Global Fundamental Analysis 22/05/2020

OPENING CALL: The Australian share market is expected to open lower. The SPI200 futures contract expected to open 7 points down.


The U.S. government has agreed to hand AstraZeneca up to $1.2 billion to secure the supply of a potential coronavirus vaccine that could be ready as early as October.


Even as restrictions on businesses began lifting across the United States, another 2.4 million workers filed for jobless benefits last week, the government reported Thursday, bringing the total of new claims to more than 38 million in nine weeks.


Overnight Summary




Australian Market


US Market

U.S. stocks gave up some momentum after data showed another wave of Americans applied for unemployment benefits the prior week. The Dow Jones Industrial Average fell 102 points, or 0.4%, to 24474. The S&P 500 lost 0.8% and the Nasdaq Composite fell 1%.

The Labor Department said that about 2.4 million Americans filed for unemployment benefits in the week ending May 16, extending a swift and severe deterioration in the
labor market. More than 38 million Americans have filed applications since mid-March.

Despite a grim economic outlook, stocks are on pace for big weekly gains, with investors citing optimism that coronavirus vaccines might be available later this year. The U.S. Food and Drug Administration has fast-tracked the process for experimental vaccines, and drugmaker Moderna earlier this week reported positive results from the first human study of its experimental coronavirus vaccine.



Gold prices posted their first loss in three sessions, with the yellow metal marking its lowest finish in more than a week as investors weighed some signs of improvement in
the latest economic data.  Gold for June delivery on Comex declined $30.20, or 1.7%, to settle at $1,721.90 an once, the lowest most-active contract finish since May 13, according to FactSet data.


Oil Futures

Oil futures inched higher, adding to recent gains that have pushed both the international and the U.S. benchmark contracts to around 2 1/2-month peaks, as a slowdown
in supplies and hope for higher demand help prices recover some of their recent losses.  Prices, however, traded off the day’s highs, pressured by profit taking on the heels of oil’s sharp climb, as well as uncertainty over the rate of demand recovery as well as U.S.-China trade tensions.

July West Texas Intermediate oil rose 15 cents, or nearly 0.5%, to $33.64 a barrel on the New York Mercantile Exchange – down from a session high of $34.66. A 4.8% rally on Wednesday pushed the U.S. benchmark to its highest finish since March 10, based on the front-month contracts, according to Dow Jones Market Data.

Meanwhile, global benchmark Brent crude for July delivery added 17 cents, or 0.5%, to reach $35.92 a barrel on ICE Futures Europe-on track to settle at its highest since March 10.



The U.S. dollar strengthened 0.3% against the euro and less than 0.1% against the yen, and the WSJ Dollar index recently rose 0.2%.  Tensions between the U.S. and China continue to rise and another 2.4 million Americans applied for jobless benefits last week.
Rabobank said it sees the euro weakening without a E.U. recovery plan, although it noted progress on the eurozone’s fiscal response to coronavirus.


European Markets


Asian Markets

Earlier in the day, major stock indexes in Asia fell, with China’s Shanghai Composite Index closing down almost 0.6% and Japan’s Nikkei 225 ticking down 0.2%.

Japanese were dragged by falls in railway and consumer goods stocks, as concerns continue about the economic impact of the Covid-19 pandemic. The Nikkei Stock Average closed down 0.2% at 20552.31. Hong Kong stocks ended the session lower, snapping a three-day winning streak as China-U.S. tensions dragged on sentiment. The benchmark Hang Seng Index fell 0.5% to 24280.03 with exporters leading the losses amid the latest flareup in friction between the two superpowers.

South Korean stocks gained for a fifth consecutive session, with the benchmark index Kospi closing up 0.4% at 1998.31. Steel, oil refinery, chemicals and shipbuilding stocks were among the top gainers. The economic reopenings in Korea and many other parts of the world and hopes for a post-pandemic recovery in the global economy supported sentiment, outweighing worries about renewed U.S.-China trade tension.

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