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Global Fundamental Analysis 11/01/2023

Global Fundamental Analysis 11/01/2023, FP Markets

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

U.S. stocks ended higher after wavering following comments from Federal Reserve Chairman Jerome Powell. The yield on the 10-year U.S. Treasury note climbed to 3.61% from 3.52% on Monday. The WSJ Dollar Index rose 0.12% to 96.17. Oil prices ended higher as traders eyed China’s reopening. And gold futures marked their first loss in three sessions as investors weighed economic soft-landing scenarios.

Australian Market

Australia’s S&P/ASX 200 benchmark index closed 0.3% lower, snapping a four day winning streak, with losses across multiple sectors. Only telecom services, consumer discretionary and consumer staples finished in the green, with materials stocks the worst performing sector, losing 0.6%. Miners also declined.

US Market 

U.S. stocks rose, even as investors parsed remarks from Federal Reserve officials indicating a higher-for-longer outlook for interest rates. The S&P 500 rose 0.7% while the Dow Jones Industrial Average edged up 0.6%. The technology-heavy Nasdaq Composite Index advanced 1%. 

Fed Chairman Jerome Powell said the central bank is strongly committed to lowering inflation, even though interest-rate increases to restrain economic growth could fuel political blowback. “The critical question on everyone’s mind right now is: When are we going to see the Fed’s tightening peak?” said Stephen Innes, managing partner at SPI Asset Management. “We keep seeing the Fed come out and make these really hawkish comments, but the market isn’t really pricing that in.”

Commodities

Gold prices finished slightly lower for the first time in three sessions — a day after prices settled at their highest in eight months — as investors continued to weigh the prospects for a soft landing for the U.S. economy. February gold settled at $1,876.50 per ounce on Comex, down 0.1%.

Oil Futures

Oil futures settled higher, with U.S. prices up a fourth-straight session, finding support as investors continued to monitor China’s reopening and looked for signs of a potential global recession. West Texas Intermediate crude for February delivery rose 0.7% to settle at $75.12 a barrel on the New York Mercantile Exchange.

March Brent crude, the global benchmark, added 0.6% to $80.10 a barrel on ICE Futures Europe. “We are confident that oil prices will climb again once the current wave of Covid infections has peaked in China and economic activity picks up,” said Carsten Fritsch, commodity analyst at Commerzbank, in a note.

Forex

Major currencies were mostly weaker against the US dollar in European and US trade. The Euro rose from lows near US$1.0711 to highs near US$1.0754 and was near US$1.0735 at the US close. But the Aussie dollar eased from highs near US69.18 cents to lows near US68.59 cents and was near US68.90 cents at the US close. And the Japanese yen weakened from near 131.66 yen per US dollar to around JPY132.45 and was near JPY132.25 at the US close.

European Markets

European sharemarkets dipped on Tuesday after hitting 8- month highs in the previous session. Retail stocks fell 1.4%. The continent-wide FTSEurofirst 300 index dipped 0.6%. But Bayer shares gained 4.1% after it said that its new blood clot drug could make more than -heavy K FTSE 100 index dropped 0.4%.

Asian Markets

Earlier, in Asia, Japanese stocks ended 0.8% higher, led by gains in electronics and machinery stocks as hopes grew for a less aggressive tightening from the Federal Reserve. Chinese shares ended mixed as the country’s manufacturing and retailing sectors continued benefiting from reopening optimism, while financial and property stocks retreated.

Auto makers outperformed all other sectors. Stocks in the financial and property sectors declined. The Shanghai Composite Index closed 0.2% lower and the Shenzhen Composite Index edged up 0.3%. The ChiNext Price Index ended 1.4% higher.

  • Global Fundamental Analysis 11/01/2023, FP Markets
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