Global Fundamental Analysis 25/05/2021

Global Fundamental Analysis 25/05/2021, FP Markets

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

U.S. stocks rose, led by a rebound in technology shares. The yield on the 10-year Treasury slipped to 1.60%. The WSJ Dollar Index was also lower, dipping to 85.1. Oil prices climbed as investors bet on strong summer demand. Gold prices were boosted by weakness in the dollar.

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Australian Market

Australia’s S&P/ASX 200 index closed 1.3% higher, clawing back some of its losses from Wednesday’s sharp fall. The session’s result marked the benchmark index’s largest percentage increase since March 1. Nearly all sectors finished in the green. Technology stocks were a standout, with only the materials sector finishing in the red.

US Market

U.S. stocks advanced, led by rebounding shares of technology and communications companies, as investors grew more comfortable with the inflation outlook and the pace of the economic recovery.  

The tech-heavy Nasdaq Composite rose 1.4%, adding to its recovery after it eked out a small gain last week and snapped a four-week losing streak.  

The S&P 500 climbed 1%. The Dow Jones Industrial Average gained 0.5%. “Inflation concerns have lessened, there’s more of a wider recognition that inflation will be transitory,” said Fahad Kamal, chief investment officer at Kleinwort Hambros. “This is reflecting the fact that we hit the fastest part of the recovery. Growth, while continuing, is going to be at a decelerating pace.

Commodities

Gold futures climbed, with prices inching toward $1,900-an-ounce resistance, as weakness in the U.S. dollar and Treasury yields, along with volatility in bitcoin, contributed to metal’s settling at the highest level since early January.

Gold has pushed higher “mainly on account of the weaker dollar and persisting inflationary concerns, coupled with the fact that the intense volatility in bitcoin could be driving some speculative flows back into the precious metal,” Edward Meir, an analyst at ED & F Man Capital Markets, wrote in a daily note.  

June gold futures rose 0.4% to settle at $1,884.50 an ounce, following a weekly gain of 2.1%, which marked the metal’s third straight weekly advance. The settlement was the highest for a most active contract since Jan. 7, FactSet data show. 

Oil Futures

Oil futures climbed, finding support as a U.S. official said there aren’t yet any signs that Iran will comply with the nuclear commitments required to lift sanctions on the country, casting doubts that Tehran would soon be able to resume crude exports.

A lack of cooperation by Iran, as well as “sceptical comments about Iranian compliance” by U.S. Secretary of State Antony Blinken, both “lower the odds that a new agreement is reached and therefore, suggest sanctions are not likely to be lifted in the near to medium term,” said Tyler Richey, co-editor at Sevens Report Research.  

West Texas Intermediate crude for July delivery rose 3.9% to settle at $66.05 a barrel on the New York Mercantile Exchange. That was the highest front-month contract finish since May 17, according to Dow Jones Market Data.

July Brent crude, the global benchmark, added 3% at $68.46 a barrel on ICE Futures Europe.

Forex

Major currencies were stronger against the US dollar in European and US trade. The Euro rose from lows near US$1.2177 to highs near US$1.2228 and was near US$1.2225 at the US close. The Aussie dollar rose from lows near US77.34 cents to highs near US77.80 cents and was near US77.70 cents at the US close. And the Japanese yen firmed from near 109.12 yen per US dollar to JPY108.74 and was near JPY108.80 at the US close.

European Markets

European sharemarkets rose on Thursday. The pan-European STOXX 600 index gained 1.3% with tech stocks up 2.7%. Shares of chipmaker Nordic Semiconductor jumped 9.8% to the top of STOXX 600 on reports that Franco-Italian rival STMicroelectronics is mulling an offer to buy the company. The German Dax index lifted 1.7% and the UK FTSE index was up 1%. In London trade shares in Rio Tinto fell by 0.2% and shares in BHP lost 0.6%.

Asian Markets

Earlier Monday, Chinese stocks ended the session higher, as the market recovered from losses in early trade. The benchmark Shanghai Composite Index gained 0.3%, recovering from a three-day losing streak last week. The Shenzhen Composite Index added 0.8%, while the ChiNext Price Index rose 0.9%. Software developers and food-and-beverage stocks led gains, while oil companies lent further support.

Hong Kong stocks, however, fell, extending a range-bound trading pattern since late last week. The benchmark Hang Seng Index lost 0.2%. Chinese tech giants led the downturn, following the sector’s losses in the U.S. market on Friday.

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  • Global Fundamental Analysis 25/05/2021, FP Markets
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