Global Fundamental Analysis 05/01/2022

Global Fundamental Analysis 05/01/2022, FP Markets

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


U.S. stocks were mixed, with the Dow industrials setting a record, while tech stocks fell. The yield on the 10-year Treasury note rose to 1.666%, compared with 1.628% on Monday. The WSJ Dollar Index rose 0.04% to 90.04. Oil futures settled higher as OPEC+ kept output plan in place. And gold futures recouped half of their Monday loss on disappointing U.S. data and Omicron uncertainty.


Australian Market

Australia’s S&P/ASX 200 index closed 2.0% higher, hitting a four-month high in the country’s first trading session of 2022. All sectors finished in the green, as the benchmark index achieved its strongest closing level since Aug. 13. The energy sector was the standout, rising 3.9%. The ASX 200 gained 13% for 2021.


US Market

The Dow industrials closed at another record in 2022, while technology stocks weighed on the broad market. The Dow Jones Industrial Average rose 0.6% to eclipse a record set Monday. The S&P 500 retreated less than 0.1% while the Nasdaq Composite fell 1.3%. Shares of economically sensitive companies in the energy, financials and industrials sectors advanced, helping the blue-chip gauge outpace other major U.S. indexes. A retreat in big tech stocks, meanwhile, helped pull the tech-heavy Nasdaq Composite lower.  

Traders tend to pile into tech stocks when economic concerns mount, betting those shares can deliver growth. When the outlook brightens, they often rotate into companies that can harness themselves to a strong economy. The Nikkei Stock Average ended the first session of 2022 1.8% higher, led by gains in auto and insurance stocks as the yen hit a five-year low. Toyota Motor climbed 6.1% and Dai-ichi Life Holdings advanced 6.0%.



Gold futures climbed, finding some support despite strength in Treasury yields to recoup just over half of what was lost a day earlier, after data showed slower-than-expected growth among U.S. manufacturers in December. February gold rose 0.8% to settle at $1,814.60 an ounce on Comex. That followed a 1.6% decline on Monday, which brought the contract to the lowest for a most-active since Dec.21, FactSet data show. For now, some analysts say that bullion continues to draw investment interest from those seeking to hedge against the potential impact of the Omicron variant on the parts of the world.


Oil Futures

Oil futures rose, with global benchmark Brent crude at $80 a barrel for its highest close in almost six weeks. West Texas Intermediate crude for February delivery, the U.S. benchmark, rose 1.2% to settle at $76.99 a barrel on the New York Mercantile Exchange. March Brent crude rose 1.3% to settle at $80 a barrel on ICE Futures Europe after touching a high at $80.55. The settlement was the highest for a front-month contract since Nov. 25, according to Dow Jones Market Data. Major oil producers known as OPEC+ said they would stick to their plan to gradually boost output next month, despite risks to oil demand tied to the spread of the Omicron variant of the coronavirus.



Major currencies were mixed against the US dollar in European and US trade. The Euro held between US$1.1270 and US$1.1323 and was near US$1.1285 at the US close. The Aussie dollar rose from near US71.85 cents to around US72.45 cents and was near US72.40 cents at the US close. And the Japanese yen eased from 115.67 yen per US dollar to JPY116.33 and was near JPY116.10 at
the US close.


European Markets

European sharemarkets rose on Tuesday. Banks led the way, up 3.3%, with travel & leisure up 3.5%. British airlines soared, with Ryanair up 8.9% and shares in British Airways-owner IAG lifting
11.3%. But shares in food delivery companies fell 7-8%. The panEuropean STOXX 600 index rose 0.8% to record highs. The German Dax index lifted 0.8% in response to a bigger-than-expected 23,000 fall in unemployment in December. The UK FTSE index rose by 1.6%. In London trade, shares in both Rio Tinto and BHP rose 1.0%.


Asian Markets

Chinese stocks ended lower on the first trading day of 2022. Losses were led by electric vehicle-related sectors, offsetting gains in transportation stocks. The weakness in EV shares followed news that the government will cut EV subsidies by 30% this year. Airline stocks got a lift following local media reports that a fuel surcharge for domestic routes will be scrapped on Wednesday. The Shanghai Composite Index dropped 0.2%, the Shenzhen Composite Index slipped 0.1%, and the ChiNext Price Index fell 2.2%.

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