Global Fundamental Analysis 22/11/2021

Global Fundamental Analysis 22/11/2021, FP Markets

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

U.S. stocks were mixed as greater Covid-19 restrictions in Europe cast shadows on prospects for worldwide economic recovery. The yield on the 10-year Treasury slipped to 1.54%. The WSJ Dollar Index rose to 89.8, dragging gold prices lower. Oil prices extended losses as fears of new lockdowns during the winter are sapping demand forecasts.

Australian Market

Australia’s S&P/ASX 200 gained 0.2% on commodity-stock gains but still racked up a consecutive weekly loss. The benchmark briefly dipped into negative territory midway through the session before recovering amid strength from shares of miners and energy producers.

US Market

U.S. stocks closed mixed for the session. Investors piled into the safety of the dollar and government bonds after fresh Covid-19 restrictions in Europe clouded prospects for the global economic recovery. The S&P 500 slipped 0.1% after closing at an all-time high Thursday. The tech-heavy Nasdaq Composite, which also hit a record Thursday, climbed 0.4%. The Dow Jones Industrial Average declined 0.75%.  

Covid-19 cases are rising in the U.S. and Europe, according to data from Johns Hopkins University. The Austrian chancellor announced that his country would go into a nationwide lockdown starting Monday, with restaurants and retail sectors to close. Areas in Germany are also going into a partial lockdown next week.  

“As Covid spreads in Europe and restrictions are strengthened in places in Germany and Austria, there’s a general recognition that things may not be going the right way,” said Sebastien Galy, a macro strategist at Nordea Asset Management. “This affects sentiment, both within markets and in households.”



Gold futures settled at their lowest in more than a week, on the back of a sharp drop in oil prices and a rise in the U.S. dollar to around the highest level in about 16 months. “The steep declines in crude oil spooked the raw commodity sector today, including the metals and gold,” said Jim Wyckoff, senior analyst at “Crude is the leader of the raw commodity sector, and now it looks like it has topped out, at least for the near term.”A higher U.S. dollar index was also a “daily negative” for the metals, said Mr Wyckoff. December gold futures fell by 0.5% to settle at $1,851.60 an ounce – the lowest most-active contract settlement since Nov. 10, FactSet data show. 


Oil Futures

Crude-oil prices settled at their lowest in about seven weeks, down for a fourth straight week to post the longest streak of declines in almost 20 months. Prices took a hit in response to a fresh lockdown in Austria, and rising Covid cases in Europe, which could eventually chip away at demand for the commodity should more countries impose Covid-19 restrictions. “Sentiment has turned bearish in Europe as Austria reimposing lockdowns has reminded investors that Covid waves can still disrupt the world economy,” said Colin Cieszynski, chief market strategist at SIA Wealth Management, in a daily note.  

West Texas Intermediate crude for December delivery slumped 3.7% to settle at $76.10 a barrel on the contract’s New York Mercantile Exchange expiration day. January Brent crude tumbled 2.9% to settle at $78.89 a barrel on ICE Futures Europe. The U.S. crude benchmark settled at its lowest since Oct. 1, down 5.8% for the week, based on the front months, while Brent crude marked its lowest finish since Sept. 30, losing 4% from the week-ago settlement, according to Dow Jones Market. Both benchmarks were down a fourth week in a row, the longest losing streak since the period ended March 27, 2020.



Major currencies were mixed against the US dollar in European and US trade. The Euro fell from US$1.1360 to lows near US$1.1250 and was near US$1.1290 at the US close. The Aussie dollar fell from highs near US72.90 cents to lows near US72.30 cents and was near US72.35 cents at the US close. And the Japanese yen firmed from 114.50 yen per US dollar to JPY113.60 and was near JPY114.00 at the US close.


European Markets

European share markets were weaker on Friday as European countries imposed fresh restrictions to battle rising Covid cases. Austria announced a fresh lockdown. Banks fell 2.5% in line with lower bond yields. But technology rose 0.6% and healthcare rose by 1%. The pan-European STOXX 600 index fell by 0.3%. The German Dax index lost 0.4%. The UK FTSE index fell by 0.5%. In London trade, shares in Rio Tinto rose by 1.8% and BHP rose by 0.8%.


Asian Markets

Earlier Friday, Chinese stocks advanced amid gains by property developers. The benchmark Shanghai Composite Index rose 1.1%, the Shenzhen Composite Index gained 1.2% and the ChiNext Price Index tacked on 1.0%. While still facing headwinds from low property sales, the sector is finding support as Beijing slowly eases credit conditions, UOB Kay Hian said. The broker also notes a growing number of developers aggressively disposing of assets and initiating placement activities to raise funds.  

Hong Kong’s Hang Seng Index extended its losing streak for a third straight day, falling 1.1%. The downturn was led by Chinese tech companies, which have suffered recent losses due to some disappointing earnings, as well as weakness in the U.S. tech sector. Japan’s Nikkei Stock Average rose 0.5% amid yen weakness and hopes for economic stimulus spurred by media reports that the government is planning a $490 billion fiscal package.

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