Global Fundamental Analysis 18/01/2021

Global Fundamental Analysis 18/01/2021, FP Markets

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

U.S. stocks declined after disappointing December retail sales. The yield on the 10-year Treasury note ticked lower to 1.10% from 1.128% Thursday. The WSJ Dollar Index was higher at 85.51. U.S. crude oil prices shed gains but closed higher for the week. Gold prices declined to post a loss for the week as the U.S. dollar firmed.

Australian Market

Australia’s S&P/ASX 200 index closed flat. Sentiment had previously been supported by a rebound in iron-ore prices.

US Market

U.S. stocks fell after President-elect Joe Biden unveiled a $1.9 trillion Covid-19 relief plan and the December retail-sales report came in weaker than expected, underscoring the coronavirus pandemic’s continued effect on the economy.

The Dow Jones Industrial Average lost 0.6%, the S&P 500 fell 0.7% and the Nasdaq Composite dropped 0.9%. All three indexes ended the week lower.

For several months, the markets have been riding a number of strong trends that have powered everything from large-cap stocks to bitcoin to record highs. Underlying all of it has been a bet on government and central-bank aid to offset the damage wrought by the pandemic.

Commodities

Gold futures slid to end lower for the week as the U.S. dollar strengthened and investors parsed President-elect Joe Biden’s recently announced $1.9 trillion Covid-19 relief plan.

February gold gave up $21.50, or 1.2%, to settle at $1,829.90. The settlement was the lowest for a most-active contract since Dec. 1, according to FactSet data.

Oil Futures

U.S. benchmark oil prices finished sharply lower, prompting U.S. prices to pare their gain for the week, as investors weighed fresh Covid-19 outbreaks in China, which has been an engine of demand as other major economies were slowed by the coronavirus pandemic.

West Texas Intermediate crude for February delivery fell $1.21, or 2.3%, to settle at $52.36 a barrel on the New York Mercantile Exchange. Prices based on the front-month contract ended the week with a modest 0.2% gain, they are third in a row, after settling Thursday at their highest since February of last year, according to Dow Jones Market Data. March Brent crude, the global benchmark, lost $1.32, or 2.3%, at $55.10 a barrel on ICE Futures Europe, for a 1.6% weekly fall.

Forex

Major currencies were weaker against the US dollar in European and US trade. The Euro fell from highs near US$1.2150 to lows near US$1.2075 and was near the lows at US close. The Aussie dollar fell from highs near US77.70 cents to lows near US76.80 cents and was near US77.00 cents at US close. And the Japanese yen fell from near 103.60 yen per US dollar to near JPY103.90 and was around JPY103.87 at US close.

European Markets

European sharemarkets fell on Friday on fears of tighter lockdowns and slow vaccine shipments across the continent. The pan-European STOXX 600 index eased 1% from 11-month highs to
be down 0.8% on the week. The German Dax index lost 1.4%, and the UK FTSE index fell by 1.0%. In London trade shares in Rio Tinto fell by 3.0% and shares in BHP fell by 3.3%.

Asian Markets

The Japanese Nikkei ended lower, dragged by declines in auto stocks, as concerns continue over the pace of a recovery from the Covid-19 pandemic. The Nikkei Stock Average fell 0.6%.

China’s major stock benchmarks ended the session with slight gains, as muted trading persisted after a strong New Year rally in the past weeks. The benchmark Shanghai Composite Index edged up 0.47 point while the Shenzhen Composite Index was up 0.3%. The ChiNext Price Index eked out a gain of 0.77 points. The food and beverage sector, together with consumer-services providers such as tourism and education companies, were the top losers, while banks strengthened to lend support.

  • Global Fundamental Analysis 18/01/2021, FP Markets
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