Global Fundamental Analysis 29/10/2020

Global Fundamental Analysis 29/10/2020, FP Markets

OPENING CALL: The Australian share market is to open lower.

U.S. stocks continued to retreat after Covid’s spread prompted shutdowns in Europe. The yield on the 10-year Treasury was flat at 0.70%. The WSJ Dollar Index rose strongly to 88.46. Oil prices fell after data showed inventories climbed. Gold prices fell due to the strengthening dollar.

Australian Market

Australia’s S&P/ASX 200 gained 0.1% as tech stocks helped the benchmark narrowly avoid a fifth straight loss. The tech sector rose 3.0%, while consumer staples added 1.8%.

US Market

U.S. stocks sold off as rising coronavirus infections shook investors confidence in the global economic recovery and sent them toward the safety of Treasuries and the dollar.

All three major indexes were on pace for their worst week since the week ending March 20. The Dow industrials lost 3.4%, its fourth losing session in a row.

The S&P 500 fell even more, 3.5%, its third consecutive retreat. The benchmark has slipped more than 7% from its record closing level in early September and its gains for the year now stand around 1.3%.

Commodities

Gold futures fell sharply to mark their lowest settlement in about a month as declines in global equities, in reaction to rising COVID-19 cases in Europe and the U.S., prompted investors to take refuge in the U.S. dollar.

December gold fell $32.70, or 1.7%, to settle at $1,879.20 an ounce. Prices, based on the most-active contract, settled at the lowest level since Sept. 25, according to FactSet data.

Oil Futures

U.S. benchmark oil prices settled 5.5% lower at $37.39 a barrel, marking the biggest one-day percentage decline since Sept. 8 and the lowest closing price since Oct. 2.

Investors were put in a selling mood by a resumption of coronavirus lockdowns in several European countries, and U.S. data that showed a larger-than-forecast rise in oil inventories.

Forex

Major currencies were mostly weaker against the US dollar in European and US trade. The Euro fell from highs near US$1.1784 to lows near US$1.1717 and was near US$1.1750 at the US close. The Aussie dollar fell from highs near US71.56 cents to lows near US70.39 cents and was near US70.45 cents at the US close. And the Japanese yen held between 104.10 yen per US dollar and JPY104.44 and was near JPY104.30 at the US close.

European Markets

European sharemarkets hit 5-month lows on Wednesday. The panEuropean STOXX 600 sank 3%. Shares of Deutsche Bank (-1.9%) and Carrefour (-0.1%) declined despite upbeat results. The German Dax index slid 4.2% after German Chancellor Angela Merkel reached a deal for a one-month partial lockdown to curb the spread of the virus. France’s CAC 40 index fell 3.4% ahead of President Emmanuel Macron’s virus stay-at-home order. The UK FTSE index fell 2.6%. London-listed shares of Rio Tinto (-3.6%) and BHP (-4%) both fell.

Asian Markets

Earlier Wednesday, Chinese stocks ended the day higher, as the market continued to recover from recent weakness. The benchmark Shanghai Composite Index gained 0.5%, while the Shenzhen Composite Index climbed 0.7%. The ChiNext Price Index added 0.7%. Electronics suppliers and the renewable-energy sector were once again the top advancers.

Japan’s Nikkei Stock Average lost 0.3%, weighed by insurance and real-estate stocks amid persistent concerns about the pace of a global economic recovery from the coronavirus pandemic.

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