Global Fundamental Analysis 18/05/2021

Global Fundamental Analysis 18/05/2021, FP Markets

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

U.S. stocks finished modestly lower to start the week. The 10-year Treasury note yield was unchanged at 1.65%. The WSJ Dollar Index was down 0.06% to 85.37. Oil prices posted their highest finish in more than two years on demand optimism. Gold prices marked their highest finish in more than four months.

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Australian Market

Australia’s S&P/ASX 200 index closed 0.1% higher after losing momentum through the latter half of the session. The benchmark was up by more than 0.7% in early trade following a positive lead from U.S. stocks at the end of last week, but steadily gave back most of its gains. The beaten-down tech sector was the best performer, rising 1.2%. Energy added 1.1% and financials lost 0.4%.

US Market

U.S. stocks fell, dragged down by declines among technology shares, as concerns about inflation continued to unsettle investors.  

The Dow Jones Industrial Average fell 0.2%. The S&P 500 dropped 0.3%, while the tech-heavy Nasdaq Composite declined 0.4%. With earnings season drawing to a close, investors remain focused on whether a recent jump in inflation will blow over or become entrenched.

Commodities

Gold finished higher, with prices at their loftiest since January on the back of a weaker U.S. dollar and losses among many global benchmark stock indexes.  

June gold rose $29.50, or 1.6%, to settle at $1,867.60 an ounce. Prices for the most active contract settled at their highest since Jan. 7, and futures also closed above the long-term 200-day moving average for the first time since early in 2021. Analysts view moves above or below moving averages as a gauge of an assets bullish and bearish momentum.

Oil Futures

Oil futures climbed to post their highest finish in more than two years, as signs of a demand recovery in the U.S. and Europe fed optimism over the outlook for energy demand, despite a round of weaker-than-expected economic data from China.  

West Texas Intermediate crude for June delivery rose 90 cents, or 1.4%, to settle at $66.27 a barrel on the New York Mercantile Exchange. That was the highest front-month contract finish since April 23, 2019, when prices ended at $66.30, according to Dow Jones Market Data. July Brent crude, the global benchmark, rose 75 cents, or 1.1%, to $69.46 a barrel on ICE Futures Europe, settling at the highest since March.

Forex

Major currencies were firmer against the US dollar in European and US trade. The Euro rose from lows near US$1.2125 to highs near US$1.2167 and was near US$1.2150 at the US close. The Aussie dollar rose from lows near US77.31 cents to highs near US77.73 cents and was near US77.70 cents at the US close. And the Japanese yen rose from near 109.32 yen per US dollar to JPY109.07 and was near JPY109.20 at the US close.

European Markets

European sharemarkets edged lower on Monday. The pan-European STOXX 600 index fell by 0.1% with travel and leisure stocks down 2.4%, but telecommunications shares lifted 1.4%. Shares of
British technical products company Diploma rose 7% after reporting a rise in fiscal first-half profit. The German Dax index lost 0.1% and the UK FTSE index slid 0.2%. In London trade shares in Rio Tinto rose by 2.3% and shares in BHP gained 1.1%.

Asian Markets

The Nikkei Stock Average closed 0.9% lower amid renewed concerns over the rising number of Covid-19 cases across Asia. Natural resources companies led losses and construction stocks also declined.

Chinese stock markets closed the session higher, extending Friday’s strong rebound. The benchmark Shanghai Composite Index gained 0.8%, its highest close since early March. The Shenzhen Composite Index rose 1.2% while the ChiNext Price Index jumped 2.6%. The renewable energy sector led the rise, recovering from some losses last week amid worries over oversupply and falling solar glass prices.

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  • Global Fundamental Analysis 18/05/2021, FP Markets
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