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Global Fundamental Analysis 11/05/2023

Global Fundamental Analysis 11/05/2023, FP Markets

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

U.S. stock indexes closed mostly higher as technology shares outperformed after data showed inflation cooled for the 10th straight month. Oil futures fell following three straight days of price increases. The dollar weakened and Treasury yields fell as investors boosted expectations for a pause in interest-rate increases from the Federal Reserve. Gold prices fell amid profit-taking.

Australian Market

Australia’s S&P/ASX 200 edged 0.1% lower on losses among financial and materials stocks. The benchmark index posted a second straight decline as investors continued to digest the implications of the federal government’s annual budget announcement.

US Market 

U.S. stock indexes finished mostly higher after fresh data showed inflation cooled for the 10th consecutive month. The consumer price index rose to 4.9% in April from a year ago, easing slightly from a 5% increase in March. It was up 0.4% for the month, in line with economists’ expectations. Stocks rose after the data was initially released, then wavered before closing mostly higher. The S&P 500 added 0.4%, while the tech-heavy Nasdaq Composite rose 1%.

The Dow Jones Industrial Average edged 0.1% lower. Though inflation remains higher than the Federal Reserve’s 2% target, the data reassured some investors that the central bank could be done raising interest rates for the time being. It marked the first CPI reading below 5% in around two years and the latest sign that prices are easing. “I don’t think there are any surprises” in the data, said Hal Reynolds, co-chief investment officer of Los Angeles Capital.

Commodities

Gold prices ended lower for the first time in three sessions as a monthly reading on U.S. consumer prices failed to provide a clear picture of the path for Federal Reserve interest rates. The U.S. dollar weakened following the data, only briefly providing support to dollar-denominated gold prices.

Gold futures for June delivery declined by 0.3% to settle at $2,037.10 per ounce on Comex after registering back-to-back session gains. “Traders were disappointed after they could not get a sure view on timing interest rate cut and interest rate pause – hence the profit-taking,” said Chintan Karnani, director of research at Insignia Consultants.

Oil Futures

Oil futures settled lower, under pressure after data from the U.S. government showed a weekly rise in crude inventories for the first time in four weeks. Weakness in the U.S. dollar following the April reading of the consumer-price index offered little support to dollar-denominated oil prices. West Texas Intermediate crude for June delivery fell 1.6% to settle at $72.56 a barrel on the New York Mercantile Exchange. July Brent crude lost 1.3% at $76.41 a barrel on ICE Futures Europe.

The EIA’s data showed “crude exports have slowed amid Brent’s narrowing [price] premium to WTI, allowing for the entirety of the near 3 million barrels released from the [Strategic Petroleum Reserve] to accumulate into commercial stocks last week,” said Troy Vincent, senior market analyst at DTN. Product stocks, meanwhile, saw sizable declines from “strengthening domestic demand and product net exports jumping 8.5% on the week” to over 4.3 million barrels per day, while domestic refining remains restrained, he said.

Forex

European Markets

European stocks are likely to open higher on Thursday after data showed China’s consumer prices rose at the slowest pace in more than two years in April, and factory gate deflation deepened, fueling debate over the need for additional stimulus to support a patchy post-COVID economic recovery in the country. European stocks ended Wednesday’s session broadly lower after leaders in Washington failed to make progress on a debt ceiling deal. The pan European STOXX 600 gave up 0.4 percent. The German DAX slipped 0.4 percent, France’s CAC 40 shed half a percent and the U.K.’s FTSE 100 eased 0.3 percent.

Asian Markets

Earlier Wednesday, Chinese shares closed mixed, extending a muted trading pattern. The benchmark Shanghai Composite Index shed almost 1.2% while the Shenzhen Composite Index edged up by 0.3% and the ChiNext Price Index advanced 0.7%. Automakers led gains after official sales data showed that sales volume exceeded production volume in April.

Hong Kong’s Hang Seng Index fell 0.5% as recent weakness dragged on. Analysts cited China’s April imports data, which showed a surprise on-year decline, as a potential factor fueling concerns about the post-reopening recovery. Japan’s Nikkei Stock Average fell 0.4%, pulled lower by losses in pharmaceuticals and steelmakers amid concerns over U.S. debt-ceiling talks.

  • Global Fundamental Analysis 11/05/2023, FP Markets
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