Global Fundamental Analysis 19/05/2020

Australian Market

Australian shares gained 1% as rising commodity prices boosted mining and energy stocks. The benchmark S&P/ASX 200 closed at 5460.5, with the materials sector putting on 4.1% for its strongest session since March 25.

Saracen Minerals led mining gains with a 11% surge as gold miners benefited from a rise in the price of the yellow metal.  The energy sector rose 2.8% as oil prices continued to recover from historic lows, while tech stocks added 1.7% to end a two-day losing streak.  Xero, Afterpay, Appen and WiseTech Global–four of Australia’s seven biggest tech firms by market capitalization–rose by 2.4%-5.7%.

US Market

U.S. stocks rallied on hopeful developments about a potential coronavirus vaccine, recovering ground following the biggest weekly percentage drop in nearly two months.
Markets have rebounded sharply from their late March lows and have been particularly sensitive to any developments suggesting progress towards a vaccine for the virus.

Still, the results are preliminary. Many vaccines fail to pass muster, even after showing positive signs in early testing.  Moderna shares jumped 25% to $83.12, on course for a new high, pulling up the broader market.

The Dow Jones Industrial Average jumped 920 points, or 3.9%. The S&P 500 rose 3.3%, erasing last week’s 2.3% loss. The Nasdaq Composite added 2.6%.
The S&P 500’s energy, real estate, industrials, materials and financial sectors all rose at least 4%. The energy group climbed 7.2%, driven by a 6.8% jump in oil prices.

Commodities

Gold prices ended lower, giving up earlier gains that had lifted prices toward their highest levels since 2012, as early positive results from a COVID-19 vaccine prompted a
rally in the U.S. stock market, dulling haven demand for the precious metal.

Gold for June delivery on Comex fell by $21.90, or nearly 1.3%, to settle at $1,734.40 an ounce, marking its first loss in five sessions. It had touched an intraday high of
$1,775.80, which put the metal near its highest settlement since 2012. Last week, gold gained 2.5% based on the most-active contract at Friday’s close.

Oil Futures

U.S. benchmark oil prices ended the session with a gain of 8.1% to $31.82 a barrel, the highest closing level in two months, as the easing of coronavirus lockdowns broadens to nearly every U.S. state, and as parts of China’s economy begin to return toward pre-Covid levels.

Forex

The Russian ruble gained as oil prices recovered and optimism about a potential coronavirus vaccine from Moderna and the reopening of economies reduced the safe haven appeal of the dollar.

ING expects USD/RUB to end the year at 72.0. The pair is last down 1.2% at 72.7190, having earlier reached a two-month low of 72.5755, according to FactSet.  The WSJ Dollar Index fell 0.7% to 93.72 intraday.

European Markets

European stocks gained as oil prices rebounded and as investors cheered the gradual easing of coronavirus lockdowns.  The Stoxx Europe 600 jumped 4.1%, the FTSE 100 advanced 4.3%, the DAX added 5.7% and the CAC-40 increased 5.2%.  Airlines rallied after Ryanair reported a rise in full-year pretax profit and revenue.

A pickup in oil prices boosted energy shares while higher copper prices lifted miners.

Asian Markets

Hong Kong stocks ended the session higher after consecutive days of declines, as continuing cuts in oil production buoy investor sentiment for energy stocks. The
benchmark Hang Seng Index gained 0.6% to settle at 23934.77. Chinese oil majors led the rise, with crude prices recovering on news that more producers plan to curb supply to balance the market. CNOOC surged 7.8%, PetroChina grew 5.5% and Sinopec was 4.0% higher.

Japanese stocks ended 0.5% higher, helped by improved sentiment as more countries are easing Covid-19 restrictions. Real estate stocks were among the best performers, with Open House Co. gaining 9.4%, Sansei Landic up 7.6% and Star Mica Holdings up 4.9%. SoftBank Group rose 1.0% following news that it is in talks to sell T-Mobile shares to Deutsche Telekom. The Nikkei Stock Average ended 0.5% higher at 20133.73.

India’s benchmark index closed 3.4% lower at 30028.98 after the country’s authorities extended a nationwide lockdown to May 31. Lenders were among the top losers on the index. IndusInd Bank closed 9.7% lower, while HDFC Bank fell 7.4% and Axis Bank dropped 7.1%. Automotive stocks also declined, with Maruti Suzuki falling 7.2% and Bajaj Auto losing 7.0%. Tech stocks were among the only gainers on the index.

South Korea’s benchmark index Kospi rose 0.5% to close at 1937.11 after mixed and choppy trade. Chemicals and oil-refinery stocks led the gains, while select large
internet and biotech shares were lower. Investors carefully weighed the benefits of easing lockdown restrictions amid the coronavirus pandemic against the potential risk of fresh waves of infections, analysts said. Renewed U.S.-China trade rows kept any overly upbeat sentiment in check.