Global Fundamental Analysis 24/08/2021

Global Fundamental Analysis 24/08/2021, FP Markets

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

 
U.S. stocks advanced, helped by strength in the tech sector. The yield on the 10-year Treasury ticked down to 1.25% ahead of the annual Jackson Hole symposium. The WSJ Dollar Index fell to 87.79, helping push gold prices higher. Oil prices posted their biggest one-day percentage gain since March 24.
 

Australian Market

Australia’s S&P/ASX 200 rose 0.4%, ending its worst losing streak in almost 18 months. Tech, property and materials were the strongest sectors as the ASX 200 snapped a run of five losses and clawed back some of last week’s 2.2% fall.

 

US Market

U.S. stocks rose, boosted by technology stocks and full approval for Pfizer’s Covid-19 vaccine. The S&P 500 advanced 0.9%, led by energy, industrials and tech. The Nasdaq Composite climbed 1.6%, indicating a larger rise in technology stocks. Meanwhile, the Dow Jones Industrial Average rose 0.6%.  

The Covid-19 vaccine from Pfizer and partner BioNTech received full approval from U.S. regulators, which many public health officials and vaccine experts hope will encourage hesitant populations to get the shot. Pfizer rose 2.8% and BioNTech climbed more than 10%.  

“Many believe that [vaccine approval] will create that much more momentum in vaccine trends, especially in those states and population groups that are lagging,” said Joe Amato, chief investment officer at Neuberger Berman. Investors also are focused on the Federal Reserve’s annual economic policy symposium later this week, awaiting fresh cues on when policymakers may slow bond purchases.

At the same time, rising concerns that elevated Covid-19 infection levels may slow the global economic recovery sent stocks lower last week. Dallas Fed President Rob Kaplan said Friday he may rethink his call to begin tapering asset purchases soon if the Delta variant weighs on growth.

 

Commodities

Gold futures settled higher, supported partly by weakness in the U.S. dollar, leading prices back above a key market above $1,800 for the first time in over two weeks. “A significant reversal in the dollar and broad-based risk on psychology has lifted gold and the rest of the metals complex off fundamental reasons to start the new trading week,” analysts at Zaner metals wrote in Monday’s market update. “Others are suggesting that the ongoing surge in the delta variant infections is still threatening the global economy and that, in turn, is providing flight to quality buying interest in gold.”  

December gold futures rose nearly 1.3% to settle at $1,806.30 an ounce, with the most active contract marking its highest finish since Aug. 5, according to FactSet data. Prices on Friday logged a weekly advance of 0.3%, its second in a row.

 

Oil Futures

Oil futures rose, scoring their biggest daily percentage gain since March after ending last week at the lowest price in three months on worries the continued spread of the Delta variant of the coronavirus that causes Covid-19 would dent demand for crude.

“Oil was way oversold and [a] fire sale was on,” said Naeem Aslam, chief market analyst at AvaTrade. “Bargain hunters are wasting no time closing the deal and this is pushing the price higher.”West Texas Intermediate crude for October delivery rose 5.6% to settle at $65.64 a barrel on the New York Mercantile Exchange. WTI dropped 8.9% last week, taking the U.S.

benchmark to a three-month low. October Brent crude, the global benchmark, climbed 5.5% to settle at $68.75 a barrel on ICE Futures Europe, after also falling to its lowest since May last week. Both benchmarks snapped seven-day losing streaks to log their biggest daily percentage gains since March 24, according to Dow Jones Market Data.

 

Forex

Major currencies were stronger against the US dollar in European and US trade. The Euro rose from lows near US$1.1706 to highs near US$1.1750 and was near US$1.1740 at the US close. The Aussie dollar rose from lows near US71.48 cents to highs near US72.17 cents and was near US72.15 cents at the US close. And the Japanese yen firmed from near 110.14 yen per US dollar to JPY109.65 and was near JPY109.70 at the US close.

 

European Markets

European share markets closed higher on Monday. The pan-European STOXX 600 index rose by 0.7%, with oil and gas stocks jumping 2.1% to lead the gains. The German Dax and the UK FTSE indexes both lifted by 0.3%. Shares of British supermarket chain Sainsbury’s surged 15.4% after reports of takeover interest from private equity firms. In London trade shares in Rio Tinto rose by 0.5% and shares in BHP lifted by 1.1%.

 

Asian Markets

Earlier Monday, Chinese stocks strengthened amid broad-based gains led by industrial sectors. The defence industry’s prospects look bright, Topsperity Securities said, noting that many companies posted strong first-half growth and the order pipeline is rich. The Shanghai Composite Index rose 1.5%, the Shenzhen Composite Index gained 2.3% and the ChiNext Price Index advanced 3.2%.

A tech sector recovery after recent weakness helped lift Hong Kong shares out of a bear market, with the Hang Seng Index finishing 1.0% higher. The Hang Seng TECH Index gained 2.1%, paring year-to-date losses to 29%.

Japanese stocks ended broadly higher, led by especially strong gains in auto and electronics shares, as the yen weakened. The Nikkei Stock Average rose 1.8%. Policy-related developments will be watched closely ahead of the Fed’s Jackson Hole meeting this week.




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