Global Fundamental Analysis 05/11/2020

Global Fundamental Analysis 05/11/2020, FP Markets

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


U.S. stocks were sharply higher as markets looked beyond Election Day. The 10-year Treasury note yield fell 11.3 basis points to 0.78%, its biggest daily drop since mid-April. The WSJ Dollar Index recently was down 0.03% at 88.22. Crude oil prices ended 4% higher on lower inventories and a rally in U.S. equities. Gold futures fell back under $1,900 as prospects for a “blue wave” fiscal-aid package in Congress faded.


Australian Market

Australia’s S&P/ASX 200 index ended the session 0.1% lower at 6062.1 following a volatile session in which the benchmark index closely tracked U.S. equities futures in thrall to early presidential election results.


US Market

Although the outcome of the presidential election remained uncertain as crucial battleground states like Georgia, Michigan and Pennsylvania continued to tally votes, neither Republicans or Democrats received a clear mandate from voters that would preface broad policy changes, analysts and traders said.

U.S. stocks surged toward their biggest-ever postelection gain, led by a rally in technology shares, as investors appeared to coalesce around the idea of a divided U.S. government.

The broad S&P 500 index gained 2.2% as of the 4 p.m. close of trading on Wall Street, its best performance on the day after a U.S. presidential election on record. The Dow Jones Industrial Average added 367 points, or 1.3%. The tech-heavy Nasdaq Composite jumped even higher, gaining 3.9%.



Gold futures finished below $1,900 an ounce as the 2020 race for the White House looked uncertain, and the prospect of Democratic majority in the Senate faded, putting in jeopardy another large and reflationary fiscal aid package which might have been bullish for the precious metal.

December gold for delivery on Comex fell $14.20, or 0.7%, to settle at $1,896.20 an ounce.


Oil Futures

Oil futures posted a third straight gain, getting a boost from a weekly drop of 8 million barrels in U.S. crude supplies. Traders also awaited the outcome of the U.S.

presidential elections and weighed prospects for a delay to OPEC+ production-cut curbs set to begin in January. There are obviously “vastly different energy policies” between President Donald Trump and Democratic challenger Joe Biden, so “we’ll have to wait and see how it turns out,” said Marshall Steeves, energy markets analyst at IHS Market.

West Texas Intermediate crude for December delivery rose $1.49, or 4%, to settle at $39.15 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$1.1630 to highs near US$1.1740 and was near US$1.1720 in late US trade. The Aussie dollar rose from lows near US70.60 cents to highs near US72 cents and was near US71.75 cents in late US trade. And the Japanese yen firmed from 105.06 yen per US dollar to JPY104.14 and was near JPY104.50 in late US trade.


European Markets

European sharemarkets advanced by around 2% on Wednesday after earlier falling. Healthcare rose 4.9% while technology rose by 3.0%. But banks lost 1.5%. The pan-European STOXX 600 index was up by 2.1% after earlier falling 1.3% at one point. The German Dax index gained 2.0% and the UK FTSE index lifted 1.7%. In London trade, shares in Rio Tinto fell by 1.3%; shares in BHP rose 0.4%.


Asian Markets

Japanese stocks rose to the highest level in nearly nine months, led by gains in tech and pharmaceutical stocks. The Nikkei Stock Average ended 1.7% higher at 23695.23, the highest close since Feb. 13.

China’s major stock benchmarks ended the session higher on the back of gains for home-appliance makers and car companies. The Shanghai Composite Index ended 0.2 higher at 3277.44, the Shenzhen Composite Index gained 0.3%, and the ChiNext Price Index added 0.2%.

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