Global Fundamental Analysis 05/03/2021

Global Fundamental Analysis 05/03/2021, FP Markets

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

U.S. stocks sank after the Federal Reserve Chairman signalled the central bank will continue its current policy stance despite rising bond yields. The comments sent the yield on the 10-year Treasury up to 1.55%. The WSJ Dollar Index rose to 85.4. Oil prices surged after OPEC+ unveiled its production plans. Gold prices fell amid strength in Treasury yields and the dollar.

Australian Market

Australia’s S&P/ASX 200 closed 0.8% lower, continuing its recent chop as a clutch of major stocks traded ex-dividend post-earnings. The benchmark index failed to recover after dropping at the open following a weak lead from the U.S.

US Market

A dayslong selloff in the stock market intensified and Treasury yields rose after Federal Reserve Chairman Jerome Powell reiterated his intention of keeping the central bank’s easy-money policies in place.  

Mr Powell answered questions on how he views the jump in yields at The Wall Street Journal Jobs Summit and emphasized that the economy is far from reaching full employment.

But some analysts and investors said that Mr Powell’s responses, which closely adhered to his previous comments, did little to assuage fears about the recent rise in bond yields.  

The S&P 500 slid 1.3% after two consecutive days of declines. The Nasdaq Composite fell 2.1% and narrowly missed finishing in correction territory-a drop of 10% from its recent high. The Dow Jones Industrial Average lost 1.1%.

Commodities

Gold futures declined, with bullion settling at its lowest in nine months, pressured by a strong rise in the U.S. dollar and strength in U.S. Treasury yields.

A rising dollar and strength in yields can make gold less attractive to buyers seeking safe-haven investments.

Gold for April delivery on Comex lost 0.9% to settle at $1,700.70 an ounce, after trading as low as $1,691.80. Prices based on the most-active contract marked their lowest settlement since June 5, FactSet data show.

Oil Futures

Oil futures rallied, with U.S. prices posting their highest finish since 2019 after the Organization of the Petroleum Exporting Countries and its allies said they will rollover current production cuts to the end of April.  

West Texas Intermediate crude for April delivery rose 4.2% to settle at $63.83 a barrel on the New York Mercantile Exchange, registering the highest front-month contract finish since April 30, 2019, according to Dow Jones Market Data.  

May Brent crude, the global benchmark, rose 4.2% at $66.74 a barrel on ICE Futures Europe. That was the highest settlement since Feb. 25.

Forex

European Markets

Asian Markets

Earlier Thursday, Chinese stocks settled lower, as rising U.S. bond yields rattled investors and sparked a selloff in Asian markets. The benchmark Shanghai Composite Index declined 2.1%, while the Shenzhen Composite Index lost 2.9%. The ChiNext Price Index, a benchmark measure for emerging industries and startups, sank 4.9%.  

Hong Kong’s Hang Seng Index ended 2.2% lower. The Hang Seng TECH Index also fell 5.8%, tracking a slide in U.S. tech stocks overnight.  

The Nikkei Stock Average slipped 2.1%, dragged by falls in technology and electronics stocks, due to persistent concerns about rising borrowing costs.

  • Global Fundamental Analysis 05/03/2021, FP Markets
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