Global Fundamental Analysis 14/05/2021

Global Fundamental Analysis 14/05/2021, FP Markets

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

U.S. stocks posted their first winning session this week as data showed jobless claims fell to a pandemic low last week, beating expectations. The yield on the 10-year Treasury slipped to 1.66% as the market for U.S. Treasurys stabilized. The WSJ Dollar Index ticked lower to 85.7. Oil prices declined as a key U.S. pipeline resumed operations. Gold prices edged higher to end a losing streak.

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Australian Market

Australia’s S&P/ASX 200 closed 0.9% lower amid a continuing sell-off of local tech stocks. The index’s third straight loss marked its worst streak since mid-March and left it 2.7% off the record it set on Monday. Tech stocks again led the drop, with the sector now down 19% for 2021.

US Market

U.S. stocks soared, chipping away at losses after suffering their worst three-day decline since late October.

The moves marked a comeback for U.S. stocks after a jittery start to the week. Signs that inflation may be picking up faster than expected have put investors on edge, pressuring shares in the priciest corners of the market. Data earlier this week showed consumer prices surged higher in April, while a separate report said producer prices posted their biggest annual jump since the Bureau of Labor Statistics began tracking the data in 2010.  

The Dow Jones Industrial Average jumped 1.3%, lifted by shares of everything from manufacturers to technology giants. The S&P 500 gained 1.2% and the Nasdaq Composite climbed 0.7%.

Commodities

Gold prices ended a bit higher, after touching their lowest intraday price in a week and posting declines over the past two sessions on the back of jitters centred on rising inflation.  

A recent resurgence in yields for U.S. government bonds to their highest levels in weeks and a perkier U.S. dollar, on the back of fears of pricing pressures building in the aftermath of the Covid pandemic, has been part of the recent drag on the precious metal, analysts have said.  

On Thursday, however, Treasury yields eased back. June gold futures tacked on nearly 0.1% to settle at $1,824 an ounce on Comex, after touching a low at $1,808.40, the lowest intraday level since May 6, according to FactSet data.

Oil Futures

Oil futures fell sharply, snapping a four-day winning streak to settle at their lowest price so far this month, as the Colonial Pipeline resumed operations after shutting down late last week in response to a ransomware attack.  

Traders also tracked a continued surge in Covid-19 cases in India, the world’s third-largest oil importer.  

Colonial said that by midday it expected each market the company services to “be receiving the product from our system.” West Texas Intermediate crude for June delivery fell 3.4% to settle at $63.82 a barrel on the New York Mercantile Exchange. July Brent crude dropped 3.3% to $67.05 a barrel on ICE Futures Europe.  

Both crude benchmarks marked their lowest front-month contract settlements since April, according to Dow Jones Market Data.

Forex

Major currencies were mixed against the US dollar in Europe and US trade. The Euro fell from highs near US$1.2104 to lows near US$1.2050 and was near US$1.2080 at the US close. The Aussie
dollar rose from lows near US76.88 cents to highs near US77.40 cents and was near US77.30 cents at the US close. And the Japanese yen firmed from 109.69 yen per US dollar to JPY109.39 and was near JPY109.45 at the US close.

European Markets

European sharemarkets were mixed on Thursday. The pan-European STOXX 600 index eased 0.1% after falling as much as 1.7% earlier in the session. Basic resources stocks were down 3%. The
German Dax index lifted 0.3%, but the UK FTSE index slid 0.6%. Shares of Burberry tumbled 4.2% after reporting an annual sales drop. In London trade shares in Rio Tinto fell by 4.1% and shares in BHP lost 4%.

Asian Markets

Earlier Thursday, Chinese stocks ended lower, snapping a recovery that started at the beginning of the week. The benchmark Shanghai Composite Index lost 1.0%, while the Shenzhen Composite Index was down 0.8%. The ChiNext Price Index shed 0.6%. Carmakers were among the top losers, as the sector weakened from its soaring momentum on Wednesday.

Hong Kong stocks ended lower, snapping their brief recovery Wednesday to extend the broad downturn this week. The benchmark Hang Seng Index shed 1.8%. Exporters led losses, as faster-than-expected U.S. inflation pressured sentiment.  

Japan’s Nikkei Stock Average dropped 2.5%, dragged by weakness in tech and electronics stocks, on growing concerns about rising inflation and higher borrowing costs. Earnings remain in focus as the season winds down in the coming days.

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  • Global Fundamental Analysis 14/05/2021, FP Markets
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