Global Fundamental Analysis 22/09/2020

Global Fundamental Analysis 22/09/2020, FP Markets

OPENING CALL: The Australian share market is to open lower.

U.S. stocks suffered broad losses amid a souring in investor mood. The yield on the 10-year Treasury ticked lower to 0.67%. The WSJ Dollar Index jumped to 88.45. The sharp rise in the dollar helped put a serious dent in both oil and gold prices.

 

Overnight Summary

EACH MARKET IN FOCUS

Australian Market

Australian shares settled 0.7% lower, weighed by the heavyweight materials and financial sectors. Tech stocks also continued to lose ground as the benchmark S&P/ASX 200 index slipped to a third straight loss. The financial sector gave up 1.3%.

US Market

The Dow Jones Industrial Average dropped about 500 points, falling in tandem with oil and gold prices and sparking worry among some investors of further turbulence ahead. The day’s losses were broad. Economically sensitive sectors like materials and industrials led the declines.

The Dow dropped 1.9%, while the S&P 500 fell 1.2%. The technology-laden Nasdaq Composite lost 0.1% All three indexes recovered somewhat from their lows earlier in the day.

Commodities

Gold futures dropped by nearly 3%, amid an apparent flight to dollars and rising global risks, including renewed COVID-19 lockdown measures in Europe, partly to blame as bullion prices slumped to their lowest finish in two months.

December gold lost $51.50, or 2.6%, to settle at $1,910.60 an ounce after trading as low as $1,885.40. The settlement was the lowest for a most-active contract since July 24, according to FactSet data.

Oil Futures

U.S. benchmark oil prices fell sharply, ending the session 4.4% lower at $39.31 a barrel due to a plunge in U.S. stock markets and big gains in the dollar.

The sharp decline was also fueled by expectations of renewed Libyan oil exports.

Forex

The Euro and commodity currencies fell against the US dollar in European and US trade. The Euro fell from near US$1.1865 to US$1.1730 and was near US$1.1765 at the US close. The Aussie dollar fell from US73.25 cents to US72.00 cents and was near US72.20 cents at the US close. But the Japanese yen lifted from 104.00 yen per US dollar to JPY104.83 and was near JPY104.70 at the US close.

European Markets

European sharemarkets posted their biggest declines in three months as fears of a second wave of virus cases weighed on travel and leisure stocks. The pan-European STOXX 600 index fell by 3.2%. The travel & leisure sector fell by 5.2%. And banks fell 5.7% on a report detailing US$2 trillion of suspect transfers by leading lenders like HSBC, Barclays and Standard Chartered. Shares in Lufthansa fell by 9.5% as it further cut its fleet and workforce due to the coronavirus crisis. The German Dax index lost 4.4% and the UK FTSE index lost 3.4%. In London trade, Rio Tinto fell by 4.1% with shares in BHP down by 3.6%.

Asian Markets

China’s major stock benchmarks failed to hold on to early gains as consumer and auto stocks dragged the broader market lower. The Shanghai Composite Index was off 0.6%, while the smaller Shenzhen Composite Index was down 0.5% and the ChiNext Price Index shed 1.0%.

  • Global Fundamental Analysis 22/09/2020, FP Markets
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