Global Fundamental Analysis 11/10/2021

Global Fundamental Analysis 11/10/2021, FP Markets

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

 
U.S. stocks ended a back-and-forth session a bit lower following a disappointing jobs report. The 10-year Treasury yield rose to 1.61%, posting its largest weekly gain since Feb. 19. The WSJ Dollar Index ticked lower to 88.57. U.S. oil prices rose to their highest closing price since Oct. 31, 2014. Gold prices reversed early gains to settle lower.

 

Australian Market

Australia’s S&P/ASX 200 gained 0.9% as broad-based gains helped end the benchmark’s run of four weekly losses. Every sector finished higher following a positive lead from U.S. stocks, with materials and tech stocks leading gains. The ASX 200 rose 1.9% for the week to sit 4.0% below its mid-August record of 7628.9.

 

US Market

U.S. stocks hugged the flatline for the session but ended a volatile week with modest gains. The S&P 500 edged lower 0.2% as of the 4 p.m. ET close of trading. The broad index had risen for three straight sessions. The Nasdaq Composite fell 0.5% while the Dow Jones Industrial Average edged less than 0.1% lower.

All three indexes held on to weekly gains. The S&P 500 and Dow advanced around 0.8% and 1.2%, respectively, this week. The Nasdaq Composite added 0.1%. Volatility has returned to markets in recent sessions, with the S&P 500 swinging at least 1% for three out of four days and other assets from bonds to commodities recording giant moves.

Throughout the week, investors remained focused on surging energy prices, concerns about inflation and negotiations on the debt ceiling. Lawmakers struck a deal for a short-term extension to the debt limit in the Senate on Thursday, stoking a rally in the stock market after several days of uncertainty.

 

Commodities

Gold futures settled lower after giving back earlier gains seen on the back of disappointing U.S. employment data. Gold surged to session highs after the data, as the U.S. dollar weakened and real yields fell “deeper into negative territory,” said Edward Moya, senior market analyst at Oanda, in a market update.

However, after digesting the report, “gold investors quickly realized that the taper announcement is still happening in November and that pricing pressures are still elevated and that could still dictate higher interest rates next year. “Gold futures for December delivery fell 0.1% to settle at $1,757.40 an ounce, with the most-active contract for the precious metal down just $1 from the week-ago finish at $1,758.40, FactSet data show.

 

Oil Futures

Oil futures rose, with U.S. prices scoring a nearly 5% gain for the week after touching highs above $80 a barrel for the first time in almost seven years. Natural-gas futures, meanwhile, pulled back from a nearly 13-year high three days ago to finish lower for the week. “Global crude and natural-gas inventories are tight, and production growth may not be sufficient to meet demand growth,” said Marshall Steeves, energy markets analyst at IHS Markit.  

West Texas Intermediate crude for November delivery rose 1.3% to settle at $79.35 a barrel on the New York Mercantile Exchange, after touching a high of $80.11. Front-month contract prices for the U.S. benchmark finished at their highest since Oct. 31, 2014, according to Dow Jones Market Data. They settled up 4.6% for the week. December Brent crude, the global benchmark, rose 0.5% to settle at $82.39 a barrel on ICE Futures Europe, up 4.9% for the week.  

Both WTI and Brent crude marked their seventh weekly gain in a row. November natural gas fell 2% to settle at $5.565 per million British thermal units, leaving it down 1% for the week after bouts of volatility. Prices have still more than doubled year to date.

 

Forex

Major currencies were mixed against the US dollar in European and US trade. The Euro rose from lows near US$1.1540 to highs near US$1.1585 and was near US$1.1565 at the US close. The Aussie dollar rose from lows near US72.90 cents to highs near US73.35 cents and was near US73.05 cents at the US close. But the Japanese yen eased from 111.50 yen per US dollar to JPY112.25
and was near JPY112.22 at the US close.

 

European Markets

European sharemarkets were mixed on Friday. Oil and auto stocks led gains while tech stocks fell by 1.4%.The pan-European STOXX 600 index fell by 0.3% but rose 1% on the week. The German Dax index fell by 0.3% after rising 1.9% the prior day. And the UK FTSE index added 0.3%, supported by travel stocks on news that Britain will scrap Covid-19 quarantine requirements for 46 destinations. In London trade shares in Rio Tinto fell by 0.4% but BHP shares were 0.7% higher.

 

Asian Markets

Earlier Friday, Chinese stocks finished mixed as mainland markets reopened after a weeklong holiday, with insurers and oil majors higher, while property developers and electricity providers dragged. Elevated energy prices boosted sentiment in oil majors, while electric power generators retreated after an earlier surge amid China’s power crunch. The Shanghai Composite Index rose 0.7%, the Shenzhen Composite Index gained 0.8% and the ChiNext Price Index was flat.  

Hong Kong’s benchmark Hang Seng Index rose 0.6%, advancing for a second day to reach its highest close since mid-September. Alibaba led gains on continued positive sentiment after a company led by Charlie Munger said it has significantly increased its holding of the Chinese tech giant’s ADRs. Japan’s Nikkei Stock Average closed 1.3% higher, led by gains in energy and auto stocks, as U.S. debt ceiling concerns eased. Investors will be watching for any economic initiatives from the new Japanese Prime Minister Fumio Kishida.




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