Global Fundamental Analysis 13/08/2020

Global Fundamental Analysis 13/08/2020, FP Markets

OPENING CALL: The Australian share market is to open lower.

U.S. stocks rose as the pandemic appeared to be stabilizing. The WSJ Dollar Index fell 0.12% to 88.77. The yield on the benchmark 10-year Treasury note gained for a fourth day, ticking up to 0.669%, from 0.657% Tuesday. Oil prices hit a five-month high as U.S.

inventories recorded another weekly drop. Gold prices recouped some of the previous day’s losses amid weakness in the dollar.

 

Overnight Summary

EACH MARKET IN FOCUS

Australian Market

Australian shares slipped 0.1% to 6132.0 as the heavyweight materials sector
declined amid a slump in gold prices. Materials’ 1.6% drop was the biggest weight on the benchmark S&P/ASX 200 index, which pared losses in the last hour of trade.

US Market

U.S. stocks moved higher, as the S&P 500 index flirted with its first closing record since before the pandemic shutdown took effect. The benchmark index rose 1.4% to 3380.34. The index needed to close above 3386.15 to eclipse the previous record, set Feb. 19.

The Dow Jones Industrial Average climbed about 1.1%, and the technology-heavy Nasdaq Composite Index advanced 2.1%.

Commodities

Gold futures settled higher, recouping a small portion of the more than 4% drop suffered a day earlier, as U.S. Treasury yields traded off the day’s highs and the dollar edged lower, providing some support for the precious metal.

The outlook for gold remains bullish,” with the recent pullback “potentially opening the path to fresh all-time highs as fundamentals stimulate appetite for the metal,” said Lukman Otunuga, senior research analyst at FXTM.

December gold rose $2.70, or 0.1%, to settle at $1,949 an ounce. It traded as low as $1,874.20 at one point, the lowest intraday mark for a most-active contract since July 23, according to FactSet data.

Oil Futures

U.S. benchmark oil prices reached a five-month-high, settling 2.5% higher at $42.67 a barrel after the Energy Information Administration reported a third straight week of sharp declines in U.S. oil inventories.

The data also showed a big, 300,000 barrel-per-day drop in U.S. oil production, to 10.7 million barrels per day, which could help keep supplies relatively tight.

Forex

Major currencies were mostly weaker against the US dollar in European and US trade. The Euro rose from lows near US$1.1725 to highs near US$1.1805 and was near US$1.1785 at the US close. The Aussie dollar rose from lows near US71.20 cents to highs near US71.75 cents and was near US71.60 cents at the US close. And the Japanese yen held between 106.68 yen per US dollar and JPY107 and was near JPY106.85 at the US close.

European Markets

European sharemarkets rose for the fourth day on Wednesday. Swiss firm, Sunrise Communications, lifted 26.8% after US firm Liberty Global launched a takeover offer for the company in a deal valued at 6.8 billion Swiss francs (US$7.40 billion). European telcos rose by 1.7%. Investors shrugged off news that the UK economy contracted by a record 20.4% in the June quarter. The pan-European STOXX 600 index closed higher by 1.1%. The German Dax index rose by 0.9%. And the UK FTSE index gained 2.0%. In London trade, shares in Rio Tinto rose by 2.3% and shares in BHP closed higher by 2.1%.

Asian Markets

China’s stock benchmarks pared back some losses after sliding sharply in afternoon trade. The Shanghai Composite Index slid 0.6% to 3319.27 and the
smaller Shenzhen Composite Index shed 1.3%. The ChiNext Price Index, a sentiment barometer of retail investors, fell 2.0%. Companies in the satellite industry broadly tumbled following a recent rally driven by the completion of the BeiDou Navigation Satellite system, a rival to the U.S. GPS.

Japanese stocks settled higher, with the Nikkei Stock Average rising 0.4% to close at 22843.96, with help from utilities and financial stocks.

  • Global Fundamental Analysis 13/08/2020, FP Markets
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