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Global Fundamental Analysis 23/11/2022

Global Fundamental Analysis 23/11/2022, FP Markets

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

U.S. stocks posted moderate gains in a low-volume day of trading. The yield on the 10-year Treasury ticked down to 3.77% amid global growth concerns. The WSJ Dollar Index fell to 99.9. Oil prices gained for the first time in five sessions as the market shook off OPEC production rumblings. Gold prices were little changed.

Australian Market

Australia’s S&P/ASX 200 rose 0.6% to its highest closing level in five months. Iron ore, lithium and oil stocks all rose as commodity shares rebounded.

US Market 

U.S. stocks rose in thin preholiday trading, with investors focused on the path of the Federal Reserve’s interest-rate increases. The S&P 500 was up 1.4%. The Dow Jones Industrial Average gained 1.2%, and the Nasdaq Composite added 1.4%. Many traders were away from their desks ahead of the Thanksgiving holiday. It was the sixth-lowest day by trading volume of the year. Still, there is still much for investors to consider as they try to chart the market’s trajectory.

Rising Covid-19 cases in China have raised concerns among money managers about growth in the world’s second-largest economy just weeks after the prospect of eased restrictions propelled stocks and commodities higher globally. “The more negative tone out of China yesterday has only added to existing fears about a U.S. recession over the coming months,” said Deutsche Bank strategist Jim Reid.

Commodities

Gold futures closed nearly flat, finding support as a sharp bounce by the U.S. dollar ran out of steam, while investors awaited more cues on the Federal Reserve’s monetary policy path. Gold futures for December delivery slightly gained 0.02% to settle at $1,739.90 an ounce on Comex.

“Though the latest cooling of U.S. inflation has dampened fears of rampant inflation and thus ever more pronounced rate hikes by the U.S. Federal Reserve, it is still clear that the central bank has not yet finished tightening its monetary policy. After all, at 7.7% inflation is still a long way off its 2% target,” wrote analysts at Commerzbank.

Oil Futures

Crude futures recovered from the steep slump sparked Monday when markets digested mixed news that major producers were mulling churning out more oil. Energy-sector prices were generally weaker to start this week, but ended well off session lows Monday after Saudi Arabia’s energy minister denied a news report that the Organization of the Petroleum Exporting Countries and its allies were weighing a production increase. Such an increase would be seen helping to ease tensions with the U.S. and keep energy flowing as new efforts to curtail Russia’s oil industry take effect.

West Texas Intermediate crude for January gained 1.14%, to $80.95. January Brent crude gained 1% to $88.36 a barrel. “Oil prices are trying to find a suitable center for gravity today,” said Stephen Innes, manager partner with SPI Asset Management. “Traders are trying to balance the 2-million-barrels-per-day output cuts announced in October, an imminent EU embargo on Russian oil shipments, and G-7 plans to set a price cap on Russian oil versus their ‘where there is smoke, there is fire’ [mentality] after reports that OPEC was considering increasing output.”

Forex

Major currencies were firmer against the US dollar in European and US trade. The Euro rose from lows near US$1.0245 to highs near US$1.0300 and was near highs in late US trade. The Aussie dollar rose from lows near US66.05 cents to highs near US66.50 cents and was near US66.45 cents in late US trade. And the Japanese yen rose from near 142.00 yen per US dollar to near JPY141.10 and was around JPY141.20 in late US trade.

European Markets

European sharemarkets rose on Tuesday, supported by a 4.8% lift in oil & gas stocks. European Central Bank officials made statements on interest rates. Austria’s central bank chief Robert Holzmann said he would favour a third straight 75 basis point lift in rates at the next European Central Bank meeting. Bundesbank President Joachim Nagel said that even a 50bp lift in rates is a “strong” move. Economists expect a 50 bps move, according to a Reuters poll. The continent-wide FTSEurofirst 300 index lifted by 0.8%. And the UK FTSE 100 rose by 1.0%.

Asian Markets

 Earlier Tuesday, China stocks ended mixed, slightly picking up from a recent downturn amid deteriorating Covid outbreaks and tightened movement curbs across several major cities. The benchmark Shanghai Composite Index, the only gainer among the major indexes, edged up 0.1%. The Shenzhen Composite Index lost 1.3%, while the ChiNext Price Index was down 1.8%.

Property developers and construction companies were among the best performers after top Beijing officials reiterated support for the embattled sector. Tourism-related companies offset the momentum as the sector continued to weaken. Hong Kong’s Hang Seng Index ended down 1.3%, extending a losing streak to a fifth session. Japan’s Nikkei Stock Average climbed 0.6% amid yen weakness that benefits export-oriented companies. Gains on the index were broad-based.

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