Global Fundamental Analysis 16/08/2021

Global Fundamental Analysis 16/08/2021, FP Markets

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

U.S. stocks edged higher as the Dow Jones Industrial Average and S&P 500 reached new highs. The 10-year Treasury yield ticked lower to 1.29% but posted a second consecutive weekly gain. The WSJ Dollar Index dropped to 87.21. Oil prices slipped as investors weighed a tight global market against a possible trend toward weakening demand. Gold futures rose, aided by weakening consumer sentiment.

Australian Market

Australia’s S&P/ASX 200 rose 0.5%, rounding out the week with broad-based gains and a fourth consecutive record close. Every sector rose except for materials, which finished flat amid a pullback in shares of iron-ore miners. The health, consumer, utility and tech sectors led gains. The ASX 200 rose 1.2% for the week.


US Market

The Dow Jones Industrial Average eked out a modest gain as of 4 p.m. ET for a new record as investors drew confidence from a blockbuster round of earnings. The Dow Jones Industrial Average added less than 0.1%. The S&P 500 climbed 0.2% for its 48th all-time closing high of 2021. The tech-heavy Nasdaq Composite edged less than 0.1% higher.  

Stocks have ground higher in thin summer trading, bolstered by a rapid pace of earnings growth at the biggest American companies, even as the spread of the Delta variant threatens to sap some speed from the economic recovery.

Companies including Walt Disney and Tyson Foods posted a big jump in profits this week, and 86% of S&P 500 constituents that have filed quarterly reports have beaten analysts’ expectations. “There’s been a lot of reasons for people to remain optimistic,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance. “I do think the stock market moves higher from here.”



Gold futures traded higher, with a decline in a U.S. consumer sentiment index contributing to the metal’s rise, prompting prices to finish higher for the week. December gold futures rose 1.5% to settle at $1,778.20 an ounce, following a 0.1% decline on Thursday. For the week, the metal saw a rise of nearly 0.9%, based on the most active contract.


Oil Futures

Oil futures declined, but the U.S. benchmark maintained a small weekly gain, as investors are worried about the spread of the Delta variant of the coronavirus that causes Covid-19, and its effect on crude demand. In the short-term, “the crude oil market is back in an uptrend but it is in a bit of a no-mans-land and it could take a few days to gather steam for another run,” said Phil Flynn, senior market analyst at The Price Futures Group, in a note. “If Covid concerns ease a bit, then reports of falling global oil inventories should ignite another rally.” 

West Texas Intermediate crude for September delivery fell 0.9% to settle at $68.44 a barrel on the New York Mercantile Exchange, leaving it with a weekly gain of 0.2%, according to Dow Jones Market Data. Prices in electronic trading Friday afternoon extended their decline. October Brent crude, the global benchmark, lost 1% to settle at $70.59 a barrel on ICE Futures Europe, for a weekly decline of 0.2%.



Major currencies were firmer against the US dollar in European and US trade. The Euro rose from lows near US$1.1730 to highs near US$1.1800 and was near US$1.1790 at the US close. The Aussie dollar rose from lows near US73.35 cents to highs near US73.80 cents and was near US73.70 cents at the US close. And the Japanese yen firmed from near 110.40 yen per US dollar to JPY110.53 and was near JPY109.60 at the US close.


European Markets

European share markets were firmer on Friday. The pan-European STOXX 600 index rose by 0.2%, hitting record highs for a 10th consecutive session – the longest winning streak since December 2006. Shares in Adidas rose 2.3% after it said it was selling Reebok to Authentic Brands Group for up to 2.1 billion euros (US$2.5 billion). The German Dax index also scaled new peaks, up by 0.3%, while the UK FTSE index rose by 0.4%. In London trade shares in Rio Tinto rose by 0.2% and shares in BHP rose by 1.5%.


Asian Markets

Earlier Friday, Chinese stocks finished lower, dragged by electronics and IT shares, while some petrochemical companies gained. The Shanghai Composite Index dropped 0.2% but was up 1.7% for the week. The Shenzhen Composite Index lost 0.4% and the ChiNext Price Index was 1.2% lower.  

Hong Kong stocks fell as technology companies and real estate developers weighed. The Hang Seng Index closed 0.5% lower, while the Hang Seng Tech Index dropped 1.9%. Property stocks lost value, as liquidity problems at China’s largest real estate developer, China Evergrande, brought into focus Beijing’s efforts to regulate the market.  

The Nikkei Stock Average lost 0.1%, dragged down by falls in energy and airline stocks, despite some gains in steel stocks. Meanwhile, the broader Topix index added 0.1%. Investors remain focused on earnings as the season winds down.

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