight-month high as the dollar weakened.

Australian Market

Australia’s S&P/ASX 200 benchmark index closed 0.6% higher, with a strong performance from miners offset by weakness in technology stocks. Energy stocks were the day’s best performers, rising 1.4%.

US Market 

U.S. stocks pared some of their early gains, with investors still weighing bets about whether the Federal Reserve might dial back its aggressive pace of increases in interest rates. The S&P 500 fell 0.1%, paring earlier gains of as much as 1.4%. The Dow Jones Industrial Average fell 0.3%, also reversing earlier gains. The tech-focused Nasdaq Composite Index rose 0.6%.

Money managers said the Federal Reserve and other central banks will want to see a sustained decline in inflation before they consider pausing efforts to tighten monetary policy. “In 2023, we’ll need to see almost all numbers pointing in the right direction to maintain this rally,” said Edward Park, chief investment officer at London-based Brooks Macdonald.

Commodities

Gold prices ended at their highest settlement since early May, as a rally driven by a softer dollar and hopes for a less-aggressive Federal Reserve continued. February gold gained 0.4% to settle at $1,877.80 per ounce on Comex, with prices for the most-active contract ending at their highest since May 6, FactSet data show. Gold is “certainly glittering, gaining over 2.8% since the start of 2023 thanks to a softer dollar, falling Treasury yields and expectations of a less hawkish” Fed, said Lukman Otunuga, manager of market analysis at FXTM.

Oil Futures

U.S. oil futures finished higher after posting an overall loss for last week, with traders betting on increased demand as Beijing continued to ease Covid-19 restrictions and open up the world’s second-biggest economy. West Texas Intermediate crude for February delivery rose 1.2% to settle at $74.63 a barrel on the New York Mercantile Exchange, with front-month prices for the U.S. benchmark up a third straight session. March Brent crude, the global benchmark, added 1.4% to $79.65 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$1.0660 to highs near US$1.0760 and was near US$1.0730 at the US close. The Aussie dollar held between US69.05 cents and US69.50 cents and was near US69.10 cents in late US trade. And the Japanese yen rose from 132.63 yen per US dollar to JPY131.56 and was near JPY131.80 in late US trade.

European Markets

European sharemarkets were firmer on Monday, hitting sevenmonth highs. Investors were encouraged by the fact that China was re-opening its borders. And German industrial production rose 0.2% in November (survey: +0.1%). Rate-sensitive technology stocks rose by 3.4% while construction & materials rose by 2.4% and mining rose by 2.2%. The continent-wide FTSEurofirst 300 index rose by 0.8% and the UK FTSE gained 0.3%.

Asian Markets

Earlier, in Asia, Japanese markets were closed for the Coming of Age Day holiday. Chinese shares continued to rally as a border reopening, cheap valuations, and a weaker U.S. dollar attracted investors. Consumption and insurance companies led the gainers. However, property stocks ran out of steam despite Beijing’s supportive policies as homebuyers’ confidence is expected to take more time to recover. The Shanghai Composite Index closed 0.6% higher, the Shenzhen Composite Index rose 0.7%, and the ChiNext Price Index added 0.8%.

  • Global Fundamental Analysis 10/01/2023, FP Markets
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