Global Fundamental Analysis 11/01/2021

Global Fundamental Analysis 11/01/2021, FP Markets

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

U.S. stocks ended the week higher under the assumption that a Democratic-controlled Congress will result in further economic stimulus. The yield on the 10-year Treasury ticked higher to 1.12%. The WSJ Dollar Index climbed to 85.12. Oil prices continued their recent gains on a pledge from Saudi Arabia to cut output temporarily. Gold prices sank, pressured by a firming dollar and higher Treasury yields.

Australian Market

Australia’s S&P/ASX 200 closed 0.7% higher at 6757.9, supported by resurgent tech stocks and solid gains by major banks. The benchmark index finished at a session high, following a strong lead from Wall Street. Afterpay surged 6.6% as the tech sector added 2.5% to pare its weekly losses.

US Market

U.S. stocks ended the first week of 2021 at record levels, as investors looked past political turmoil and signs of economic weakness to focus on prospects for more fiscal stimulus.

Major indexes rallied for much of the week, with the Dow Jones Industrial Average notching three consecutive records, as Democratic victories in Senate runoff races in Georgia raised the likelihood of increased government spending to support the economy.

Friday brought another indication of how the coronavirus has weighed on businesses and workers. The monthly employment report showed the U.S. shed 140,000 jobs in December, ending seven months of job growth. Nevertheless, the S&P 500 rose 0.5%, while the Dow Jones Industrial Average added 0.2%.

The tech-heavy Nasdaq Composite advanced 1%. All three indexes closed at records. For the week, the Dow industrials gained 1.6%, while the S&P 500 added 1.8%. The Nasdaq Composite climbed 2.4% in the first week of 2021.

Commodities

Gold futures dropped by more than 4% to log their biggest one-day loss since early November, as yields for U.S. government bonds extended a weekly climb, eroding some appetite for bullion which competes against haven sovereign debt for buyers.

Strength in the U.S. dollar also pressured dollar-denominated prices for gold.

February gold lost 4.1% to settle at $1,835.40 an ounce. That was the lowest settlement for most-active gold futures since Dec. 14, according to FactSet data. Prices also saw their worst one-day percentage loss since Nov. 9, according to Dow Jones Market Data.

March Brent crude, the global benchmark, climbed or 3% at $55.99 a barrel on ICE Futures Europe.

Oil Futures

Oil futures rose, with prices up by roughly 8% for the week in large part due to Saudi Arabia’s decision to unilaterally cut crude output.

The headline item this week was the announcement by Saudi Arabia” that the country would cut an additional one million barrels per day from its output or more than 1% of global supply for the month of February, said Robbie Fraser, manager of global research & analytics at Schneider Electric, in a daily note.

West Texas Intermediate crude for February delivery rose 2.8% to settle at $52.24 a barrel on the New York Mercantile Exchange.

Forex

Major currencies were mixed against the US dollar in European and US trade. The Euro held between US$1.2190 and US$1.2280 and was near US$1.2220 in late US trade. The Aussie dollar held
between US77.30 cents and US78 cents and was near US77.60 cents in late US trade. And the Japanese yen held between 103.6 yen per US dollar and JPY104.10 and was near JPY103.93 in late
US trade.

European Markets

European sharemarkets were firmer on Friday. The panEuropean STOXX 600 index rose by 0.7% on Friday to be up 3% for the week. Tech stocks rose 2.7%, miners rose 0.2% and oil & gas
rose 0.3%. The UK FTSE lifted by 0.2% while the German Dax index rose by 0.6% to record highs. In London trade shares in Rio Tinto were flat while shares in BHP gained 0.9%.

Asian Markets

Earlier Friday, China’s A-shares broadly slipped, snapping a winning streak since the beginning of the year that saw the blue-chip index hitting the highest level since 2008. The Shanghai Composite Index shed 0.2%, while the Shenzhen Composite Index and the ChiNext Price Index each lost around 0.3%. Leading baijiu makers, which had been driving this week’s rally, retreated after several of them broke new record highs earlier this week.

Hong Kong’s Hang Seng Index closed 1.2% higher at 27878.22 as most of its constituents advanced. Geely Automobile soared by 20% to a record of HK$19.60, as a reported electric-vehicle partnership with Baidu further brightens its already-upbeat outlook as China’s leading EV company.

The Nikkei Stock Average rises 2.4% to 28139.03, its highest close since August 1990. Semiconductor-related stocks rose sharply after the Japanese government issued a new state of emergency for Tokyo to contain the Covid-19 pandemic and as hopes grow for U.S. stimulus.

  • Global Fundamental Analysis 11/01/2021, FP Markets
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