Global Fundamental Analysis 30/11/2021

Global Fundamental Analysis 30/11/2021, FP Markets

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

U.S. stocks rebounded from Friday’s Omicron-variant driven selloff. The 10-year Treasury yield rose to 1.51% from 1.484% as investors became more comfortable with risk. The WSJ Dollar Index strengthened to 90.15. Oil prices also stabilized after Friday’s Omicron-related route. Gold prices continued to fall. 

Australian Market

Australia’s S&P/ASX 200 slipped 0.5%, paring early losses as futures pointed to U.S. equities bouncing back from Friday’s Omicron-driven selloff. The benchmark was down 1.4% in early trade before partially recovering amid hopes that the latest Covid-19 variant may not be as deadly as initially feared. Banking stocks continued their recent retreat amid concerns over squeezed lending margins. The materials and tech sectors rose by 0.7% and 0.6%, respectively.

US Market

Stocks and oil prices bounced back from Friday’s selloff, with investors betting that the Omicron Covid-19 variant will cause less damage to the global economic recovery than initially feared. The S&P 500 jumped 1.3% as of the 4 p.m. close of trading, recouping many of its losses after the index suffered its worst one-day percentage decline in nine months. Friday’s selloff came after South Africa identified a fast-spreading strain of the coronavirus, which the World Health Organization named Omicron, and countries around the world responded with a fresh wave of travel restrictions.  

The Nasdaq Composite advanced 1.9%, boosted by investor appetite for technology stocks. The Dow Jones Industrial Average added 0.7%. “Friday was a panic selloff,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. “Traders have had time to sit back and breathe a bit,” she added, noting that trading volumes were lower over the Thanksgiving holiday weekend, likely exacerbating declines.

Commodities

Gold futures declined, with prices for the haven metal settling below $1,800 an ounce for the fourth session in a row — failing to find much support even as the emergence of a new coronavirus variant sparked a U.S. stock market selloff on Black Friday. Only a global lockdown caused by the Omicron variant will impact precious metals, stocks and bonds, said Chintan Karnani, director of research at Insignia Consultants.

Gold is likely to break past the $1,900 level and climb to nearly $2,000 if there is any indication of an “Omicron-induced lockdown in Europe, the U.K. and North America,” he said. On Comex, the most active February gold futures contract edged down 0.2% to settle at $1,785.20 an ounce. December gold, the front-month contract, lost 0.2% to end at $1,782.30 an ounce.

Oil Futures

Oil futures rallied to recoup a portion of the steep decline on Friday, as markets scrambled to assess the coronavirus variant Omicron. Investors are also awaiting the outcome of this week’s OPEC meetings, some of which have reportedly been delayed due to recent price action.  

Declared a “variant of concern” by the World Health Organization’s technical advisory group, the new strain has sparked fresh travel restrictions around the globe. For the commodity, investors are worried about weakness in demand as recoveries potentially get tripped up. Still, “as long as there are no new lockdowns that would derail the economic recovery, then oil should stabilize,” wrote analysts at Sevens Report Research.  

West Texas Intermediate crude for January delivery climbed 2.6% to settle at $69.95 a barrel, after touching an intraday high at $72.93. The contract slid 13.1% on Friday, the biggest one-day drop for a front-month contract since April 20, 2020, according to Dow Jones Market Data. The global benchmark January Brent crude, which expires at the end of Tuesday’s trading session, rose 1% to $73.44 a barrel on ICE Futures Europe. On Friday, Brent tumbled 11.6%, the biggest one-day percentage decline since April 21, 2020, with both WTI and Brent seeing their lowest closes since Sept. 9. 

Forex

Major currencies were mixed against the US dollar in European and US trade. The Euro held between US$1.1255 and US$1.1295 and was near US$1.1280 in afternoon US trade. The Aussie dollar fell from highs near US71.55 cents to lows near US71.15 cents and was near US71.30 cents in afternoon US trade. And the Japanese yen eased from 113 yen per US dollar to JPY113.90 and was near
JPY113.65 in afternoon US trade.

European Markets

European share markets rebounded on Monday. The pan-European STOXX 600 index rose by 0.7% – the best day in a month – but only regained a portion of the 3.7% loss on Friday. Travel & leisure stocks rose by 1.8%. There were also gains in energy, financial and mining stocks. The German Dax index rose by just 0.2%, constrained by data showing harmonised consumer price inflation at a record high of 6%. And the UK FTSE index rose 0.9%. In London trade, shares in Rio Tinto lifted by 1.7% and BHP shares gained 2.9%.

Asian Markets

Earlier Monday, Chinese stocks settled with mixed results as concerns about the Omicron variant of the coronavirus weighed on travel and tourism-related sectors, offsetting gains among liquor makers. Shipping companies advanced amid the prospect of continued disruptions to supply chains and elevated freight rates. The Shanghai Composite Index was flat, the Shenzhen Composite Index added 0.4% and the ChiNext Price Index ticked 1.0% higher.  

Hong Kong’s Hang Seng Index lost 0.9% amid persistent worries over how the Omicron variant will weigh on the global economy. Casino stocks led the losses, as sentiment was also hit by news that an arrest warrant was issued for the head of Macau’s largest junket group over cross-border gambling. Concerns over the new coronavirus variant also hurt consumer stocks.

Japanese stocks settled mostly lower, led by sharp drops in auto and transportation stocks, as concerns grew about travel and other restrictions in response to the emerging Omicron variant. The Nikkei Stock Average fell 1.6% to 28283.92. Meanwhile, game and select electronics stocks rose. The Japanese government said it will bar new entry of foreigners to the country.

 

  • Global Fundamental Analysis 30/11/2021, FP Markets
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