Global Fundamental Analysis 26/05/2021

Global Fundamental Analysis 26/05/2021, FP Markets

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

U.S. stocks fell slightly after bouncing between small gains and losses. The yield on the 10-year Treasury slipped to 1.56% as the Fed continued to call a recent jump in inflation “transitory.” The WSJ Dollar Index edged lower to 85.05. Oil prices were virtually unchanged ahead of data on U.S. oil inventories. Gold prices rose amid a drop in U.S. consumer confidence and home sales.

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Australian Market

Australia’s S&P/ASX 200 advanced 1.0%, with almost all sectors finishing in the green. Utilities were the only sector to close lower, losing 0.4%.

US Market

U.S. stocks edged lower with the Dow Jones Industrial Average slipping in late trading after hovering around the flatline.  

The S&P 500 and Dow Jones Industrial Average both lost about 0.2%, while the Nasdaq Composite fell less than 0.1%. All three indexes had opened modestly higher before losing steam.  

“There’s this overriding fear that exists in the market that it’s an economy that’s significantly overheating and big inflationary pressures are coming,” said Brian Levitt, global market strategist at Invesco.

Commodities

Gold futures climbed, hitting a high near $1,900 an ounce, a key price resistance level, as data showed monthly declines in U.S. consumer confidence and new home sales, boosting the precious metal’s appeal as a haven investment.  

June gold futures rose 0.7% to settle at $1,898 an ounce. Shortly after the settlement, prices in electronic trading touched a high of $1,899.40, FactSet data show.

Oil Futures

Oil futures posted a modest gain, with U.S. prices holding ground, as traders kept an eye on developments in talks aimed at reviving the Iran nuclear deal.  

Prices “remain at high levels as the high season for oil demand is approaching, and as restrictions are lifted in much of Europe and the United States,” said Louise Dickson, oil markets analyst at Rystad Energy, in a market update.  

West Texas Intermediate crude for July delivery rose 0.03% to settle at $66.07 a barrel on the New York Mercantile Exchange.  

Front-month July Brent crude tacked on 0.3% to settle at $68.65 a barrel on ICE Futures Europe.

Forex

Major currencies were mixed against the US dollar in European and US trade. The Euro rose from lows near US$1.2220 to highs near US$1.2265 and was near US$1.2245 at the US close. The Aussie dollar fell from highs near US77.75 cents to lows near US77.33 cents and was near US77.50 cents at the US close. And the Japanese yen eased from near 108.57 yen per US dollar to JPY109.06 and was near JPY108.75 at the US close.

European Markets

European sharemarkets were mixed on Tuesday. The pan-European STOXX 600 index ended largely unchanged, after hitting a record high earlier in the trading session. The German Dax index rose by 0.2% to all-time highs. Deutsche Wohnen shares climbed 15.7% after announcing that it had agreed to an €18 billion takeover bid from Europe’s largest residential property company Vonovia (-6.1%). But the UK FTSE index fell by 0.3% with London-listed shares in Rio Tinto (-1.5%) and BHP (-1.6%) both down.

Asian Markets

Earlier Tuesday, Chinese stocks ended the session sharply higher. The benchmark Shanghai Composite Index rose 2.4% to its highest closing level in three months. The Shenzhen Composite Index gained 1.9%, while the ChiNext Price Index climbed 2.8%. Food and beverage companies, especially liquor makers, led gains. However, Central China Securities has warned investors of stretched valuations in the industry.  

Hong Kong stocks also finished higher. The Hang Seng Index rose 1.8%, logging its largest one-day percentage gain since early April, as investors weighed a mixed bag of cues including China’s crackdown on commodity prices and easing inflation fears. The Nikkei Stock Average gained 0.7%, led by technology and electronics companies.

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  • Global Fundamental Analysis 26/05/2021, FP Markets
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