Global Fundamental Analysis 11/02/2022

Global Fundamental Analysis 11/02/2022, FP Markets

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

U.S. stocks sank following data showing inflation reached a four-decade high. The yield on the 10-year Treasury advanced to 2.04%, topping 2% for the first time since mid-2019. The WSJ Dollar Index rose to 89.8. U.S. oil prices edged higher in a choppy trading session that saw intraday prices drift inside a wide range. Gold posted gains for a fifth day in a row.

Australian Market

Australia’s S&P/ASX 200 gained 0.3% as the heavyweight financial sector racked up a third consecutive gain. The financial sector rose 0.9%. Tech stocks also rose, but energy, health and consumer stocks dragged. The ASX 200 is up by 2.4% so far this week.


US Market

A selloff in stocks intensified as bond yields rose in the wake of data showing inflation reached a new four-decade high, raising the stakes on whether the Federal Reserve will plot a more aggressive path on interest rates. The S&P 500, Dow Jones Industrial Average and Nasdaq Composite all fell, while the yield on the all-important 10-year U.S. Treasury note breached 2% for the first time since 2019.  

The moves followed new data showing inflation had accelerated to a 7.5% annual rate in January, topping economists’ forecasts and December’s 7% pace. Benchmarks briefly recouped their losses before sliding again, with the worst of the losses coming after remarks from a Fed official, signaling the central bank may move more drastically to curtail inflation.  

The S&P 500 closed 1.8% lower, while the Dow Jones Industrial Average shed 1.5%. Technology stocks were hit harder, with the Nasdaq Composite sliding 2.1%. All 11 sectors of the S&P 500 closed in the red. Shares of fast-growing companies were hit hardest. 



Gold futures climbed for a fifth straight session, shaking off earlier weakness to mark their longest streak of gains since November, after a reading on January U.S. inflation came in higher than expected. Prices found support at their 18-day moving average of $1,820, said Peter Spina, president and chief executive officer at  

“There is simply too much buying in gold recently to get any sustained corrections,” he said. “Gold simply is refusing to fall below $1,800.” Mr. Spina also said a “reported ‘whale’ is buying up physical under $1,800,” which he believes to be the Russians – specifically the Russian National Wealth Fund.  

“It is my belief that the big buyer in gold is this fund, which is a reflection of the strong tradition of gold demand flow from oil profits, ” he said. “These very high oil prices will only add more fuel to the gold demand story in the coming year.” April gold futures edged up less than 0.1% to settle at $1,837.40 an ounce on Comex.


Oil Futures

Oil futures finished on a mixed note, with U.S. prices building on gains scored a day earlier after data showed an unexpected drop in U.S. crude inventories, but global Brent prices giving back some of their recent climb. The “hot inflation report sent the dollar higher, which tentatively dragged down commodities,” including oil prices, said Edward Moya, senior market analyst at OANDA.

However, oil market fundamentals “remain very tight and with no immediate changes to that outlook, crude prices seem poised to go higher.” West Texas Intermediate crude for March delivery rose nearly 0.3% to $89.88 a barrel on the New York Mercantile Exchange. April Brent crude fell nearly 0.2% to $91.41 a barrel on ICE Futures Europe.



Major currencies gyrated against the US dollar in European and US trade. The Euro rose from lows near US$1.1380 to near US$1.1493 and was near US$1.1430 in afternoon US trade. The Aussie dollar rose from near US71.50 cents to US72.47 cents and was near US71.60 cents in afternoon US trade. And the Japanese yen held between 115.54 yen per US dollar and JPY116.30 and was near JPY116.04 in afternoon US trade.


European Markets

European sharemarkets were mixed on Thursday. In response to rising bond yields, technology stocks fell 1.1%. But mining stocks rose in response to higher metal and iron ore prices. And both travel & leisure and chemicals sectors rose over 1%. The pan-European STOXX 600 index fell by 0.2%. The German Dax index rose by 0.1% and the UK FTSE index lifted by 0.4%. In London trade, shares in Rio Tinto rose by 2.4% while BHP rose by 2.6%.


Asian Markets

Earlier Thursday, Chinese stocks finished mixed, with gains among coal miners and construction-related sectors offset by renewables and home-appliance makers. Construction-material companies could get a lift from expectations that Beijing will stabilize growth, China Fortune Securities said. The Shanghai Composite Index rose 0.2%, gaining for a fourth straight session. The Shenzhen Composite Index slipped 0.6% and the ChiNext Price Index closed 2.0% lower.  

Hong Kong stocks rose, as property-related stocks helped push the benchmark Hang Seng Index 0.4% higher. Shares of developers gained after reports China Evergrande would fully restore construction and sales activity. Japanese stocks were driven higher by gains in electronics and chemical companies after posting strong results. The Nikkei Stock Average rose 0.4%.

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