Global Fundamental Analysis 24/03/2022

Global Fundamental Analysis 24/03/2022, FP Markets

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

U.S. stocks fell on worries over energy prices, supply shortages and inflation. The yield on the 10-year Treasury dropped to 2.29% as investors digested updates on the Federal Reserve’s policy path. The WSJ Dollar Index edged up to 91.3. Oil prices jumped to two-week-highs. Gold prices jumped amid demand for haven assets.

Australian Market

Australia’s S&P/ASX 200 added 0.5%, led by tech stocks and shares of financial companies likely to benefit from higher interest rates. Shares in Uniti surged 11% before being placed in a trading halt amid media reports of a second bidder for the telecoms services provider. Lenders ANZ, Westpac, Macquarie, Commonwealth and NAB–which comprise about 22% of the ASX 200 by market capitalization–added between 0.8% and 1.6%. Only the materials sector lost ground, pulling back 0.4% after five consecutive sessions higher.

US Market

U.S. stocks declined, as concerns about rising energy prices, supply shortages and inflation rattled investors once again. The S&P 500 ticked down about 1.2%, while the Dow Jones Industrial Average fell 1.3%. The tech-focused Nasdaq Composite Index dropped 1.3%. Major U.S. stock indexes jumped Tuesday, as investors shrugged off worries that inflation will push the nation’s economy into a recession.  

Some of that confidence faded, however, after Brent crude, the international benchmark, moved higher again. Brent crude has surged 56% this year amid an expanding global economy and concerns about supplies due to Russia’s invasion of Ukraine. Adding to those concerns: Russia said on Tuesday that oil exports via a pipeline from Kazakhstan to the Black Sea may temporarily fall by around 1 million barrels a day — representing about 1% of global oil demand — citing storm damage. Repairs could take up to two months, Russian officials said.  

“Things will stay highly sensitive to the events unfolding in Ukraine,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, noting that sharp moves in energy prices will continue to weigh heavily on indexes. “There is still real pressure on oil prices that is adding to inflationary concerns.”



Gold futures rallied, posting their highest finish in nearly a week as traders kept an eye on an increasingly hawkish Federal Reserve and monitored developments in the Russia-Ukraine war. The Fed has “marked out a series of planned interest rate rises throughout the year, so gold is likely to face an increasingly less favorable macroeconomic environment,” said Rupert Rowling, market analyst at Kinesis Money. “Yet the one factor that could trump all this is further escalation in the war in Ukraine.”  

Gold futures for April delivery rose 0.8% to settle at $1,937.30 an ounce on Comex. Most-active contract prices marked their highest settlement since March 17, FactSet data show. “The war in Ukraine provides flight to quality support to the precious metals, but a hawkish turn in Fed commentary has been negative,” analysts at Zaner wrote in daily commentary.


Oil Futures

Oil prices climbed sharply, with prices at their highest settlement in just over two weeks, as supply worries hovered over the market as the war in Ukraine neared a one-month mark and U.S. crude inventories posted a weekly decline. Supply concerns linked to Russia’s invasion of Ukraine that shows no signs of letting up, were again helping to drive gains for crude, with U.S. oil up over 11% and Brent climbing nearly 13% so far this week.  

“It’s a massive week for oil markets, with meetings of [European Union] leaders and a NATO summit both happening over the next few days,” said Stephen Innes, managing partner at SPI Asset Management, in a daily note. “A new wave of Russian sanctions is likely, and speculation in the press has focused on the probability of sanctions affecting oil.” West Texas Intermediate crude for May delivery rose 5.2% to settle at $114.93 a barrel on the New York Mercantile Exchange. May Brent crude, the global benchmark, climbed 5.3% to $121.60 a barrel on ICE Futures Europe. Brent and WTI marked their highest front-month contract settlements since March 8, according to Dow Jones Markets Data.



Major currencies were mixed against the US dollar in European and US trade. The Euro fell from highs near US$1.1040 to lows near US$1.0965 and was near US$1.1005 at the US close. The Aussie dollar rose from lows near US74.50 cents to highs near US75 cents and was near session highs at the US close. And the Japanese yen held between 120.62 yen per US dollar to JPY121.15 and was near JPY121.12 at the US close.


European Markets

European sharemarkets were weaker on Wednesday with traders reportedly taking profits after five days of gains. Investors are awaiting meetings between US and European leaders. Data showed that annual UK inflation lifted from 5.5% to a new 30-year high of 6.2% in February. Energy stocks rose 2% in response to higher oil prices. But banks fell by 2.1%. The pan-European STOXX 600 index fell by 1%. The German Dax index fell by 1.3%. And the UK FTSE index eased by 0.2%. In London trade, shares in Rio Tinto rose by 1.6% and BHP shares lifted by 2.8%%.


Asian Markets

Earlier Wednesday, Chinese stocks got a boost from the property-management and telecom sectors. The benchmark Shanghai Composite Index rose 0.3%, while the Shenzhen Composite Index gained 0.5%. The tech-heavy ChiNext Price Index was the best performer, gaining 1.0%. Property-management companies extended the strong gains from the previous session, as sentiment remained upbeat following recent policy easing and fundraising progress by some major developers. Telecom stocks lent further support, driven by ZTE’s 10% surge after the company confirmed that its probation under a U.S. monitor has officially ended.

Hong Kong shares also advanced, with the benchmark Hang Seng Index rising 1.2%. Asian equities were buoyed by gains in U.S. equity markets overnight, Oanda said, adding that “China’s tech-heavyweight buyback fever has lifted the Hang Seng.” The Hang Seng TECH Index advanced 2.1%. Japanese stocks were led higher by sharp gains in electronics and technology stocks, as the yen weakened to its lowest level in more than six years. The Nikkei Stock Average climbed 3.0% to its highest level since Jan. 18.

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