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Global Fundamental Analysis 24/11/2022

Global Fundamental Analysis 24/11/2022, FP Markets

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

U.S. stocks closed higher, getting a boost following FOMC minutes that showed policymakers favoring easing the pace of interest-rate raises soon. The yield on the 10-year Treasury declined to 3.70%. The WSJ Dollar Index retreated to 99.0. Oil prices fell as investors doubted a price cap on Russian oil would curtail supplies much. Gold prices edged higher.

Australian Market

Australia’s S&P/ASX 200 gained 0.7%, with investors apparently undaunted by a large interest-rate rise by neighboring New Zealand’s central bank. The board of Australia’s central bank next meets on Dec. 6. Commodity and utility stocks led gains, while the heavyweight financial sector climbed 0.7%.

US Market 

U.S. stocks rose as minutes from the Federal Reserve’s latest meeting showed most officials favored slowing interest-rate increases soon. The S&P 500 gained 0.6%, while the Dow Jones Industrial Average added 0.3%. The Nasdaq Composite added 1%. The minutes said that “a substantial majority of participants judged that a slowing in the pace of increase would soon be appropriate.” Stock indexes came off their lows of the session after the release of the minutes.

“Fed minutes tend to be market-moving events,” said Megan Horneman, chief investment officer at Verdence Capital Advisors. “But there’s a lot more economic data that we’ll get between now and the next Fed meeting. I don’t know that any movement you’ll see today will be long lasting.” Trading volume has been thinner than usual this week as investors step away from their desks before the Thanksgiving holiday.

Commodities

Gold prices settled higher on Wednesday ahead of the release of minutes from the Federal Reserve’s most recent policy meeting, while investors digested U.S. economic data showing business conditions deteriorating, suggesting slower economic growth. Gold prices for December delivery rose 0.3% to settle at $1,745.60 per ounce on Comex. 

“Gold appears to have established a range over the last week or so, with the upper end falling around $1,780 – a major area of support in the first half of the year – and the lower around $1,730 – a major barrier of resistance in September and October,” said Craig Erlam, senior market analyst at Oanda.

Oil Futures

Oil futures closed lower as investors kept tabs on Group of Seven talks on a price cap for Russian oil. The U.S. and its allies could agree on a price cap for the warring nation’s crude, The Wall Street Journal reported early in the trading day, with officials discussing a level around $60 a barrel. The cap still could be set as high as $70, according to the report. 

West Texas Intermediate crude for January delivery fell 3.7% to settle at $77.94 a barrel on the New York Mercantile Exchange. January Brent crude dropped 3.3% to settle at $85.41 a barrel on ICE Futures Europe. “The higher the price cap, the easier it will be for buyers in India and China to access shipping, insurance and other services from Group of Seven nations,” said analysts at Mizuho in a daily report, stressing that that is the intent of the G-7 intervention.

Forex

Major currencies were stronger against the US dollar in European and US trade. The Euro rose from lows near US$1.0296 to highs near US$1.0402 and was near US$1.0395 at the US close. The Aussie dollar lifted from lows near US66.34 cents to highs near US67.38 cents and was near US67.35 cents at the US close. And the Japanese yen rose from near 141.58 yen per US dollar to near JPY139.19 and was around JPY139.55 at the US close.

European Markets

European sharemarkets closed higher on Wednesday as gains in travel and leisure (+1.9%) and mining (+1.8%) stocks offset losses in Credit Suisse (-6.1%) after its profit warning. The S&P Global
eurozone composite purchasing managers’ index (PMI) rose from 47.3 to 47.8 in November (survey: 47). The continent-wide FTSEurofirst 300 index lifted by 0.6% and the UK FTSE 100 rose by 0.2%.

Asian Markets

Earlier Wednesday, Chinese stocks ended mixed, extending a muted trading pattern so far this week, as investors weighed the impact of expanding Covid outbreaks across the country. The benchmark Shanghai Composite Index extended its slight uptrend from the last session, edging up 0.3%. The other two major indexes fell, with the Shenzhen Composite down 0.3% and the ChiNext Price Index losing 0.1%.

Solar energy companies, such as solar glass and panel makers, were among the top gainers, amid the brightening outlook for solar glass demand. The weakness in the tourism sector continued to weigh on the market. Hong Kong stocks ended the session higher, recovering from a five-session losing streak as tech and property shares gained. The benchmark Hang Seng Index advanced 0.6%. Markets in Japan were closed in observance of Workers Day.

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