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Global Fundamental Analysis 17/03/2023

Global Fundamental Analysis 17/03/2023, FP Markets

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

U.S. stocks closed higher as First Republic got a rescue from major U.S. lenders. Treasury yields rose, with the two-year yield jumping back above 4%. The WSJ Dollar Index declined. U.S. oil prices ended higher and gold prices lower as banking jitters eased.

Australian Market

Australia’s S&P/ASX 200 closed 1.5% lower as heavyweight mining and bank stocks kept it firmly on course for its longest run of weekly losses since 2008. Major lenders fell amid worries that more banks globally could fail or require significant support as economic headwinds grow. Mining and energy stocks fared even worse as investors fretted that commodity demand could wane. The energy sector retreated 4.8%.

US Market 

Stocks climbed after 11 of the nation’s biggest banks deposited $30 billion to prop up First Republic Bank. The S&P 500 added 1.8%, the Dow Jones Industrial Average gained 1.2%, and the Nasdaq Composite Index advanced 2.5%. Stocks have come under pressure in recent days amid concerns about the broader financial system.

Thursday’s developments appeared to ease some of those worries, at least temporarily. “We certainly are on alert and watching for signals that the stress can permeate across asset classes and industries and leak into the real economy, which it certainly will,” said Adam Abbas, co-head of fixed income at Harris Associates. “There will be knock-on effects.”

Commodities

Gold prices retreated from a six-week high as global banking jitters abated. April gold prices settled 0.4% lower at $1,923 per ounce on Comex, according to Dow Jones Market Data.

Oil Futures

Oil futures ended higher, stabilizing after the U.S. benchmark ended below $70 a barrel in the previous session, as banking woes eased. West Texas Intermediate crude for April delivery rose 1.1% to finish at $68.35 a barrel on the New York Mercantile Exchange.

May Brent crude, the global benchmark, rose 1.4% to settle at $74.70 a barrel on ICE Futures Europe. Crude prices found support as U.S. stocks rallied on reports that several major banks were working on a rescue package for troubled lender First Republic Bank.

Asian Markets

In Asia earlier, Japan’s Nikkei Stock Average ended 0.8% lower, dragged by falls in financial stocks amid continuing concerns about the sector. Chinese shares ended lower as the Credit Suisse turmoil stoked fears of financial contagion, dragging global stocks down amid negative sentiment.

The benchmark Shanghai Composite Index dropped 1.1% while both the Shenzhen Composite Index and the ChiNext Price Index were 1.5% lower. Most stocks dropped, with energy companies and chip makers leading the losers. Among the few bright spots in the market was the banking sector, which some consider immune from external volatility.

  • Global Fundamental Analysis 17/03/2023, FP Markets
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