Global Fundamental Analysis 10/02/2022

Global Fundamental Analysis 10/02/2022, FP Markets

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

U.S. stocks rose, with all 11 S&P 500 sectors gaining. The yield on the 10-year Treasury pulled back from recent highs to 1.95%. The WSJ Dollar Index slipped to 89.6, helping push gold prices higher. U.S. oil prices climbed after weekly government data showed a bullish drop in U.S. inventories.

Australian Market

Australia’s S&P/ASX 200 advanced 1.1%, gaining more than 1.0% in consecutive sessions for the first time since October 2020. Commonwealth Bank surged 5.6% after the largest ASX-listed company by market capitalization announced a A$2 billion on-market buyback. That helped lift the heavyweight financial sector by 2.6%. Commodity stocks weighed, paring strong gains from earlier in the week.


US Market

U.S. stocks rose and government-bond yields fell Wednesday following a recent climb, potentially easing some pressure on technology shares. The S&P 500 rose 1.5%. The Dow Jones Industrial Average climbed 0.9%, while the Nasdaq Composite added 2.1%. While all three indexes are up this week so far, they are in negative territory year to date. The session’s advance came as all 11 sectors within the S&P 500 rose. Many were up at least 1%.  

Analysts said recent volatility could continue until investors get clear guidance from the Fed about the rate increases ahead. Some are betting the turbulence will continue throughout 2022. “We could potentially see bouts of volatility throughout this year, especially as the Fed starts its tightening cycle; that’s usually when markets have a little bit of indigestion,” said Mona Mahajan, a senior investment strategist at Edward Jones.  

Fresh inflation data due Thursday is expected to give investors additional clues as to how quickly the Fed may raise rates after slashing them in 2020 to cushion the economy from the impact of Covid-19.



Gold futures finished higher, with prices stretching their gains to a fourth-consecutive session as the U.S. dollar and Treasury yields eased back, boosting the appeal of the haven metal. Volatility in the metal’s prices could be explained by fluctuations in the U.S. dollar, “which also obviously has long and short-term ties to inflation,” said Adam Koos, president of Libertas Wealth Management Group, pointing out that investors are awaiting a reading on the U.S. consumer price index due out Thursday.

“Without hotter inflation numbers, as long as yields continue to rise, it’ll be difficult for the [dollar] alone to provide enough boost to steadily lift gold prices through the spring,” he said. April gold futures rose 0.5% to settle at $1,836.60 an ounce, FactSet data show. Thursday’s “pivotal” CPI inflation report “should tilt market expectations into either pricing anywhere between four to six” Federal Reserve interest rate hikes this year, said Edward Moya, senior market analyst at Oanda, in a market update.


Oil Futures

Oil futures ended higher, but with U.S. benchmark prices holding below $90 a barrel, after U.S. government data revealed weekly declines in crude and gasoline supplies. Traders also monitored developments on the potential return of Iran to an international nuclear accord, and kept an eye on the threat of a Russian invasion of Ukraine. Lifting sanctions could see Iran unleash 1 million barrels a day or more of crude and condensate production within four to six months, according to analysts at Rystad Energy. 

The only risk factors for oil are “the possibility of a resumption of Iranian exports or Russia pulling back from the border with Ukraine,” said Phil Flynn, senior market analyst at The Price Futures Group. West Texas Intermediate crude for March delivery rose 0.3% to settle at $89.66 a barrel on the New York Mercantile Exchange after an intraday high at $90.58. April Brent crude, the global benchmark, added 0.9% to $91.55 a barrel on ICE Futures Europe. 



Major currencies were firmer against the US dollar in European and US trade. The Euro rose from lows near US$1.1402 to near US$1.1447 and was near US$1.1425 in afternoon US trade. The
Aussie dollar rose from near US71.45 cents to US71.93 cents and was near US71.80 cents in afternoon US trade. And the Japanese yen held between 115.33 yen per US dollar and JPY115.56 and was near JPY115.52 in afternoon US trade.


European Markets

European sharemarkets were firmer on Wednesday, buoyed by solid earnings results. The pan-European STOXX 600 index rose 1.7% – the best gain in two months – with auto stocks up 4%. Shares in Volkswagen rose by 6.1% on reports of a potential listing of Porsche AG at Volkswagen’s press conference set for March 15. The German Dax index rose by 1.6% and the UK FTSE index lifted by 1.0%. In London t


Asian Markets

Earlier Wednesday, Chinese stocks ended higher, with gains led by the telecom sector and liquor makers. Telecom companies’ fundamentals are improving amid a benign competitive environment, 5G migration and strong demand for digital services, Nomura said. The Shanghai Composite Index rose 0.8%, the Shenzhen Composite Index advanced 1.6% and ChiNext Price Index grew 1.3%.  

Hong Kong’s Hang Seng Index gained 2.1% after two days of losses as the tech sector rebounded. Alibaba was the top gainer on the index, after investor fears over a potential stake sale by its largest shareholder, SoftBank, eased. Japan’s Nikkei Stock Average rose 1.1%, tracking gains in regional equity markets and U.S. stock futures as well as driven by strong earnings.

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