Global Fundamental Analysis 10/06/2020

Australian Market

US Market

The S&P 500 fell, pausing a powerful rally that had briefly returned the broad U.S. stock index to positive territory for the year.  The benchmark index dropped 0.8%, and the Dow Jones Industrial Average lost 300 points,
or 1.1% as of the 4 p.m. ET close of trading in New York. The tech-heavy Nasdaq Composite, meanwhile, gained 0.3%, after notching on Monday its first record close since the coronavirus pandemic sent stocks tumbling.

All three major U.S. stock indexes have surged more than 40% from their March lows as investors have grown optimistic about the economic recovery.

Commodities

Gold prices settled higher as global equities staged a modest retreat after being buoyant for weeks on the back of the reopening of economies stricken by the coronavirus pandemic.
Prices for the precious metals found some traction “in the wake of a risk off global trade in equities, official recession labeling for the U.S. economy and because of the market’s capacity to reject sub-$1,700 pricing for a second day in a row,” analysts at
Zaner Metals wrote in a daily note. Against that backdrop, August gold on Comex rose $16.80, or 1%, to settle at $1,721.90 an ounce, after finishing Monday’s session up 1.3%.

Oil Futures

Oil futures gave up earlier losses to finish higher. Expectations that major Gulf producers won’t extend voluntary output cuts beyond this month, as well as the potential for a climb in U.S. output, had pressured prices in earlier dealings.
In a report, however, the Energy Information Administration raised its 2020 forecasts for U.S. and Brent crude prices and lowered its forecast for U.S. oil production this year. The EIA will release its weekly data on U.S. petroleum supplies Wednesday.

Analysts polled by S&P Global Platts expect the data to show a decline of 3.2 million barrels in crude supplies. July West Texas Intermediate oil rose 75 cents, or 2%, to settle at $38.94 a barrel on the New York Mercantile Exchange.

Forex

The WSJ Dollar Index was recently down 0.07% at 90.69.  The dollar should strengthen further on increased demand for safe havens in coming months as the pace of the global economic recovery is likely to disappoint.

European Markets

Asian Markets

Earlier in the day in Asia, Japanese stocks ended lower, weighed by declines in auto and electronics stocks, as the yen rose to a one-week high amid speculation the Fed will maintain an accommodative policy.
The Nikkei Stock Average fell 0.4% to 23091.03.  Mainland China stocks ended the session higher, resuming an uptrend after flattish trading on Monday. The benchmark Shanghai Shanghai Composite Index rose 0.6% to 2955.84, while the Shenzhen Composite Index gained 0.7% to settle at 1869.33. The ChiNext Price Index, which measures the performance of emerging industries, increased the most, closing 1.3% higher at 2181.59. Media and entertainment firms led the gains. Consumer-services stocks, especially travel agencies and tourism firms, also lent support.

Hong Kong stocks ended the session higher, with the benchmark Hang Seng Index rising 1.1% to settle at 25057.22, the highest closing level in nearly three months. Property developers and consumer-product stocks led gains. South Korean stocks gained for an eighth straight session, with the benchmark Kospi closing 0.2% higher at 2188.92. Aviation and some technology stocks led the gains, as hopes for economic recovery continued to buoy investor sentiment, as countries eased pandemic restrictions.