Global Fundamental Analysis 07/12/2021

Global Fundamental Analysis 07/12/2021, FP Markets

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


U.S. stocks rallied on hopes Omicron is a milder Covid-19 variant. The yield on the 10-year Treasury note ticked up to 1.44% from 1.34% Friday. The WSJ Dollar Index rose 0.11% to 90.27. Oil settled at its highest in a week, up nearly 5%, as Omicron fears eased. And gold ended lower as inflation and the Fed interest-rate outlook remained in focus.


Australian Market

Australia’s S&P/ASX 200 index closed 0.1% higher, helped along by consumer staples stocks. Energy and industrials stocks rose 0.6% and 0.7%, respectively, while the consumer staples sector added 1.9%, and utilities gained 2.0%. The technology sector was the biggest drag on the index, falling 2.2%.


US Market

U.S. stock indexes finished higher as investors assessed early indicators that the Omicron Covid-19 variant may be causing milder illness than previously feared, while bitcoin and other cryptocurrencies edged up from weekend lows.  

The S&P 500 advanced 1.2%, regaining ground after closing down 0.8% Friday. The Dow Jones Industrial Average added 1.9% while the Nasdaq Composite rose 0.9%. U.S. chief medical adviser Anthony Fauci said on CNN that there didn’t appear to be a “great deal of severity” to Omicron, adding the same caveat.



Gold futures posted a modest decline as a pickup in Treasury yields and the dollar helped to the dull appetite for the precious commodity, which has been held in check by uncertainties about the spread of Omicron and on Federal Reserve policies. The most active February gold contract lost nearly 0.3% to settle at $1,779.50 an ounce, according to Dow Jones Market Data. Gold shot up around 1.2% on Friday.


Oil Futures

Crude-oil prices settled with a gain of nearly 5%, as concerns surrounding the Omicron variant of coronavirus that causes Covid-19 eased a bit. West Texas Intermediate crude for January delivery rose 4.9% to settle at $69.49 a barrel on the New York Mercantile Exchange. February Brent crude, the global benchmark, rose 4.6% to settle at $73.80 a barrel on ICE Futures Europe, the highest finish since Nov. 29. Energy prices have moved up “off chatter that the Omicron virus might not present severe health problems,” analysts at Zaner wrote in Monday’s commentary.



Major currencies were mixed against the US dollar in European and US trade. The Euro fell from highs near US$1.1308 to lows near US$1.1266 and was near US$1.1280 at the US close. The Aussie dollar rose from lows near US70.09 cents to highs near US70.52 cents and was near US70.45 cents at the US close. And the Japanese yen eased from 112.99 yen per US dollar to JPY113.54 and was near JPY113.45 at the US close.


European Markets

European share markets closed higher on Monday. The pan-European STOXX 600 index lifted 1.3% with travel and leisure stocks up 3.9% on hopes that Omicron virus variant symptoms may be mild. The German Dax index advanced 1.4% despite a hefty 6.9% collapse in German factory orders in October (survey: -0.3%). And the UK FTSE index climbed by 1.5% with London-listed shares in Rio Tinto (+0.3%) and BHP (+0.8%) both up.


Asian Markets

Japan’s Nikkei Stock Average closed 0.4% lower, dragged by declines in tech and pharmaceutical stocks, as rising prospects for the Fed’s potential tightening raised concerns about global growth. SoftBank Group fell 8.2% following selloffs in some of its portfolio companies such as Didi Global and Alibaba Group Holding.  

Chinese stocks finished the session lower in spite of positive signals by Premier Li Keqiang that the government may soon introduce monetary easing measures. The benchmark Shanghai Composite Index lost 0.5% while the Shenzhen Composite Index lost 1.2%. The ChiNext Price Index, a measure for emerging industries, declined the most, ending 2.1% lower.

The downturn came in part due to concerns over geopolitical risk for Chinese tech companies, after U.S. regulators earlier finalized a rule that would delist foreign stocks for failure to comply with certain audit requirements. Chipmakers led losses, while auto services companies further weighed on the market.

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