Global Fundamental Analysis 13/04/2021

Global Fundamental Analysis 13/04/2021, FP Markets

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

U.S. stocks slipped ahead of a busy week of earnings and economic data. The yield on the 10-year U.S. Treasury note ticked up to 1.67%. The WSJ Dollar Index slipped to 86.97.

Oil prices rose amid rising tensions in the oil-rich Middle East. Gold prices fell, dragged lower by strength in Treasury yields.

Australian Market

Australia’s S&P/ASX 200 dropped 0.3%, pulled down by commodity and consumer-related stocks.

Losses among gold miners and building-materials producers weighed on the materials sector, which lost 1.2%.

The energy sector gave up 0.3% amid lower oil prices, while retail and travel stocks lost ground after Australia’s Prime Minister acknowledged that not all Australians may receive their first Covid vaccine doses before the end of the year. Only the health and telecom sectors rose.

US Market

U.S. stocks inched lower at the start of a busy week of corporate earnings and economic data.  

The Dow Jones Industrial Average fell 0.2%. The S&P 500 was little changed and the Nasdaq Composite lost 0.4%.  

Investors said they were positioning for the start of earnings season, as well as data that will help to gauge whether a coming burst of inflation will prove transitory.  

Among the reports expected this week are those from JPMorgan Chase, Bank of America and Wells Fargo -and companies ranging from Delta Air Lines to PepsiCo to UnitedHealth Group.

Meanwhile, inflation data due on Tuesday are expected to show consumer prices picked up in March.

Commodities

Gold ended lower, with strength in U.S. Treasury yields dulling demand for the precious metal and helping to push prices to their lowest finish in a week.  

Federal Reserve Chairman Jerome Powell’s comments about the U.S. economy being at an “inflexion point” and coupled with increased optimism regarding economic growth and employment caused a sell-off in bonds,” said David Russell, director of marketing at GoldCore.  

June gold futures fell 0.7% to settle at $1,732.70 an ounce on Comex — the lowest finish for a most active contract since April 5, FactSet data show.  

Oil Futures

Oil futures finished higher, as reports that Yemen’s Iran-backed Houthi rebels attacked a Saudi oil facility lifted tensions in the oil-rich Middle East.  

The Houthi movement said that it fired drones and ballistic missiles at targets in Saudi Arabia, including some Saudi Aramco facilities, Reuters reported, adding that there was no confirmation from the Saudis.

Oil also saw support from sizable progress in European efforts to vaccinate against Covid-19 and optimism surrounding a recovery in the U.S. economy, which offset some pressure from a global rise in cases of the virus.  

Against that backdrop, oil prices climbed but settled below the day’s best levels.

West Texas Intermediate crude for May delivery rose 0.6% to settle at $59.70 a barrel on the New York Mercantile Exchange. It had touched an intraday high of $60.77.

Forex

Major currencies were stronger against the US dollar in European and US trade. The Euro rose from lows near US$1.1870 to highs near US$1.1918 and was near US$1.1910 at the US close. The Aussie dollar rose from lows near US76.04 cents to highs near US76.35 cents and was near US76.20 cents at the US close. And the Japanese yen lifted from near 109.59 yen per US dollar to JPY109.24 and was near JPY109.40 at the US close.

European Markets

European share markets fell on Monday. The pan-European STOXX 600 index ended 0.5% lower with technology stocks shedding 1.3%. Shares of Veolia (+9.7%) and Suez (+7.7%) surged after the French utility companies agreed on a merger deal worth about €13 billion. Eurozone retail sales rose 3.0% in February (survey: +1.7%). The German Dax index fell by 0.1%. The UK FTSE index slipped 0.4%. In London trade shares in Rio Tinto (-0.3%) and BHP (-1.5%) both fell.

Asian Markets

Earlier Monday, Asian markets were broadly lower. Chinese stocks settled lower as the market continued to track down after a brief recovery earlier this month. The benchmark Shanghai Composite Index shed 1.1%, while the Shenzhen Composite Index lost 2.1%.

The ChiNext Price Index, a measure for emerging sectors and startups, slid 2.3%. Industrial stocks, including metal producers, packaging makers and chemical suppliers, led the downturn.  

Hong Kong stocks also fell as the market continued to weaken from a recent peak in February. The benchmark Hang Seng Index shed 0.9%. Geely Auto led declines with a 7.1% slump. Chinese tech giants further weighed on the index.  

The Nikkei Stock Average lost 0.8%, dragged lower by disappointing earnings results.

Any Covid-19 countermeasures and their economic implications are being closely watched after the government took new steps to shorten restaurant operating hours in Tokyo.

  • Global Fundamental Analysis 13/04/2021, FP Markets
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