Global Fundamental Analysis 23/07/2021

Global Fundamental Analysis 23/07/2021, FP Markets

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

U.S. stocks extended their winning streak to three days, shaking off weak labour data. The 10-year Treasury note yield slipped 1.5 basis points to 1.264% after trading above 1.30%. The WSJ Dollar Index fell 0.02% to 87.47. U.S. oil prices posted their highest settlement in more than a week. Gold prices settled higher after a rise in U.S. jobless claims and the ECB’s latest policy announcement.


Australian Market

Australia’s S&P/ASX 200 index closed 1.1% higher, led by the rebounding materials sector. The benchmark built on the previous session’s 0.8% raise and a strong lead from U.S. stocks to close at a record for the first time since June 16. Almost every ASX 200 mining stock rose. Energy shares rose amid higher oil prices and the heavyweight financial sector increased 1.1%.

US Market

U.S. stocks edged higher, adding modest gains after two strong days. The Dow Jones Industrial Average rose 0.1%. The S&P 500 rose 0.2% and the tech-heavy Nasdaq Composite rose 0.4%.  

The Labor Department’s latest data on jobless claims, viewed as a proxy for layoffs, showed that 419,000 people applied for unemployment insurance last week. That was up from the preceding week. Economists had been expecting claims to fall to a new pandemic low.

Stocks had resumed their monthslong rally earlier in the week, erasing most of their losses from the sharp drop Monday when the spread of the Delta variant raised alarms about renewed lockdown measures. Investors have since sent the major indexes back up to less than 1% below their all-time highs.



Gold futures marked a modest gain, holding to a relatively tight trading range following data showing an unexpected rise in first-time U.S. jobless claims, as investors weighed the European Central Bank’s latest announcement on monetary policy.  

Gold continued to show “little volatility” after the ECB meeting and U.S. economic data, said Carlo Alberto De Casa, market analyst for Kinesis.  

August gold edged up by 0.1% to settle at $1,807.60 an ounce on Comex after ending Wednesday at the lowest for a most active contract since July 8.


Oil Futures

Oil futures rose for a third-straight session, erasing a Monday rout to turn higher for the week. Traders shook off concerns about the impact of the spread of the Delta variant of the coronavirus on energy demand and a rise in U.S. crude inventories last week, with oil prices finding support from rising investor appetite for assets perceived as risky, as well as tight supplies.  

West Texas Intermediate crude for September delivery climbed 2.3% to settle at $71.91 a barrel on the New York Mercantile Exchange. September Brent crude, the global benchmark, rose 2.2% at $73.79 a barrel on ICE Futures Europe.



Major currencies were mixed against the US dollar in European and US trade. The Euro fell from highs from near US$1.1830 to lows near US$1.1755 and was near US$1.1770 at the US close.
The Aussie dollar rose from lows near US73.55 cents to almost US74 cents and was near US73.80 cents at the US close. And the Japanese yen held between 110 yen per US dollar and JPY110.35 and was near JPY110.15 at the US close.


European Markets

European sharemarkets were mixed on Thursday. The pan-European STOXX 600 index rose by 0.6%. And the German Dax index also rose 0.6%. The European Central Bank said it would not hike rates until it sees inflation reach its 2% target “well ahead of the end of its projection horizon and durably”. In response, bond yields fell, leading to a 0.2% fall in bank shares. The UK FTSE fell by 0.4%, with a sharp fall in the iron ore price weighing on the mining sector. In London trade, shares in Rio Tinto fell by 2.1% and BHP lost 0.8%.


Asian Markets

Japan’s Nikkei Stock Average was closed for the Marine Day holiday. Chinese stocks ended the session mixed, as steelmakers and miners advanced, while the pharma sector dragged. Steelmaking margins have strongly rebounded, and expectations are rising that production curbs will come through in the second half, straining supply, CITIC Securities said. The Shanghai Composite Index rose 0.3%, the Shenzhen Composite Index gained 0.5%, and the ChiNext Price Index lost 0.4%.

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