Global Fundamental Analysis 03/12/2021

Global Fundamental Analysis 03/12/2021, FP Markets

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


U.S. stocks jumped, getting some help from the WHO’s chief scientist suggesting vaccines will likely still offer some protection from the Omicron variant of the coronavirus. The yield on the 10-year Treasury edged up to 1.45%. The WSJ Dollar Index ticked higher to 90.05. Oil futures rose after the market seemingly brushed off an OPEC+ announcement that it will continue to raise its production targets. Gold dropped to its lowest settlement since mid-October.


Australian Market

Australia’s S&P/ASX 200 ticked 0.15% lower, clawing back most of its early losses for a consecutive session. Gains by the heavyweight financial sector, industrials and utilities offset weakness among tech, health and materials stocks. Tech was the worst-performing sector, falling 3.2%.


US Market

U.S. stocks jumped, continuing a tumultuous week for markets driven by uncertainty about the potential impact of the Omicron variant on public health and the economy. Equities rose, with the S&P 500 and Dow Jones Industrial Average more than recouping Wednesday’s losses. All 11 sectors of the S&P 500 were up, with all but one rising at least 1%. Investors already confronting rising inflation are now also evaluating the likelihood that Omicron could spur changes in government or monetary policy, which has led to pronounced volatility in recent sessions.  

“You have a demand disruption story on one hand — Omicron — and a monetary tightening issue with the Fed, so people are trying to figure out which way is up,” said Austin Graff, co-chief investment officer and portfolio manager of the TrueShares Low Volatility Equity Income ETF, who is bullish on energy and financial companies. The S&P 500 settled 1.4% higher. The Dow Jones Industrial Average added 1.8%, while the Nasdaq Composite gained 0.8%.



Gold prices declined to their lowest settlement since mid-October, after a volatile few days of trading since the announcement of a new Omicron variant of Covid late last week. Most traders and investors believe that the omicron variant “won’t cause catastrophic damage to the global economy,” said Chintan Karnani, director of research at Insignia Consultants.

“They are preferring stocks over safe havens like gold,” he said. “Technical traders are also not buying as short term technicals are bearish. “The most active February gold futures contract lost 1.2% to settle at $1,762.70 an ounce on Comex. That was the lowest settlement for a most-active contract since Oct. 12, according to Dow Jones Market Data.


Oil Futures

Crude-oil futures rose after a group of major oil producers decided to stick with their existing production policy and boost output at the start of next year, despite growing concerns over energy demand. “Demand concerns were already on the rise and the last thing crude oil bulls were expecting to hear was another rollover of the current policy from the OPEC+ group,” said Fawad Razaqzada, market analyst at ThinkMarkets, in a market update.

“Yet contrary to some expectations for only a moderate hike or no hike at all for January, that’s exactly what happened. “In its statement, however, OPEC+ said that its meeting remains in session “pending further developments of the pandemic and continue to monitor the market closely and make immediate adjustments if required. “West Texas Intermediate crude for January delivery climbed 1.8% to $66.72 a barrel on the New York Mercantile Exchange after trading as low as $62.43. Meanwhile, February Brent crude, the global benchmark, rose 1.4% to settle at $69.84 a barrel on ICE Futures Europe, following a 0.5% decline a day ago and a 5.5% tumble on Tuesday.



Major currencies were mixed against the US dollar in European and US trade. The Euro fell from highs near US$1.1345 to lows near US$1.1294 and was near US$1.1300 at the US close. The Aussie dollar rose from lows near US70.84 cents to highs near US71.13 cents and was near US70.90 cents at the US close. And the Japanese yen lifted from 113.30 yen per US dollar to JPY112.71 and was near JPY113.15 at the US close.


European Markets

European sharemarkets shed more than 1% on Thursday as countries ramped up restrictions to curb the spread of the Omicron virus variant. The pan-European STOXX 600 index fell by 1.2% with travel and leisure stocks down 2.6%. The German Dax index lost 1.4% and the UK FTSE index dipped 0.6%. In London trade, shares in Rio Tinto rose by 0.6% and BHP shares lifted 1.2%.


Asian Markets

Earlier Thursday, Chinese stocks retreated, following steep losses in U.S. equities overnight, as rising Omicron concerns and the Fed’s indication of inflation worries weighed on sentiment. The benchmark Shanghai Composite Index fell 0.1%, while the Shenzhen Composite Index lost 0.6%. The ChiNext Price Index edged down 0.2%. Hong Kong’s Hang Seng Index gained 0.5%, thanks to gains by property developers and lenders.

Property heavyweights are outperforming as companies issue more debt domestically, easing fears of a liquidity crunch, Oanda said. The Nikkei Stock Average was dragged 0.7% lower by railway and electronics stocks, as concerns persisted over the Omicron Covid-19 variant and renewed travel restrictions. SoftBank Group lost 5.1%, as shares of some of its portfolio companies have fallen sharply in recent sessions.

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