Global Fundamental Analysis 24/02/2022

Global Fundamental Analysis 24/02/2022, FP Markets

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

U.S. stocks fell again as Ukraine declared a state of emergency and called on its citizens to leave Russia immediately because of a growing threat of war. The yield on the 10-year Treasury rose to 2.00%, as the spread between 2- and 10-year yields shrank to its narrowest level since April 2020. The WSJ Dollar Index edged up to 89.7. U.S. benchmark oil prices ended a volatile session a bit higher. Gold continued higher, reaching its highest level in over a year.

Australian Market

Australia’s S&P/ASX 200 gained 0.6%, recovering some of the prior day’s losses despite continued worries over Russia’s actions in Ukraine. Beaten-down tech stocks led gains, with Altium, Life360 and Tyro Payments adding between 5.55% and 8.6%. The heavyweight financial sector edged 0.3% higher despite banks Macquarie, NAB and ANZ all dragging. Commodity stocks showed strength, with buyers pivoting from gold stocks to iron-ore and lithium miners.

US Market

U.S. stocks fell, deepening to their losses after concerns over the Ukraine crisis helped push the S&P 500 into correction territory. The threat of war in Ukraine has added to uncertainty in global markets. The S&P 500 ended 1.8% lower, a day after closing down more than 10% from its Jan. 3 record following Russia’s deployment of soldiers in Ukraine’s Donbas region. Ukraine declared a state of emergency and began to mobilize reservists, calling on its citizens to immediately leave Russia.  

The Dow Jones Industrial Average fell 1.4% while the technology-heavy Nasdaq Composite retreated 2.6%. The losses were broad-based with 10 of the S&P 500’s 11 sectors down for the day. The consumer discretionary segment fell 2.9%, while the tech segment dropped 2.1%. Only the energy group defied the trend, rising 1.1%. Investors say the effects of the tensions on Eastern Europe on stocks and bonds are hard to predict. The implications depend on rapidly moving diplomatic and military developments as well as the possible spillover of higher energy prices into inflation in Western economies.



Gold futures climbed, amid the Russia-Ukraine crisis, which lifted values to the highest finish in more than a year. Bullion has been enjoying an upswing amid intensifying tensions between Moscow and the West over troop deployments into Donbas regions of Ukraine and growing fears of a full-scale invasion of Kyiv. “Precious metals continue to shine amid heightened geopolitical risks concerning Ukraine, a struggling global stock market and soaring inflation,” said Fawad Razaqzada, market analyst at ThinkMarkets, in a market update. Against that backdrop, April gold futures advanced 0.2% to settle at $1,910.40 an ounce. Prices logged the highest most-active contract settlement since Jan. 7, 2021, FactSet data show.


Oil Futures

U.S. oil futures settled slightly higher as traders weighed risks to global crude supplies amid sanctions on Russia and the potential for a full invasion of Ukraine. The conflict in Ukraine “significantly increases the risk of disruptions to Russian supply and sanctions,” said Pat Thaker, editorial director, Middle East & Africa at Economist Intelligence Unit. “While the Ukraine crisis remains fluid, [the] extremely tight energy market is facing significant risk premium.”  

If a U.S.-Iran nuclear deal is reached, that would “ease some of the pressure, but not enough to stop oil prices inching towards triple digits,” said Ms. Thaker. West Texas Intermediate crude for April delivery rose 0.2% to settle at $92.10 a barrel on the New York Mercantile Exchange. April Brent crude, the global benchmark, ended flat at $96.84 a barrel on ICE Futures Europe, holding ground at the highest finish since 2014.



Major currencies were mixed against the US dollar in European and US trade. The Euro fell from highs near US$1.1355 to lows near US$1.1300 and was near US$1.1305 in afternoon US trade. The Aussie dollar rose from lows near US72.25 cents to highs near US72.83 cents and was near US72.30 cents in afternoon US trade. And the Japanese yen lifted from 115.17 yen per US dollar to JPY114.91 and was near JPY114.99 in afternoon US trade.


European Markets

European sharemarkets closed weaker on Wednesday. Investors mulled strong corporate earnings updates and the sanctions applied by Western nations on Russia in response to its incursion into
separatist regions of eastern Ukraine. Retailers, banks and financial services led declines. Shares in UK bank Barclays rose by 3.1% after its annual profit nearly trebled. The pan-European STOXX 600 index fell by 0.3% after being up 1% earlier in the session. The German Dax index lost 0.4% but the UK FTSE index rose by 0.1%. In London trade, shares in Rio Tinto fell by 2.2% and BHP fell by 0.4%.


Asian Markets

Earlier Wednesday, Chinese stocks ended the session higher, picking up from a muted performance earlier this week. The benchmark Shanghai Composite Index rose 0.9%, while the Shenzhen Composite Index added 1.8%. The ChiNext Price Index, a measure for emerging markets and startups, climbed 2.8%.

The upturn was driven by chip companies, including chip equipment makers, assemblers and semiconductor materials suppliers, amid growing investor optimism on the sector over an industrywide supply shortage and China’s latest policy to boost data center development, which should further raise chip demand. 

Hong Kong shares reversed a three-day losing streak, supported by broadly rebounding tech stocks. Meituan added 3.1% after a state-owned newspaper called Friday’s selloff of the food-delivery giant an overreaction. The Hang Seng Index climbed 0.6%.

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