Global Fundamental Analysis 11/05/2021

Global Fundamental Analysis 11/05/2021, FP Markets

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

U.S. stocks fell, hurt as shares at the biggest tech companies declined. The yield on the 10-year Treasury ticked higher to 1.61%, finishing above the psychologically significant 1.6% level. The WSJ Dollar Index slipped to 85.3. Oil prices edged higher after a ransomware attack shut a major U.S. pipeline. Gold prices rose, aided by the weakness in the dollar.

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Australian Market

Australia’s S&P/ASX 200 closed 1.3% higher as mining stocks pulled the index to its first record since the onset of the Covid pandemic. The materials sector put on 3.4% amid rising Chinese iron ore futures. Utilities was the only sector to lose ground amid losses by infrastructure owners AusNet, APA and Spark.

US Market

Technology stocks tumbled, weighing on major indexes after the S&P 500 and Dow Jones Industrial Average ended last week at records.  

  Stocks have ground higher in recent days after Federal Reserve officials reiterated their commitment to easy financing conditions to aid the economic recovery. President Biden also is proposing additional fiscal spending. A weaker-than-expected jobs report on Friday boosted optimism that the government and central bank are likely to continue with supportive policies. But some money managers are concerned that stocks’ high valuations may mean the rally will lose steam.  

“Markets have come quite a long way and gone up a lot in a relativity straight line,” said Mike Bell, global market strategist at J.P. Morgan Asset Management. “So the hurdle for further gains becomes higher.”  

The S&P 500 lost 1%, after closing Friday at its 26th record for this year. The Dow Jones Industrial Average briefly crossed above the 35000 milestones for the first time in intraday trading but finished lower by 0.1%. The Nasdaq Composite fell 2.6%.

Commodities

Gold prices climbed, headed for a fourth consecutive gain, supported by a fall in the U.S. dollar to a roughly 2 1/2-month low, as well as some weakness in the stock market.  

June gold futures climbed 0.3% to settle at $1,837.60 an ounce after the most active contract logged a 3.6% weekly gain. Prices extended a climb to the highest finish since Feb. 10, FactSet data show.

Oil Futures

Oil futures ended a few pennies higher, after a ransomware attack forced the shutdown of pipelines supplying around 45% of fuel to the East Coast.  

Crude prices spent some time during the session trading a bit lower on expectations that the U.S. will have to slow its refining activities and boost imports of gasoline.  

In an update, however, Colonial Pipeline said it’s executing a plan to “facilitate a return to service in a phased approach,” with a goal to “substantially” restore operational service by the end of the week.  

West Texas Intermediate crude for June delivery rose 0.03% to settle at $64.92 a barrel on the New York Mercantile Exchange. July Brent crude added nearly 0.1% to settle at $68.32 a barrel on ICE Futures Europe.

Forex

Major currencies were mixed against the US dollar in European and US trade. The Euro held between US$1.2135 and US$1.2175 and was near US$1.2130 at the US close. The Aussie dollar held between US78.35 cents and US78.90 cents and closed US trade near US78.30 cents. And the Japanese yen held between 108.65 yen per US dollar and JPY109.05 and was near JPY108.83 at the US close.

European Markets

European sharemarkets advanced on Monday. The pan-European STOXX 600 index rose by 0.1% to a record high. Shares in miners rose to decade highs in response to a 8% lift in the iron ore price. But travel & leisure stocks fell by 1.4% and technology lost 2.4%. The German Dax index rose by less than 0.1%. But the UK FTSE index fell by 0.1%. In London trade shares in Rio Tinto rose by 1.9% and shares in BHP rose by 1.6%.

Asian Markets

Earlier Monday, Chinese stocks finished the session higher, recovering from steep losses last week when investor sentiment was weaker after a five-day holiday in the country. The benchmark Shanghai Composite Index rose 0.3%, while the Shenzhen Composite Index added 0.2%. The ChiNext Price Index, which suffered the worst decline last week, settled 0.4% higher. Steel producers, metal miners and coal companies led the rise, as commodity prices continued to track up amid a global economic recovery.  

Hong Kong stocks ended the session slightly lower, as Chinese tech giant Meituan extended the sharp downturn it has been on since authorities launched an antitrust probe into the delivery company. The benchmark Hang Seng Index fell 0.1%. Other tech companies added to the losses.  

The Nikkei Stock Average rose 0.5%, led by gains in steel and auto stocks, partly thanks to continued policy support amid the Covid-19 pandemic.

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  • Global Fundamental Analysis 11/05/2021, FP Markets
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