Global Fundamental Analysis 05/07/2021

Global Fundamental Analysis 05/07/2021, FP Markets

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


U.S. stocks rose for the day and the week after a stronger-than-expected employment report. The U.S. jobs data also pushed Treasurys higher, sending the yield on the 10-year note down to 1.44%. The WSJ Dollar Index fell to 86.9, helping gold prices end higher. Oil prices slipped on the day but notched a sixth consecutive weekly gain.


Australian Market

Australia’s S&P/ASX 200 advanced 0.6%, erasing weekly losses as energy stocks jumped on rising oil prices. The energy sector gained 1.8% as oil prices hovered near three-year highs and the financial sector gained 0.8%. The only sectors not to gain were consumer staples, which closed flat, and tech. The ASX 200 finished flat for the week.


US Market

Major U.S. stock indexes climbed, notching a trio of fresh highs as an early summer rally picked up steam.  

After the monthly employment report confirmed that the U.S. economy continued to recover at a healthy clip, the S&P 500 added 0.8%, setting a seventh consecutive record, its longest watermark streak since mid-1997.  

Technology stocks led the gains, pushing the Nasdaq Composite up 0.8%, also setting a record. As the upswing broadened out, the Dow Jones Industrial Average joined the rally, advancing 0.4%, hitting its first closing high since early May.  

The action wrapped up another solid week of gains. The Nasdaq rose 1.9% over the last five trading days, posting its sixth weekly advance out of the last seven. The S&P 500’s historic run added 1.7% this week, and the Dow gained 1%.  

Friday’s jobs report added to the good news cheering on markets. For investors, the gains were further evidence the economic recovery remains intact and doesn’t currently warrant a tightening of fiscal stimulus, so far fulfilling predictions by Federal Reserve Chairman Jerome Powell.



Gold futures closed higher for a third straight session, which helped contracts for the precious metal to register a modest weekly advance, amid a retreat in benchmark U.S.

Treasury yields, as well as a steadying U.S. dollar. August gold futures traded 0.4% higher to settle at $1,783.30 an ounce, representing the highest settlement for the most active contract since June 23, FactSet data show.  

Trading in precious metals followed a closely watched report on June employment from the Labor Department, which came in better than expected.  

The employment update could help to influence the Federal Reserve’s monetary policy plans and spark moves in bullion. 


Oil Futures

Oil traders stuck to the sidelines, awaiting the outcome of a meeting of the Organization of the Petroleum Exporting Countries and its allies after a dispute emerged over plans to further ease production curbs through the end of the year.

West Texas Intermediate crude for August delivery fell 0.1% to close at $75.16 a barrel on the New York Mercantile Exchange, leaving the U.S. benchmark with a 1.5% weekly gain. 

The global benchmark, September Brent crude, rose 0.4% to finish at $76.17 a barrel on ICE Futures Europe, for a weekly gain of 1.1%.  

OPEC+ had been scheduled to wrap up proceedings Thursday, with investors expecting the group to agree to a deal backed by Saudi Arabia and Russia that would further unwind previously agreed output curbs.  

An objection by the United Arab Emirates, however, during a meeting of an OPEC+ advisory panel, forced the delay. According to reports, U.A.E. argued that the production baseline used to determine the size of its production curb should be lifted by using the country’s April 2020 output of 3.841 million barrels a day as the reference versus 3.16 million barrels a day in October 2018. That would allow the U.A.E. to pump more crude.



Major currencies were stronger against the US dollar in European and US trade. The Euro rose from lows near US$1.1817 to highs near US$1.1873 and was near US$1.1865 at the US close. The Aussie dollar lifted from lows near US74.47 cents to highs near US75.33 cents and was near US75.25 cents at the US close. And the Japanese yen rose from 111.65 yen per US dollar to JPY110.94 and was near JPY111.05 at the US close.


European Markets

European sharemarkets rose on Friday. The pan-European STOXX 600 index lifted by 0.3% with technology shares up 1.1%, but bank stocks lost 1.3% as bond yields fell. The German Dax index also gained 0.3% and the UK FTSE index was little changed. In the London trade, shares in Rio Tinto and BHP both rose by 0.4%.


Asian Markets

Earlier Friday, Chinese stocks fell sharply, as heavily weighted liquor and financial shares were a drag on the indexes. Some of the largest cap companies suffered big losses, with Kweichow Moutai losing 4.4% and China Merchants Bank retreating 5.3%. The Shanghai Composite Index fell 2.0%, the Shenzhen Composite Index dipped 1.9% and the ChiNext Price Index retreated 3.5%.  

The Hang Seng Index had its worst day since mid-May, ending 1.8% lower, as investors sold off tech shares. The Hang Seng TECH index lost 3.2%, with big tech names suffering heavy losses. IG analyst Jun Rong Yeap said Chinese President Xi Jinping’s “tough warning” to foreign powers on Thursday could “drive concerns that tensions between U.S. and China may have lower chances of easing.” The HSI fell 3.3% for the week.  

Japanese stocks, however, were elevated by gains in auto and energy stocks, amid growing hopes for a U.S. economic recovery. The Nikkei Stock Average climbed 0.3%.

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