Global Fundamental Analysis 09/02/2022

Global Fundamental Analysis 09/02/2022, FP Markets

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


U.S. stocks rose as companies continued reporting solid earnings. The yield on the 10-year Treasury climbed to 1.96%. Gold prices rose, despite pressure from the dollar, as the WSJ Dollar Index advanced to 89.7. U.S. benchmark oil prices dropped for a second consecutive session.


Australian Market

Australia’s S&P/ASX 200 climbed 1.1%, hitting a nearly three-week high. Materials stocks jumped 2.2% while the financial sector added 1.4%. Travel stocks also shot up after Australian authorities said the international border will open in a matter of weeks. The tech sector was the day’s weakest, closing 1.6% lower.


US Market

Major U.S. stock indexes rose as investors snapped up shares of companies across industries. The S&P 500 advanced 0.8%, while the Dow Jones Industrial Average added 1.1%. The tech-heavy Nasdaq Composite climbed 1.3%. Seven of the S&P 500’s 11 sectors were recently up for the day, with the financials group gaining 1% and the technology group rising 0.8%. The energy segment bucked the trend, declining 2.5% as oil prices fell.  

The S&P 500 is still down 5.5% in 2022 after selling off in January. “It just looks like people are very happy sort of buying the dip,” said Katie Nixon, chief investment officer at Northern Trust Wealth Management. “We have very strong markets across the board here.”



Gold futures climbed, shaking off pressure from strength in the U.S. dollar and Treasury yields, to stretch their gains into a third-consecutive session and mark their highest finish in almost three weeks. “The only trade finding any real conviction right now seems to be betting on faster rate hikes sooner from the [Federal Reserve],” said Adrian Ash, director of research at BullionVault. He said he expects higher interest rates to act “like kryptonite to gold, sapping its strength.”  

However, “the Fed is clearly so far behind the curve on inflation that the solid bid for gold says it’s either too late to ever catch up, or it’s about to make a historic mistake, hiking just as the economy cools down,” Mr. Ash said. April gold futures climbed by 0.3% to settle at $1,827.90 an ounce – the highest most-active contract settlement since Jan. 26, FactSet data show.


Oil Futures

Oil futures logged their lowest finish in almost a week, extending a pullback from levels last seen in 2014 as traders monitored talks aimed at returning Iran to an international nuclear accord and allowing the country to resume crude exports. Negotiations aimed at reviving the 2015 nuclear deal resumed in Vienna.

“Besides the feel good-vibe coming from the negotiations, the Biden administration is feeling pressure to lower inflation, and the fastest way to do that would be to lower energy prices,” said Robert Yawger, executive director of energy futures at Mizuho, in a note. “I do think that the Biden administration is more likely to get a deal done versus $90 a barrel than they would be versus $50.”  

West Texas Intermediate crude for March delivery fell 2.2% to settle at $89.36 a barrel on the New York Mercantile Exchange – the lowest front-month contract finish since Feb. April Brent crude fell 2.1% to $90.78 a barrel on ICE Futures Europe, also the lowest since Wednesday, after ending last week at its highest since October 2014.



Major currencies were mixed against the US dollar in European and US trade. The Euro generally held between US$1.1395 and US$1.1430 and was near US$1.1415 in afternoon US trade. The Aussie dollar rose from near US71.05 cents to US71.45 cents and was near highs in afternoon US trade. And the Japanese yen fell from 115.22 yen per US dollar to JPY115.62 and was near JPY115.50 in afternoon US trade.


European Markets

European sharemarkets were mixed on Tuesday. Higher bond yields weighed on technology stocks (down 0.9%). And lower oil prices weighed on the oil & gas sector (down 1.8%). Shares in BP
fell 2.4% despite reporting its biggest profit in eight years. But the mining sector rose 2.2%. The pan-European STOXX 600 index was flat. The German Dax index rose by 0.2% but the UK FTSE index fell by 0.1%. In London trade, shares in Rio Tinto rose by 1.8% while BHP fell by 0.2%.


Asian Markets

Earlier Tuesday, Chinese stocks closed mixed, as gains by coal miners were offset by electronics stocks’ declines. Rising coal prices buoyed the likes of China Shenhua Energy, Yankuang Energy and China Coal Energy. Thirty-three Chinese entities, including electronics companies, optics companies and Wuxi Biologics, were added to the U.S. “unverified list” that subjects them to tighter export controls. Shares in the sectors targeted faced selling pressure.

The Shanghai Composite Index climbed 0.7%, the Shenzhen Composite Index slipped 0.2% and the ChiNext Price Index was down 2.4%. Hong Kong stocks dropped amid a selloff in biotech company Wuxi Biologics after the U.S. Commerce Department added two of its units to its “unverified list”. The steep losses helped drag the benchmark Hang Seng Index down 1.0%. Tech companies added further pressure, as the sector tracked weakness in the U.S. tech-heavy Nasdaq overnight. The Nikkei Stock Average gained 0.1%, amid continued hopes over an earnings recovery from the pandemic. Financial stocks were among the gainers

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