Global Fundamental Analysis 10/07/2020

OPENING CALL: The Australian share market is expected to open lower. SPI Futures contract expected to open 24 points lower


Initial unemployment claims fell by a seasonally adjusted 99,000 to 1.3 million for the week ended July 4, the Labor Department reported Thursday. That extends a trend of gradual declines from a peak of 6.9 million in mid-March, when the coronavirus pandemic and mandated business closures shut down swaths of the U.S. economy. Still, last week’s level was well above the highest week on record before this year, which was 695,000 in 1982.


China Tries to Keep Market Exuberance Under Control  – Chinese state media urged investors to think long term, and authorities highlighted hundreds of operations making illegal loans against shares, showing that Beijing is eager
to avoid stocks overshooting.  Mainland stocks have surged to multiyear highs in recent days, with the Shanghai Composite rising 16.5% in eight straight sessions of gains through Thursday. Those increases were partly fueled by optimism among China’s millions of individual investors, who dominate trading.


Overnight Summary




Australian Market

Australian shares rose 0.6% to 5955.5 as another surge by Afterpay led tech stocks higher. The tech sector added 3.1% to help the S&P/ASX 200 end a three-day losing streak.


US Market

U.S. stocks dropped as investors continued to back away from bets on a smooth reopening from the coronavirus shutdowns. Fresh data showed that initial unemployment claims in the U.S. remain elevated, and the number of confirmed new Covid-19 cases in the U.S. hit a new single-day high Wednesday.  The S&P 500 pulled back, dropping 0.6% as of the 4 p.m. ET close of trading. Only its technology and consumer discretionary sectors were in the green. The index has surged
about 40% from its March low. The Dow Jones Industrial Average fell about 360 points, or 1.4%, recovering after briefly being down more than 500 points.



Gold futures ended lower, pulling back a day after scoring another settlement at the highest since September 2011, but the haven metal held ground above $1,800 an ounce after data showed weekly U.S. jobless claims remained well above one million. August gold fell $16.80, or 0.9%, to settle at $1,803.80 an ounce, a day after the most-active contract rose 0.6% to settle at $1,820.60, the highest since Sept. 14, 2011, according to FactSet data. Prices on Thursday touched a low of $1,799.60.


Oil Futures

Oil futures retreated after settling a day earlier at their highest level in four months, pulling U.S. prices back below $40 a barrel. The U.S. set another single-day record number of confirmed COVID-19 cases on Wednesday.
Traders continued to watch the pace of the economic recovery against that backdrop, and for signs of an improvement or setback in energy demand.  August West Texas Intermediate oil fell $1.28, or 3.1%, to settle at $39.62 a barrel on the New York Mercantile Exchange.



Major currencies were mostly weaker against the US dollar in European and US trade. The Euro fell from highs near US$1.1367 to lows near US$1.1278 and was near US$1.1281 at the US close. The Aussie dollar fell from highs near US69.99 cents to lows near US69.50 cents and was near US69.60 cents at the US close. The Japanese yen rose from JPY107.39 per US dollar to JPY107.09 and was near JPY 107.20 at the US close


European Markets

European sharemarkets closed lower on Thursday. The panEuropean STOXX 600 index lost 0.8%. The German Dax index was down just 0.04%. But the UK FTSE index lost 1.7% with BP (- 4.4%) and Royal Dutch Shell (-3.7%) shares both down as oil prices fell on fuel demand concerns. In London trade shares in Rio Tinto were flat while shares in BHP fell 1.3%.


Asian Markets

Earlier in the day, Chinese stocks shrugged off wavering trade early in the session to extend their winning streak, with the Shanghai Composite Index rising 1.4% to 3450.59. The Shenzhen Composite Index gained 2.7%, while the ChiNext Price Index climbed 4.0%. The Nikkei Stock Average extended its morning gains to close 0.4% higher at 22529.29. Investors are likely to look out for developments on U.S.-China relations and the coronavirus pandemic following reports of more than 200 new Covid-19 cases in Tokyo today.

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