Global Fundamental Analysis 19/04/2022

Global Fundamental Analysis 19/04/2022, FP Markets

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


U.S. stocks slipped after bouncing back and forth between small gains and losses. The yield on the 10-year Treasury climbed to 2.85% as the selloff in government bonds continued. The WSJ Dollar Index advanced to 93.1. U.S. oil prices reached their highest closing price since March 25. Gold prices gained ground as the war in Ukraine looks set to drag on.


Australian Market

Australia and New Zealand were closed in observance of Easter Monday.


US Market 

U.S. stocks edged lower, while the 10-year Treasury yield continued its upward march following a three-day holiday weekend. The S&P 500 slipped less than 0.1%, while the Dow Jones Industrial Average and the technology-heavy Nasdaq Composite Index each gave back roughly 0.1%. All three indexes wavered between small gains and losses throughout the day.

U.S. government bonds tumbled again. The rout in Treasurys is surprising because yields have already climbed to levels that look attractive to long-term investors like pension funds and foreign governments, said Jimmy Lim, founder of Modular Asset Management, a Singapore-based macro hedge fund. “The inflation concern is real. There is a bit of a buyers’ strike going on,” he added.



Gold futures advanced with little prospect for a quick end to Russia’s invasion of Ukraine in sight contributing to global inflation, supporting haven demand and lifting prices to their highest finish in more than five weeks. “Gold directly benefits from the Russia-Ukraine conflict inflation effects, which are now more meaningful than direct military developments, in a market sense,” said Stephen Innes, managing partner at SPI Asset Management.

“These consequences have fabricated a hyperinflationary environment that sees gold investors stocking up on paper and [the physical metal] for the eventual procession to recession.” Gold futures for June delivery climbed 0.6% to settle at $1,986.40 an ounce on Comex. The settlement was the highest for a most-active contract since March 10, according to Dow Jones Market Data.


Oil Futures

Oil prices have climbed to their highest prices of the month so far, lifted by concerns over tight supplies. “The impact of long-term undersupply continues to provide fundamental support to the market,” said Robbie Fraser, global research and analytics manager at Schneider Electric, in a daily note. “The longer those conditions continue, the more it forces storage levels lower, in turn raising the floor for where prices can trade near-term.”

“Those conditions have been further reinforced by near-term challenges though, with an outage at Libya’s largest oil field serving as the most recent example,” he said. “Amid major protests, the Sharara field has been shut at least temporarily, with government officials warning that all exports from Libya are now threatened.”

West Texas Intermediate crude for May delivery rose 1.2% to settle at $108.21 a barrel. Front-month contract prices logged their highest finish since March 25, according to Dow Jones Market Data. June Brent crude, the global benchmark, added 1.3% to $113.16 a barrel, with prices at their highest settlement for the month so far.



Major currencies were weaker against the US dollar in European and US trade. The Euro fell from highs near US$1.0812 to lows near US$1.0768 and was near US$1.0780 at the US close. The Aussie dollar fell from highs near US73.76 cents to lows near US73.41 cents and was near lows at the US close. And the Japanese yen eased from 126.43 yen per US dollar to JPY126.98 and was near JPY126.95 at the US close.


European Markets

European sharemarkets were generally closed on Monday. Last Thursday the pan-European STOXX 600 index rose by 0.7%. The German Dax rose by 0.6% and the UK FTSE rose by 0.5%. In
London trade on Thursday, shares of Rio Tinto rose by 0.5% and BHP shares added 0.2%.


Asian Markets

Earlier Monday, Chinese stocks ended mixed, as investors remained cautious despite the country’s better-than-expected official first-quarter GDP data. The benchmark Shanghai Composite Index fell 0.5%, the only decliner among the three major indexes. The Shenzhen Composite Index gained 0.4%, while the ChiNext Price Index rose 1.1%. Electronics makers, including semiconductor companies and telecom equipment suppliers were among the top gainers. But the momentum was offset by losses in property developers and property management firms.

Japanese shares were dragged lower by chemical and food stocks, amid continuing concerns about higher costs of commodities and raw materials. Credit Saison jumped 21% after activist investor City Index Eleventh took a 5.1% stake in the credit card company. The Nikkei Stock Average lost 1.1%. Investors remained focused on the supply-chain disruption caused by the war in Ukraine and Covid-19 lockdowns in China.

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