Global Fundamental Analysis 08/07/2020

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


The number of Americans dismissed from their jobs fell sharply in May to match levels recorded before the coronavirus pandemic and related shutdowns caused widespread layoffs. In May, 1.8 million workers were laid off or otherwise discharged from their jobs, the Labor Department said Tuesday. That was down from 7.7 million in April and 11.5 million in March. May’s dismissals were in line with the numbers reported in January and February, before the pandemic shut swaths of the U.S. economy.


A federal judge cast doubt on Bayer AG’s proposal to neatly resolve all future lawsuits over the safety of its Roundup weedkiller, potentially snagging the German company’s attempts to move past the massive liability.
Bayer said recently it would pay up to $10.9 billion to settle tens of thousands of current Roundup cases and create a system for handling future cases. The deal came after three juries in recent years awarded large verdicts to plaintiffs alleging Roundup caused non-Hodgkin lymphoma, spooking investors.


Overnight Summary




Australian Market

Australian shares closed essentially flat at 6012.9, giving up their daily gains after the country’s second-largest city was locked down in response to a rise in coronavirus cases.   The benchmark index is now down 32 points or 0.5% to 5980 after midday and trading near the lows of the session. It was a soft lead from Wall Street as investors weigh up the fresh spike in COVID-19 cases and how that may impact the speed of the economic recovery


US Market

U.S. stocks fell, pulling back after a recent rally, while gloomy economic forecasts suggested a recovery will be uneven. The S&P 500 fell 1.5%, snapping its five-session winning streak. The Dow Jones Industrial Average dropped 1.1% and the Nasdaq Composite lost 0.9%. All three indexes have risen more than 40% from their March lows.
Shares of airlines were among the biggest decliners after United Airlines said reservations for travel within the coming month began to slide after new quarantine measures were put into effect. The carrier also warned employees to prepare to receive notifications of potential furloughs as soon as this week.



Gold futures finished at their highest settlement since September 2011, with the metal’s climb back above the $1,800-an-ounce coming amid rising cases of coronavirus and doubts about the health of the global economy.  August gold rose $16.40, or 0.9%, to settle at $1,809.90 an ounce, wrapping up the session at the highest intraday level. Prices based on the most-active contracts logged the loftiest finish since Sept. 16, 2011, according to FactSet data.


Oil Futures

Oil prices swung between small gains and losses, extending a recent stall around $40 a barrel ahead of this week’s data on U.S. crude stockpiles. U.S. crude futures for August delivery finished the day down 0.1% at $40.62 a barrel on the New York Mercantile Exchange. That put prices just 3 cents off from last Thursday’s close.



Major currencies were mostly stronger against the US dollar in European and US trade. The Euro rose from lows near US$1.1260 to highs near US$1.1305 and was near US$1.1270 at the US close. The Aussie dollar rose from lows near US69.20 cents to highs near US69.75 cents and was near US69.45 cents at the US close. The Japanese yen rose from JPY107.77 per US dollar and JPY107.49 and was near JPY 107.53 at the US close.


European Markets

European sharemarkets eased on Tuesday. STOXX 600 index fell by 0.6%. Banks, real estate, technology and telecom sectors fell by between 1.0-1.8%. The European Commission said the 19 nation single currency area would contract by a record
8.7% in 2020 (previous estimate -7.7%) before rising by 6.1% in 2021.The German Dax index lost 0.9% and the UK FTSE index fell by 1.5%. In London trade shares in Rio Tinto rose by 0.4% while shares in BHP fell by 0.9%


Asian Markets

Earlier in the day, Chinese stocks continued to rise but their gains moderated after the previous session’s surge. The Shanghai Composite Index entered the sixth consecutive winning session, rising 0.4%. The benchmark, dominated by banks and oil companies, notched its biggest one-day gain in five years yesterday after closing 5.7% higher. Japanese stocks ended lower, dragged by auto and pharmaceutical stocks, as uncertainty persisted over the pace of a recovery from the Covid-19 pandemic. The Nikkei Stock Average declined 0.4% to 22614.69.

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