Global Fundamental Analysis 24/11/2021

Global Fundamental Analysis 24/11/2021, FP Markets

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

U.S. stocks were mixed as the Dow and S&P 500 closed with slight gains in the face of higher Treasury yields, driven by Fed Chairman Jerome Powell’s renomination. The yield on the 10-year Treasury ticked up to 1.67%. U.S. oil prices jumped, despite the Biden administration announcing a long-anticipated plan along with other countries to release oil from their strategic reserves. Gold fell for a fourth-straight session. 

Australian Market

Australia’s S&P/ASX 200 advanced 0.8%, recording its strongest gain in more than a week as mining and energy stocks benefited from higher commodity prices. The energy and materials sectors added 2.5% and 2.3%, respectively, after oil and iron ore prices rose. Every ASX 200 energy stock gained, with Woodside jumping 3.5%.

US Market

The S&P 500 edged higher as gains by cyclical stocks balanced against losses in technology shares. The S&P 500 was up about 0.2% as of 4 p.m. ET, while the Dow Jones Industrial Average added 0.55%. The tech-heavy Nasdaq Composite retreated 0.5% after losing more than 1% Monday.

Focus on the continuing economic recovery and expectations for rising interest rates has dented the outlook for tech stocks, which often trade at high prices based on expectations of growth far into the future. Higher rates reduce the value of those far-off earnings, while broader economic growth makes other parts of the market relatively more attractive.



Gold futures declined for a fourth straight session, with the precious metal falling to the lowest value in about three weeks, breaching the psychologically significant value at $1,800 again. December gold shed 1.2% to settle at $1,783.80 an ounce, marking the lowest finish for a most-active contract since Nov. 3, FactSet data show. The slump comes as Treasury yields extend their rise in a holiday-shortened Thanksgiving week. U.S. markets will be closed on Thursday in observance of Thanksgiving.

December gold futures traded 1.2% lower to settle at $1,783.80 an ounce, marking the lowest finish for a most-active contract since Nov. 3, a day after the yellow metal sank 2.4% and logged the sharpest percentage drop since Aug. 6, FactSet data show. The four-day slide also matched the longest string of declines since the period ended April 30.


Oil Futures

A case of “sell the rumour, buy the fact” appeared to be in play as oil futures bounced higher after the White House announced the U.S. and other countries would release crude from strategic reserves in an effort to push down energy prices. The U.S. will release 50 million barrels of crude from its Strategic Petroleum Reserve, or SPR, while China, India, South Korea and the U.K. will tap their supplies. Talk of a coordinated release has hung over the oil market in recent weeks, with traders pricing in the potential for a large release, analysts said.  

Oil initially extended a decline after the White House announcement but then turned higher. West Texas Intermediate crude for January delivery advanced 2.3% to finish at $78.50 a barrel on the New York Mercantile Exchange. January Brent crude, the global benchmark, rose 3.3% to end at $82.31 a barrel on ICE Futures Europe. Both benchmarks have seen four straight weekly losses, ending Friday at seven-week lows.



Major currencies were mixed against the US dollar in European and US trade. The Euro rose from US$1.1230 to highs near US$1.1270 and was near US$1.1250 in afternoon US trade. The Aussie dollar fell from highs near US72.30 cents to lows nearUS72.05 cents and was near US72.25 cents in afternoon US trade. And the Japanese yen lifted from 115.14 yen per US dollar to JPY114.54 but was back near JPY115.15 in the afternoon of US trade.


European Markets

European sharemarkets were mixed on Tuesday. Basic materials rose 0.6% and oil & gas rose 0.5%. But travel stocks fell 1.8% after the US issued an advisory against travel to Germany and Denmark due to rising Covid case numbers. Technology shares also fell 3.4%. The pan-European STOXX 600 index fell by 1.3%. The German Dax index lost 1.1%. But the UK FTSE index rose by 0.2%. In London trade, shares in Rio Tinto rose by 2.9% and BHP rose by 3.0%.


Asian Markets

Earlier Tuesday, Chinese stocks ended mixed, although Beijing’s “common prosperity” policy is weighing on equities, Oanda said. The policy overhang should mean “China equities will remain a challenging market into 2022,” it said, adding that it doesn’t think that Chinese equities have fully priced in the negatives yet. Chinese coal companies were among gainers thanks to increased coal output and relatively steady prices, while renewable-energy companies broadly fell.

The Shanghai Composite Index rose 0.2%, the Shenzhen Composite Index dropped 0.2% and the ChiNext Price Index closed 0.4% lower. Hong Kong’s Hang Seng Index fell 1.2%, extending its losing streak for the fifth straight session and closing at its lowest level since early October. Cautious sentiment prevailed after President Biden nominated Jerome Powell for Fed chairman.

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