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Global Fundamental Analysis 29/09/2022

Global Fundamental Analysis 29/09/2022, FP Markets

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

U.S. stocks rallied as bond yields tumbled. The yield on the 10-year Treasury retreated to 3.73% from 3.96% on Tuesday — the biggest daily drop since March 18, 2009. The WSJ Dollar Index fell 0.97% to 104.13. U.S. oil prices settled higher as Hurricane Ian forced production cuts. And gold futures posted their highest finish in nearly a week.

Australian Market

Australia’s S&P/ASX 200 index fell 0.5% — its lowest closing level since late June. Nearly all sectors finished in the red, with energy, utilities and telecommunications services the only outliers, rising 0.1%, 1.9% and 1.4%, respectively. Technology was the worst-performing sector.

US Market 

U.S. stocks turned upward after a week of punishing losses. The S&P 500 climbed 2% as bond yields tumbled, leaving stocks looking more attractive to investors. The Dow Jones Industrial Average rose nearly 1.9%. Both indexes had fallen for six straight days as of Tuesday, and earlier this week the Dow joined the S&P 500 in a bear market. The Nasdaq Composite Index jumped 2.1%. Bond yields swiveled after the Bank of England said it would begin buying U.K. government bonds in a bid to stabilize markets.  

The BOE’s action helped drive a rise in U.S. stocks, said David Lefkowitz, head of U.S. equities for UBS’s global wealth management business. “For the last several trading days, the pressure on U.S. stocks has been a reflection of some of the turmoil in the fixed-income market,” Lefkowitz said. “As that turmoil settles down, we’re seeing a better tone for equities.”

Commodities

Gold futures posted their highest finish in nearly a week, supported by weakness in the dollar and a drop in U.S. Treasury yields, as nervous traders boosted haven buying of the metal ahead of the month’s end. December gold rose 2.1% to settle at $1,670 per ounce on Comex after trading as low as $1,622.20. Gold prices climbed on “safe-haven buying amid a very nervous marketplace, as the calendar is set to turn to what can be a tumultuous month of October for stock and financial markets,” said Jim Wyckoff, senior analyst at Kitco.com, in daily commentary.

Oil Futures

Oil futures climbed, with U.S. prices settling back above $80 a barrel to their highest finish in nearly a week, after Hurricane Ian forced temporary production cuts in the Gulf of Mexico. West Texas Intermediate crude for November delivery rose nearly 4.7% to settle at $82.15 a barrel on the New York Mercantile Exchange. November Brent crude, the global benchmark, was up 3.5% at $89.32 a barrel on ICE Futures Europe. The Bureau of Safety and Environmental Enforcement reported that in response to the storm, 9.12% of oil production and 5.95% of natural-gas output in the Gulf has been shut in.

Forex

Major currencies were firmer against the US dollar in European and US trade. The Euro rose from lows near US$0.9536 to highs near US$0.9749 and was near US$0.9730 at the US close. The
Aussie dollar firmed from lows near US63.63 cents to highs near US65.30 cents and was near US65.20 cents at the US close. And the Japanese yen strengthened from near 144.79 yen per US dollar to JPY143.92 and was near JPY144.10 at the US close.

European Markets

European sharemarkets rose on Wednesday. The continent-wide FTSEurofirst 300 index lifted by 0.3% after falling nearly 2% earlier in the session. Geopolitical tensions intensified as Europe investigated severe damage to two Nord Stream gas pipelines from Russia. The UK FTSE 100 index also gained 0.3% after falling as much as 2%. The Bank of England said it would buy as many long-dated UK government bonds as needed between now and October 14 to stabilise financial markets after the tax cut rout.

Asian Markets

Earlier, in Asia, Japan’s Nikkei Stock Average ended 1.5% lower, dragged by falls in real estate and shipping stocks, as policy tightening by major central banks raised uncertainty over the global economic outlook. Chinese stocks ended lower, resuming a recent downtrend amid sluggish market sentiment stemming from an uncertain economic outlook. Market turnover is still relatively subdued ahead of the National Day holiday starting next month, Dongguan Securities said in a note. The Shanghai Composite Index lost 1.6%, while the Shenzhen Composite Index and the ChiNext Price Index each dropped 2.6%.

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