Global Fundamental Analysis 04/11/2020

Global Fundamental Analysis 04/11/2020, FP Markets

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


U.S. stocks extended gains amid the election-day vote. The 10-year Treasury note yield hit its highest level in five months, at 0.89%, in a bullish day for risk assets. The WSJ Dollar Index recently was down 0.60% to 88.29. Crude oil prices ended higher on OPEC and the U.S. economy. Gold futures marked their one-week high as investors braced for the U.S. Election Day outcome.


Australian Market

Australia’s S&P/ASX 200 index ended the session up 1.9% to 6066.4 as the country’s central bank cut the cash rate to a record-low 0.1%. The benchmark index rose steadily through the session to its best one-day performance in more than four weeks. Every sector closed higher ahead of the U.S. presidential election, with energy’s 5.3% rise out in front amid stronger oil prices.


US Market

U.S. stocks rose strongly as Election Day voting continues. Investors think a Biden win and the Senate flipping to Democratic control could lead to a big stimulus package to recharge the economy.

Stocks rose as millions of Americans headed to the polls, setting markets up for a second consecutive session of strong gains.

The Dow Jones Industrial Average rose 2%, while the S&P 500 gained 1.8% and the tech-heavy Nasdaq Composite added 1.9%. Historically, stocks have fared well on Election Day. Ahead of Tuesday, the S&P 500 rose 0.8% on average on the nine days from 1984 to 2016 that Americans went to the polls to elect a president. The index climbed on seven of those occasions.



Gold futures settled at their highest in a week as investors focused on uncertainty around the outcome of the U.S. elections and the Federal Reserve’s two-day policy meeting this week. “The rally in gold only takes us back to where prices were trading a week ago, and this looks more like position-squaring ahead of the (election) result” than new long positions, said Adrian Ash, director of research at BullionVault.

December gold for delivery on Comex climbed by $17.90, or nearly 1%, to settle at $1,910.40 an ounce, after gaining 0.7% Monday. The settlement was the highest for a front-month contract since Oct. 27, according to FactSet data.


Oil Futures

The U.S. election is high on traders’ minds, though it’s not clear when the official winner of the presidency will be announced.

“A Trump victory would likely mean “continued issuance of permits for drilling on federal lands [and] support for additional midstream infrastructure” said Stewart Glickman, energy equity analyst at CFRA Research in New York. Trump is not likely to make any change to policy with respect to Iran, which would keep “incremental Iranian barrels off the world market, and “helps the current supply overhang from becoming worse. “Meanwhile, if Democrat Joe Biden becomes president, that may lead to the” possible cessation of new drilling permits on federal land,” said Glickman. Many firms, however, have already built up a “war chest of such permits,” so any such new law “probably only has real teeth to it by maybe 2024.”

West Texas Intermediate crude for December delivery rose 85 cents, or 2.3%, to settle at $37.66 a barrel on the New York Mercantile Exchange.



Major currencies were firmer against the US dollar in European and US trade. The Euro rose from lows near US$1.1649 to highs near US$1.1737 and was near US$1.1710 at the US close. The Aussie dollar rose from lows near US70.27 cents to highs near US71.74 cents and was near US71.60 cents at the US close. And the Japanese yen firmed from 104.78 yen per US dollar to JPY104.43 and was near JPY104.50 at the US close.


European Markets

European sharemarkets advanced on Tuesday with the panEuropean STOXX 600 index up by 2.3% – its best day since mid-June-as investors awaited the US election outcome. Banks (+4.4%) led gains with shares of French lender BNP Paribas up 6.1% after it beat quarterly profit estimates. Shares of Ferrari raced 7.1% higher after an upbeat 2020 earnings forecast. The German Dax index gained 2.6% and the UK FTSE index lifted 2.3%. UK-listed shares of Rio Tinto (+1.6%) and BHP (+1.8%) both rose.


Asian Markets

Japanese stocks closed broadly higher, as corporate results so far showed signs of a recovery from the Covid-19 pandemic. The Nikkei Stock Average ended 1.4% higher at 23295.48.

China’s major stock benchmarks ended the session higher on the back of gains for metal miners and smelters. The Shanghai Composite Index ended 1.4% higher at 3271.07, the Shenzhen Composite Index gained 1.4%, and the ChiNext Price Index added 1.3%.

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