Global Fundamental Analysis 24/03/2021

Global Fundamental Analysis 24/03/2021, FP Markets

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

Stocks were lower, with the Dow industrials suffering its worst day in about three weeks. The 10-year Treasury note yield eased down for a third straight day to 1.652%, from 1.682% on Monday.

The WSJ Dollar Index was up 0.64% to 87.04. Oil prices dropped 6% to enter correction territory. Gold prices settled at their lowest in more than a week as the dollar firmed.

Australian Market

Australia’s S&P/ASX 200 index closed 0.1% lower as losses among financial, tech and energy stocks outweighed gains elsewhere. The energy was the biggest drag, shedding 1.2%. Financial stocks also suffered, following weakness from their U.S. counterparts.

US Market

U.S. stocks finished solidly lower as the first of two days of testimony from Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen on the state of the government’s efforts to limit the economic damage from the Covid-19 pandemic concluded without any major surprises.  

The Dow Jones Industrial Average ended about 1% lower, marking its worst day since March 4. The S&P 500 index closed off 0.8%, powered lower by declines in industrials and materials, while the Nasdaq Composite Index finished the session 1.1% lower. Rising worries about extended lockdowns in Europe due to the Covid-19 pandemic helped to drive risk appetite lower.

Commodities

Gold futures settled with a loss, as strength in the U.S. dollar contributed to the metal’s price settlement at the lowest in more than a week.  

Gold for April delivery shed $13, or nearly 0.8%, to settle at $1,725.10 an ounce, following a 0.2% decline on Monday. That was the lowest settlement since March 12 for a most-active contract, FactSet data show.

Oil Futures

 U.S. and global oil prices fell by roughly 6% to enter correction territory, as renewed lockdowns in Europe to combat the coronavirus pandemic looked likely to crimp energy demand.  

West Texas Intermediate crude for May delivery lost 6.2% to settle at $57.50 a barrel on the New York Mercantile Exchange. Front-month prices have fallen 12.6% from the recent high of $66.09 on March 5 to enter correction territory, according to Dow Jones Market Data.  

Meanwhile, May Brent crude dropped 5.9%, to $60.49 a barrel on ICE Futures Europe. The global benchmark also marked a correction, down 12.7% from the recent high of $69.63 from March 11.

Forex

Major currencies were generally firmer against the US dollar in European and US trade. The Euro fell from highs near US$1.1930 to lows near US$1.1845 and was near lows at the US close. The
The Aussie dollar fell from highs near US77.00 cents to lows near US76.25 cents and was near lows at the US close. And the Japanese yen rose from 108.80 yen per US dollar to JPY108.40 and was near JPY108.55 at the US close.

European Markets

European share markets generally fell modestly on Tuesday. Germany extended a lockdown to April 18, weighing on economic recovery prospects for the broader region. Also, sanctions were imposed on China by the US, UK and EU, prompting retaliation by China. The pan-European STOXX 600 index eased by 0.2%. But while the German Dax was flat (up just 5 points), the UK FTSE index lost 0.4%. In London trade, shares in Rio Tinto fell by 0.8% while BHP fell by 0.3%.

Asian Markets

The Nikkei Stock Average closed lower as profit-taking kicked in for transportation and bank stocks following their recent gains on the prospects of economic reopening and higher interest rates. The Nikkei Stock Average fell 0.6% as investors are focusing on any signs of economic recovery after the government ended the Covid-19 state of emergency for Tokyo on Sunday.  

China’s major stock benchmarks ended lower as a correction that started in late February showed few signs of ending. The Shanghai Composite Index lost 0.9%, while the Shenzhen Composite Index and the ChiNext Price Index each slipped 1.1%. Companies that supply non-ferrous metals and steelmakers led the declines, likely as pollution-control measures in parts of China could restrict the production of these metals.

  • Global Fundamental Analysis 24/03/2021, FP Markets
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