Global Fundamental Analysis 14/09/2020

Global Fundamental Analysis 14/09/2020, FP Markets

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

U.S. stocks bounced back after a rough couple of sessions to settle sharply higher. The yield on the 10-year Treasury rose slightly to 0.70%. The WSJ Dollar Index fell to 88.26.

Crude prices recovered alongside stocks, but were held back by demand worries. Gold prices benefited from the softening dollar.


Overnight Summary


Australian Market

Australian shares also tumbled, with energy shares hit hard as the S&P/ASX 200 closed 2.2% lower at 5878.6, its lowest level since June 29. Every sector of the benchmark index lost ground following the negative lead from the U.S.

US Market

U.S. stocks surged, rebounding after a three-session selloff in big technology stocks that pulled the Nasdaq Composite Index into correction territory.

The stocks that drove the selloff-Apple, Microsoft and, among others-led the bounce-back as well, all climbing more than 4%. Those stocks began retreating last week after soaring this year, benefiting from the stay-at-home orders implemented to slow the corona-virus pandemic.

Their gains pulled the Nasdaq up 2.7% as of the 4 p.m. close of trading in New York, helping the tech-laden index recover some of the losses it suffered during its steepest three-day drop since March.

The Dow Jones Industrial Average rose 440 points, or 1.6%, and the S&P 500 gained 2%. Both indexes are still lower for September.


Gold futures tallied a second straight session gain, finding support as the strength in the euro pressured the U.S. dollar, boosting the dollar-denominated metal’s appeal.

December gold rose $11.70, or 0.6%, to settle at $1,954.90 an ounce after trading as low as $1,926.30.

Oil Futures

Oil futures finished higher, with U.S. prices reclaiming less than half of the more than 7% drop suffered in the previous session as worries over the demand outlook, driven by the pandemic, continued to limit crude’s upside potential.

West Texas Intermediate crude for October delivery on the New York Mercantile Exchange rose $1.29, or 3.5%, to settle at $38.05 a barrel. November Brent crude, the global benchmark, rose $1.01, or 2.5%, to $40.79 a barrel on ICE Futures Europe.


Major currencies were mostly lower against the US dollar in European and US trade. The Euro fell from highs near US$1.1870 to lows near US$1.1825 and was near US$1.1845 at the US close. The Aussie dollar fell from highs near US73.05 cents to lows near US72.60 cents and was near US72.85 cents at the US close. But the Japanese yen lifted from 106.23 yen per US dollar to JPY106.05 and was near JPY106.14 at the US close.

European Markets

European sharemarkets closed mixed on Friday. Investors weighed prospects for a no-deal Brexit. Investors also mulled merger & acquisition news. The pan-European STOXX 600 index rose 0.1%. The German Dax lost 0.1% but the UK FTSE index rose by 0.5%. In London trade, shares in Rio Tinto rose by 4.3% with shares in BHP up by 2.1%.

Asian Markets

Earlier Wednesday, the technology sector continued to weigh on Asian markets, following the tech selloff on Wall Street the previous day.

Chinese stocks ended the session sharply lower. The benchmark Shanghai Composite Index fell 1.9%. The Shenzhen Composite Index lost 3.2%, while the start-up heavy ChiNext Price Index slumped 4.8%.

Likewise, Japanese stocks settled broadly lower, with tech, auto and banks falling especially sharply. The Nikkei Stock Average declined 1.0%.

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