Global Fundamental Analysis 28/05/2021

Global Fundamental Analysis 28/05/2021, FP Markets

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

U.S. stocks mostly rose following a jobless claims report showing another pandemic low in unemployment. The yield on the 10-year Treasury climbed to 1.60%, in part driven by the Biden administration’s plan to release a multitrillion-dollar budget. The WSJ Dollar Index edged lower to 85.2. Oil prices rose as hopes for strong demand seem to be materializing ahead of Memorial Day weekend. Gold prices slipped amid higher Treasury yields.

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Australian Market

Australia’s S&P/ASX 200 closed flat as strength among materials and tech stocks was offset by weakness elsewhere. The tech sector rose 1.9%.

US Market

U.S. stocks settled mostly higher after jobless claims fell to a new pandemic low in another sign of economic reopening.  

The Dow Jones Industrial Average advanced 0.4%, while the S&P 500 gained 0.1%. The tech-heavy Nasdaq Composite fell less than 0.1%  

Stocks have risen this week as investors grow more comfortable with the idea that the Federal Reserve will maintain its supportive monetary policy despite near-term inflation.

Officials have indicated in recent days that there are no plans for imminent policy changes.

Commodities

Gold prices fell from the key level of $1,900 to settle lower for the first time in four sessions, as the U.S. dollar steadied and U.S. Treasury yields moved higher, dulling the metal’s investment appeal.

August gold futures, the most active contract, dropped 0.3% to settle at $1,898.50 an ounce.

Oil Futures

Oil futures finished higher, with U.S. prices at their highest since 2018, as some upbeat U.S. economic data boosted prospects for energy demand, prompting prices to stretch their streak of gains into a fifth-straight session.  

“Iran is still a wild card but as negotiations drag on the market is getting mixed messages,” said Phil Flynn, senior market analyst at The Price Futures Group.  

West Texas Intermediate crude for July delivery rose 1% to settle at $66.85 a barrel on the New York Mercantile Exchange. That was the highest front-month contract settlement since October 29, 2018, according to Dow Jones Market Data.

The front-month July Brent crude, the global benchmark, tacked on 0.9% to end at $69.46 a barrel on ICE Futures Europe.  

WTI and Brent futures have climbed for five sessions in a row, the longest streak of gains since February.

Forex

Major currencies were mixed against the US dollar in European and US trade. The Euro held between US$1.2180 and US$1.2215 and was near US$1.2200 at the US close. The Aussie dollar held
between US77.25 cents and US77.55 cents and was near US77.45 cents at the US close. And the Japanese yen eased from near 109.05 yen per US dollar to JPY109.90 and was near JPY109.80 at
the US close.

European Markets

European sharemarkets were mixed on Thursday. Banks rose by 2% with basic resources up 3%. Shares in Airbus rose 9.2% after the aircraft maker lifted output targets. The pan-European STOXX 600 index rose 0.3% to record highs. But the German Dax index fell by 0.3%, weighed down a 5% fall in shares of pharmaceutical giant, Bayer, after a court ruling. The UK FTSE index lost 0.1%. In the London trade, shares in Rio Tinto rose by 2.7% with BHP up by 2.6%.

Asian Markets

Earlier Thursday, Chinese stocks settled broadly higher, as the market recovered from opening losses. The benchmark Shanghai Composite Index rose 0.4%, while the Shenzhen Composite Index gained 0.8%. The ChiNext Price Index advanced 0.9%. Central China Securities cautioned that recent strength may ease soon as positive factors, such as recent appreciation in the yuan, look largely priced in.

Hong Kong stocks ended the session lower, snapping a two-day recovery. The benchmark Hang Seng Index fell 0.2%, mainly dragged by China’s internet and tech giants.

Japanese shares fell amid concerns about the resurgence of Covid-19 infections in the country and over the MSCI’s rebalancing of its Japan Index. The Nikkei Stock Average lost 0.3%, led by a mixed bag of companies.

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  • Global Fundamental Analysis 28/05/2021, FP Markets
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