Global Fundamental Analysis 18/05/2020

Global Fundamental Analysis 18/05/2020

OPENING CALL: The Australian share market is expected to open higher. The SPI200 futures contract expected to open 32 points up.

New restriction stops foreign semiconductor manufacturers whose operations use U.S. software and technology from shipping products to Huawei without first getting a license from U.S. officials.

Germany fell into recession in the first quarter, shrinking at its second-fastest pace since reunification as the coronavirus pandemic hurt everything from retailers to auto
exporters, but its economy is expected to fare better than its neighbors in 2020.  v

Overnight Summary

EACH MARKET IN FOCUS

Australian Market

US Market

U.S. stocks came back with gains, but ended the week lower. A wide range of data this week revealed the sharp contraction in economic activity
across the nation. Meanwhile, the possibility of renewed trade tensions between the U.S. and China came back to the forefront, igniting concerns about relations between two of the biggest world economies at a time when the U.S. is already facing a massive downturn.

Major indexes fell to start the day but later wavered between small gains and losses. The Dow Jones Industrial Average, as of 4 p.m. ET, rose 60 points, or 0.3%. The S&P 500 gained 0.4%, and the Nasdaq Composite added 0.8%.  Still, all three major indexes ended the week with declines of at least 1.1%. Industrial production figures for April showed a sharp downturn with an 11.2% drop, roughly in line with analysts expectations. Data released by the U.S. Census Bureau showed retail sales fell a record 16.4% in April from a month earlier, as nonessential stores were forced to close. That surpassed a 12% estimate from economists surveyed by The Wall Street Journal.

Commodities

Gold prices ended higher as U.S. economic data underscored the damage from the COVID-19 pandemic on business activity and as concerns over U.S.-China trade tensions lifted haven demand for the metal, which scored its highest settlement in a month.

Gold for June delivery on Comex climbed $15.40, or 0.9%, to settle at $1,756.30 an ounce. Prices for the most-active contract marked their highest settlement since April 14, according to FactSet data.

Oil Futures

Oil prices rose, continuing a recent rebound with global fuel demand starting to rise as the world reopens for business. Most actively traded U.S. crude futures for July delivery rose 5.9% to $29.52 a barrel. Prices have risen from a 21-year low of $11.57 hit last month with oversupply fears easing. Front-month U.S. crude futures for delivery next month advanced 6.8% to $29.43 a barrel.

Forex

The U.S. dollar weakened against the euro and yen and is sharply higher against the pound. The WSJ Dollar Index gained 0.3%.  The government reported retail sales plummeted an unprecedented 16.4% in April from March, but the University of Michigan’s consumer-sentiment survey showed an increase for May in a better than expected result.

European Markets

European sharemarkets rose on Friday. The pan-European STOXX 600 gained 0.5% but was down 3.8% on the week. The German Dax index rose 1.2% despite the
economy contracting 2.2% in the March quarter. The UK FTSE index was up by 1.0%. In London trade, shares of Rio Tinto were up by 4.4% and BHP shares rose by 4.3%.

Asian Markets

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