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Global Fundamental Analysis 12/05/2023

Global Fundamental Analysis 12/05/2023, FP Markets

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

U.S. stocks ended mixed amid regional bank pressure and streaming woes at Disney. Oil prices dropped on recession worries and a stronger dollar. The dollar’s strength also sapped gold prices. U.S. Treasury yields were little changed as data supported calls for a rate pause in June.

Australian Market

Australia’s S&P/ASX 200 closed 0.1% lower, edging to a third consecutive decline amid weakness in shares of gold and iron-ore miners. New Zealand’s NZX-50 closed 0.8% lower on losses among shares of its largest companies.

US Market 

Shares in Walt Disney, Peloton Interactive and some regional banks weighed on stock indexes, offsetting gains among most Big Tech firms after the U.S. economy showed fresh signs of cooling. Weekly jobless claims ticked higher, while a Labor Department measure of producer prices notched its slowest rate of growth since January 2021, providing new evidence that inflation is slowing and the Federal Reserve may pause interest-rate hikes next month.  

Still, major stock indexes wavered for most of the day and finished mixed. The Dow Jones Industrials fell 0.7%, while the S&P 500 edged down 0.2%. The technology-heavy Nasdaq Composite eked out a 0.2% gain. The quiet trading day continued a weekslong slow dance between markets and policy makers, as investors have parsed regulators’ ability to contain banking-sector stress while curbing price increases for housing, services and more. “But there’s no rest for the weary until that debt ceiling gets resolved, ” said Karyn Cavanaugh, chief investment officer at Carolinas Wealth Management.


Gold prices ended lower, with prices stretching their losses into a second straight session, pressured by strength in the U.S. dollar as investors parsed this week’s U.S. inflation data. Gold futures for June delivery declined by 0.8% to settle at $2,020.50 per ounce on Comex. “The PPI report again looks like success for the Fed’s controlled demolition program to bring down inflation,” wrote Jason Schenker, president of Prestige Economics.

“Despite the easing in PPI inflation, solid jobs data and high CPI inflation could give the Fed a green light to implement a 25 basis point rate hike” at the June Fed meeting, Schenker said. “There is reason to believe that the decline in year-on-year producer inflation will likely presage a further easing of consumer inflation rates.”

Oil Futures

Oil futures settled at their lowest in a week, with ongoing worries about a potential recession pulling U.S. and global benchmark crude prices down a second day in a row. West Texas Intermediate crude for June delivery fell 2.3% to settle at at $70.87 a barrel on the New York Mercantile Exchange. July Brent crude lost 1.9% to end at $74.98 on ICE Futures Europe.

There are “multiple notable influences” on the oil market right now, including the U.S. debt ceiling drama, simmering regional bank worries, and inflation expectations driving a still-aggressive Fed policy outlook, which will ultimately result in a potentially deep economic recession, which would crush demand, analysts at Sevens Report Research wrote.

Asian Markets

Earlier Thursday, Chinese shares ended the session mixed, extending a muted trading pattern. The benchmark Shanghai Composite Index dropped 0.3%. The Shenzhen Composite Index added 0.2% and the ChiNext Price Index was up 0.6%. Consumer-services sectors led gains, but their strength was offset by losses among automakers.

Hong Kong’s benchmark Hang Seng Index shed 0.1%, extending a losing streak for a third day. Cross-sector losses dragged on, as a mixed bag of companies and industries weighed on the market. Japan’s Nikkei Stock Average closed little changed amid cautiousness over the U.S. debt-ceiling issue.

  • Global Fundamental Analysis 12/05/2023, FP Markets
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