Global Fundamental Analysis 26/04/2022

Global Fundamental Analysis 26/04/2022, FP Markets

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

U.S. stocks finished higher as bond yields took a breather. The yield on the 10-year Treasury note fell to 2.825% from 2.905% Friday. The WSJ Dollar Index rose 0.47% to 94.29. U.S. oil prices fell below $100 a barrel as a China Covid spread triggered fresh demand worries. And gold prices settled at a two-month low as investors sidesteped the metal for more attractive safe havens.

Australian Market

Australia’s S&P/ASX 200 index also was closed for the Anzac Day holiday.

US Market 

U.S. stocks flipped higher as government bond yields retreated and investors took the opportunity to scoop up shares of beaten-down technology and other growth stocks. The S&P 500 rose 0.6% in a volatile session. The Dow Jones Industrial Average gained 0.7% after suffering on Friday its worst session since October 2020. The tech-focused Nasdaq Composite Index, which has underperformed the other indexes this year, added 1.3%.

Twitter shares rose 5.6% after the social-media company accepted Elon Musk’s $44 billion takeover deal. A decline in bond yields signaled to investors that the Federal Reserve may not move to raise interest rates as aggressively as feared, investors said. “Rates had been weighing against the market,” said Jack Ablin, chief investment officer of Cresset Capital. “Now what we’re seeing is a reversal of that trend.” Investors are worried that strict policies China has in place to combat Covid-19 will further disrupt global supply chains.



Gold futures posted their lowest finish since late February, failing to find support as investors dumped equities and other assets perceived as risky, while jumping into other assets perceived as safe, including U.S. Treasurys and the dollar. June gold fell 2% to settle at $1,896 an ounce on Comex – the lowest finish for a most-active contract since Feb. 25, FactSet data show.  

“Investors appear to be fleeing to the safety of the world’s reserve currency and U.S. Treasurys rather than the traditional safe haven, gold, ” said Raffi Boyadjian, lead investment analyst at XM, in a note. “Treasury yields were weaker across the curve today, but they remained elevated as the Fed is expected to front load its rate hikes in the coming months.”


Oil Futures

Oil futures declined, with the U.S. benchmark below $100 a barrel as worries over spreading Covid cases in China weighed on prospects for energy demand. West Texas Intermediate crude for June delivery tumbled 5.4% to $98.74 a barrel on the New York Mercantile Exchange. June Brent crude fell 5.4% to $102.38 a barrel on ICE Futures Europe. China growth worries added to an overall risk-averse mood across global markets on Monday that washed over commodity prices.  

“It seems that China is the elephant in the room and markets feel that slowing China growth could materially change the supply/demand equation on international markets,” said Jeffrey Halley, senior market analyst at Oanda, in a note to clients.



Major currencies were mixed against the US dollar in European and US trade. The Euro fell from highs near US$1.0775 to lows near US$1.0700 and was near US$1.0715 at the US close. The Aussie dollar fell from highs near US72.00 cents to lows near US71.35 cents and was near US71.75 cents at the US close. And the Japanese yen rose from 128.58 yen per US dollar to JPY127.52 and was near JPY128.02 at the US close.


European Markets

European sharemarkets fell on Monday. Worries about an economic slowdown in China dragged on commodity prices, sending share prices of mining and energy stocks lower. Share prices of luxury good makers also eased. Supporting prices was news that French President Emmanuel Macron had been re-elected. The panEuropean STOXX 600 index fell by 1.8%. The German Dax lost 1.5% and the UK FTSE fell by 1.9%. In London trade, shares of Rio Tinto fell by 5.2%. Shares in BHP fell by 6.3%.


Asian Markets

Japanese stocks closed lower, dragged by falls in tech and electronics shares, which were hit by continued concerns about the Federal Reserve’s pace of tightening. SoftBank Group lost 7.8% and electric-motor maker Nidec dropped 6.7%. The Nikkei Stock Average fell 1.9%.

Chinese stocks fell sharply on broad-based selling, with heavy losses among nonferrous metals and electronics, as the economic impact of Covid-19 continued to weigh on sentiment. The Shanghai Composite Index slid 5.1%, its biggest one-day drop since February 2020 and its lowest closing level since June 2020. The Shenzhen Composite Index declined 6.5% and the ChiNext Price Index lost 5.6%.

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