Global Fundamental Analysis 25/10/2021

Global Fundamental Analysis 25/10/2021, FP Markets

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

U.S. stocks wavered, with many sectors up on robust earnings but communications shares fell sharply. The yield on the 10-year Treasury pulled back to 1.64%. The WSJ Dollar Index slipped to 88.05 but remained near its 2021 highs. Crude resumed its upward trend, with U.S. prices recording their ninth consecutive weekly gain. Gold prices pared early gains to edge higher, losing momentum after comments from Fed Chairman Jerome Powell. 

Australian Market

Australia’s S&P/ASX 200 closed flat, after bouncing between narrow gains and losses. The energy and materials sectors were the biggest losers, dropping 2.1% and 1.2%, respectively, after the price of oil and iron ore fell overnight. Consumer and health stocks rose strongly, but the tech sector gave up its gains to close flat after Australia’s central bank said buy-now-pay-later providers should end so-called no-surcharge rules. The ASX 200 gained 0.7% for the week.

US Market

U.S. stocks were mixed but finished higher for a third consecutive week. The blue-chip Dow Jones Industrial Average edged up about 0.2% to a new record high, in 4. p.m. trading. The S&P 500 index shed around 0.1%, and the technology-heavy Nasdaq Composite fell 0.8%.  

Stocks have risen in recent days after strong earnings results from some of the biggest U.S. corporations. Most S&P 500 companies that have reported earnings have beat analysts’ expectations, and corporate profits are expected to jump around 35% in the latest quarter from the prior year, according to Refinitiv data.  

The latest financial results from companies like Tesla and Procter & Gamble showed that companies have been able to insulate themselves from the global supply-chain crisis and deliver strong results. Some companies have been passing down higher prices to customers.



Gold futures climbed, but bullion ended below the day’s best levels after remarks from Federal Reserve Chairman Jerome Powell raised the likelihood that the central bank will soon start to slow, or taper, its monthly bond purchases. The comments offset some of gold’s earlier support from concerns that rising inflation in the aftermath of Covid-19 may erode purchasing power.  

Gold gave up much of its early gains after Powell’s remarks on tapering its bond purchases, said Chintan Karnani, director of research at Insignia Consultants. Powell also said inflation will be longer than previously expected and that monetary tools will be used if inflation rises for longer than expected.  

December gold futures rose 0.8% to settle at $1,796.30 an ounce, after trading as high as $1,815.50 during the trading session. For the week, however, gold was up 1.6% and notched a fourth weekly gain in five weeks, according to Dow Jones Market Data.


Oil Futures

Oil futures climbed, with U.S. prices tallying a record streak of weekly gains, up nine weeks in a row, on the back of easing travel restrictions, a slow recovery in U.S. crude production and expectations for higher energy demand for the holidays. West Texas Intermediate crude for December delivery rose 1.5% to settle at $83.76 a barrel on the New York Mercantile Exchange. Prices for the front-month contract saw a 2.6% weekly rise.  

That marked a ninth weekly climb in a row for the U.S. crude benchmark, the longest-ever weekly winning streak for front-month WTI contracts, based on records going back to April 1983, according to Dow Jones Market Data. December Brent crude, the global benchmark, rose 1.1% to settle at $85.53 a barrel on ICE Futures Europe, for a 0.9% weekly advance. WTI earlier this week closed at a seven-year high, while Brent has traded at its highest in three years.



Major currencies were mixed against the US dollar in European and US trade. The Euro held between US$1.1620 and US$1.1652 and was near US$1.1645 at the US close. The Aussie dollar eased from highs near US75.10 cents to lows near US74.55 cents and was near US74.65 cents at the US close. And the Japanese yen rose from 114.06 yen per US dollar to JPY113.41 and was near the JPY113.45 at the US close.


European Markets

European share markets closed firmer on Friday on news that Chinese property developer Evergrande made a bond payment to avert default. The pan-European STOXX 600 index rose by 0.5%.
The German Dax index also rose by 0.5%. And the UK FTSE index edged 0.2% higher. In London trade shares in Rio Tinto rose 0.5% and BHP rose 0.7%.


Asian Markets

Earlier Friday, Chinese stocks ended the session mixed, continuing a trend of muted trading so far this month. The benchmark Shanghai Composite Index shed 0.3%, while the Shenzhen Composite Index lost 0.1%. The ChiNext Price Index, which features emerging industries, rose 0.2%. Coal miners led the losers as the sector retreated from the previous day’s growth. Consumer goods and services showed some strength.  

Hong Kong stocks recovered from the previous session’s brief downturn to extend their recent rally. The benchmark Hang Seng Index edged up 0.4%. Chinese property developers led the rise after China’s top officials recently reiterated support for the sector and noted that the impact from China Evergrande’s debt crisis looks manageable.  

Japanese stocks also advanced, as hopes for an earnings recovery offset concerns about higher costs of borrowing and raw materials. The Nikkei Stock Average rose 0.3%. Investors are expected to focus on the earnings season set to start next week and any policy developments ahead of Japan’s lower-house election on Oct. 31.

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