Global Fundamental Analysis 25/01/2021

Global Fundamental Analysis 25/01/2021, FP Markets

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

U.S. stocks lost momentum but still managed weekly gains as President Biden started his term. The yield on the 10-year Treasury ticked lower to 1.09% amid disappointing global economic data. The WSJ Dollar Index ticked higher as traders looked for safety. Oil prices fell after data showed U.S. supplies grew unexpectedly. Gold prices slipped on the day but managed a modest weekly gain.

Australian Market

Australia’s S&P/ASX 200 closed 0.3% lower, paring the week’s gains amid losses by tech, commodity and financial stocks. The heavyweight materials and financial sectors fell by 1.1% and 0.6%, respectively.

US Market

U.S. stocks wobbled but managed to post weekly gains, lifted by shares that rallied on strong quarterly reports.

Investors were encouraged this week by a solid start to the corporate earnings season, with companies from Netflix to Morgan Stanley reporting better-than-expected results. Although stock momentum appeared to fade Friday, with both the S&P 500 and Dow Jones Industrial Average retreating from records set earlier in the week, analysts said they believe the market has potential to keep climbing as long as earnings continue to show companies are weathering the coronavirus pandemic.

This week, several technology-driven companies, including Facebook, Apple and Tesla, are set to report results. The Dow Jones Industrial Average fell 0.6% for the session but rose 0.6% for the week. 

The S&P 500 slipped 0.3% but climbed 1.9% for the week. The Nasdaq Composite erased initial losses to end 0.1% higher. It posted a 4.2% weekly gain.

Commodities

Gold futures settled lower, as the U.S. dollar strengthened after losses earlier in the week, but prices for the precious metal tallied their largest weekly gain since mid-December.

“Concerns over new pandemic restrictions in China have triggered the risk-off mood, sending some investors towards the dollar’s safe embrace at the expense of gold,” said Lukman Otunuga, senior research analyst at FXTM.

February gold lost 0.5% to settle at $1,856.20 an ounce, after trading as low as $1,836.30.

Gold saw a weekly gain of 1.4%, the first in three weeks and largest weekly climb since the period ending Dec. 18, FactSet data show, based on the most-active contracts.

Oil Futures

Oil futures declined for the session, pulling U.S. prices lower for the week after U.S. government data revealed an unexpected weekly rise in domestic crude supplies. A resurgence of Covid-19 infections in China and Southeast Asia also raised concerns about near-term oil demand.

West Texas Intermediate crude for March delivery fell by 1.6% to settle at $52.27 a barrel on the New York Mercantile Exchange, with the contract down about 0.3% for the 

Global benchmark March Brent crude fell 1.2% at $55.41 a barrel on ICE Futures Europe, with prices holding on to a gain of around 0.6% for the week. Week, according to Dow Jones Market Data.

Forex

Major currencies were mixed against the US dollar in European and US trade. The Euro rose from lows near US$1.2084 to highs near US$1.2143 and was near US$1.2125 at the US close. The Aussie dollar fell from highs near US77.23 cents to lows near US76.88 cents and was near US76.95 cents at the US close. And the Japanese yen rose from near 104.07 yen per US dollar to near JPY103.83 and was around JPY103.90 at the US close.

European Markets

European sharemarkets rose on Wednesday with the pan-European STOXX 600 index up 0.7%. Dutch chip equipment maker ASML (+3.0%) and Swiss luxury group Richemont (+2.8%) provided
encouraging earnings updates. Shares of education group Pearson (+8.6%) and fashion brand Burberry (+3.9%) rose as investors reacted positively to trading reports. The German Dax index gained 0.8% and the UK FTSE index rose 0.4%. London-listed shares of Rio Tinto (+2.0%) and BHP (+2.8%) both lifted.

Asian Markets

 Earlier Friday, Chinese stocks ended the session mixed, as the market weakened from strong gains in the past two days. The benchmark Shanghai Composite Index fell 0.4%, after the index on Thursday hit its highest level since 2015. The Shenzhen Composite Index rose 0.3%, while the ChiNext Price Index gained 2.3%. The new-energy industry extended its rally to lead gains. But developers and telecom suppliers weighed on the market.

Hong Kong shares fell, continuing to weaken from a recent rally. The benchmark Hang Seng Index fell 1.6%, its largest one-day loss in nearly two months. All but a handful of index constituents declined, with Chinese oil majors leading the downturn.

Japanese stocks also ended lower, dragged down by steel and financial stocks a day after the Nikkei Stock Average hit a new 30-year high. The benchmark index declined 0.4% as concerns persist about elevated Covid-19 deaths in Japan this winter. Earnings season is set to start this week.

  • Global Fundamental Analysis 25/01/2021, FP Markets
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