Global Fundamental Analysis 09/08/2021

Australian Market

Australia’s S&P/ASX 200 index rose 0.4%, closing at a record for a third consecutive day amid gains by financial and tech stocks. The ASX 200’s 2.0% weekly gain was its best in 10 weeks.

US Market

U.S. stocks mostly rose after a better-than-expected jobs report showed the economy continuing to rebound, but raised fresh questions about Federal Reserve policy. The Dow Jones Industrial Average rose 0.4% and the S&P 500 rose 0.2%, both closing at fresh record highs. The Nasdaq Composite fell 0.4%. The nonfarm payrolls report showed U.S. employers added jobs at the best pace in nearly a year and the unemployment rate fell sharply.  

Investors had to digest what a continued economic rebound might mean for the Fed’s easy-money policies put in place to fight the pandemic. A continued run of hiring, as seen in July, is likely to keep the central bank on track to begin reducing its $120 billion in monthly asset purchases later this year, by allowing Fed policymakers to conclude they have reached their goal of “substantial further progress” toward their economic objectives. Exactly when they make the determination could depend on what the August jobs report reveals about labour supply and demand.

Commodities

Gold futures ended a downbeat week with the sharpest daily fall since mid-June, marking the sharpest weekly drop in two months, after the U.S. monthly jobs report for July came in better than expected, delivering a further jolt to the U.S. dollar and bond yields, which undercut demand for precious metals.  

December gold traded 2.5% lower to settle at $1,763.10 an ounce, after declining 0.3% on Thursday, marking its sharpest daily fall since June 17 and its first settlement below $1,800 since July 28. For the week, gold fell 2.97%, marking its steepest weekly slump since the period ended June 18, when it fell 5.88%.

Oil Futures

Oil futures finished sharply lower, with the commodity staging a turnaround from earlier gains after a better-than-expected report on U.S. employment helped to deliver a boost to the U.S. dollar, weighing on assets priced in the currency.  

West Texas Intermediate crude for September delivery lost 1.2% to end at $68.28 a barrel after the U.S. benchmark grade climbed 1.4% on Thursday. October Brent crude, the global benchmark, fell 0.8% to settle at $70.70 a barrel on ICE Futures Europe, with an intraday high at $72.43 a barrel.

Forex

Major currencies were weaker against the US dollar in European and US trade. The Euro fell from highs near US$1.1830 to lows near US$1.1755 and was near US$1.1760 at the US close. The Aussie dollar fell from near US73.95 cents to lows near US73.45 cents and was near US73.50 cents at the US close. The Japanese yen eased from near 109.70 yen per US dollar to JPY110.35 and was near JPY110.25 at the US close.

European Markets

European share markets were mostly flat on Friday. The pan-European STOXX 600 index was unchanged. The German Dax index rose by 0.1%. The UK FTSE index was flat (up just 2.5 points). In London, trade shares in Rio Tinto and BHP were up by 0.1%.

Asian Markets

Japan’s Nikkei Stock Average closed 0.3% higher, supported by precision instruments and energy stocks. Chinese stocks ended lower, dragged by pharma shares. Some electric-vehicle-related companies got a lift after the Biden administration set a target for 50% of all cars sold in the U.S. to be electric, hydrogen fuel cell and plug-in hybrid vehicles by 2030. The Shanghai Composite Index slipped 0.2% but was up 1.8% for the week. The Shenzhen Composite Index lost 0.2% and the ChiNext Price Index declined 1.2%.