Global Fundamental Analysis 21/01/2022

Global Fundamental Analysis 21/01/2022, FP Markets

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

U.S. stocks fell after giving up early gains. The yield on the 10-year Treasury note rose to 1.82%. The WSJ Dollar Index rose 0.14% to 89.55. Oil prices settled lower, but global supply risks limited losses. And gold ended slightly lower a day after posting its best daily advance since December.

Australian Market

Australia’s S&P/ASX 200 index closed 0.1% higher, driven by strong performance in the materials sector which finished up 3.0%. Some blue-chip stocks in the heavyweight financial sector were a drag on the benchmark index. The day’s best performer, Northern Star Resources climbed 11.2% after telling investors that it was on track to meet fiscal year 2022 output.

US Market

U.S. stocks closed lower after weakening late in the afternoon, giving up the morning’s gains and showing that investors are still concerned about the prospects of tightening monetary policy and slowing growth. The Nasdaq Composite Index retreated 1.3% after being been up nearly 2% earlier in the day. The S&P 500 dropped 1.1% and the blue-chip Dow Jones Industrial Average fell about 0.9%. The choppy trading shows investors are trying to gauge how far this selloff will “Whenever we see equities churn lower, as they have this year, we are mindful that the risk of a meltdown grows rather than diminishes,” said Nicholas Colas, founder of analytics firm DataTrek Research.  

The Nikkei Stock Average closed 1.1% higher, led by gains in electronics stocks, as selloffs on Wednesday triggered some bargain-hunting. Sony Group gained 5.8% following a 13% drop on Wednesday caused by concerns about new competition for its videogame business from the combination of Microsoft and Activision Blizzard.

Commodities

Gold futures ended with a slight loss, a day after posting the best one-day advance since December and the highest settlement in two months. February gold fell less than 0.1% to settle at $1,842.60 an ounce, following a 1.7% rise a day ago. Wednesday’s rise brought the most-active contract to the highest finish since Nov. 19 on the back of the strongest daily advance of this year, according to FactSet data.  

“Gold is finally finding its footing, largely due to the inflationary environment we find ourselves in, combined with the recent weakness in the U.S. dollar,” said Adam Koos, president at Libertas Wealth Management Group.

Oil Futures

Oil futures settled with a modest loss, easing back from their highest levels since 2014, following an unexpected weekly rise in U.S. crude supplies. Geopolitical risks to global supplies helped to limit price losses.

The February contract for West Texas Intermediate crude fell nearly 0.1% to end at $86.90 a barrel on the New York Mercantile Exchange. The most actively traded March contract, which is now the front month, lost 0.3% to settle at $85.55 a barrel. March Brent crude, the global benchmark, shed nearly 0.1% to settle at $88.38 a barrel on ICE Futures Europe.

Forex

Major currencies were mixed against the US dollar in European and US trade. The Euro fell from highs near US$1.1365 to lows near US$1.1305 and was near session lows in late US trade. The Aussie dollar rose from lows near US72.20 cents to highs near US72.75 cents but fell back to US72.20 cents in late US trade. And the Japanese yen rose from 114.53 yen per US dollar to JPY113.97 and was near JPY114.20 in late US trade.

European Markets

European sharemarkets ended generally higher on Thursday. Travel stocks led the gains (up 2.9%) after Ryanair (up 4.2%) expressed confidence about a recovery in travel demand later this year. The pan-European STOXX 600 index rose by 0.5%. The German Dax index rose by 0.7% despite data showing a record rise in German producer prices in December. But the UK FTSE index eased by 0.1%. In London trade, shares in Rio Tinto fell by 1.3% while BHP shares rose by 1.2%.

Asian Markets

Chinese stocks closed lower, even as the country’s central bank cut benchmark lending rates for a second straight month in a bid to support the economy amid a fresh wave of coronavirus cases. KGI Securities said Beijing’s monetary support might have been offset by concerns over tightening U.S. monetary policies. The benchmark Shanghai Composite Index fell 0.1% while the Shenzhen Composite Index lost 0.9%. The ChiNext Price Index, a measure for emerging industries, slipped 0.3%.

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