Global Fundamental Analysis 27/04/2021

Australian Market

Australia’s S&P/ASX 200 lost 0.2%, finishing at its session low after oscillating between narrow gains and losses for most of the day. Only the materials sector showed consistent strength. Consumer-related stocks suffered after residential property action clearance rates slipped and Westpac suggested the country’s house price boom could soon be over.

US Market

The Nasdaq Composite climbed to a record as investors looked ahead to a busy week of corporate earnings reports, including from some of the biggest technology companies.  

The tech-heavy index gained 0.9%, logging its first closing high since February. The S&P 500 ticked up 0.2%, also setting a record, while the Dow Jones Industrial Average slipped 0.2%. All three indexes posted modest declines last week.  

More than one-third of the companies in the S&P 500 are reporting quarterly results this week. Investors will be watching to see whether the earnings justify rich valuations for some companies, especially in tech.

Commodities

Gold futures kicked off the week with a modest move higher, recouping just over half what they lost in Friday’s trading session, as traders looked ahead to this week’s meeting of Federal Reserve policymakers.  

In addition to the Fed meeting Wednesday, prices for the precious metal may also be influenced by President Joe Biden’s speech to Congress on Wednesday and Thursday’s first-quarter U.S. GDP report’s impact on the U.S. dollar — “gold’s natural adversary,” said Colin Cieszynski, chief market strategist at SIA Wealth Management.  

Gold futures for June delivery inched up 0.1% to settle at $1,780.10 an ounce on Comex, after trading as low as $1,768.20.

Oil Futures

Oil futures fell to extend overall losses from last week, but prices settled above the session’s worst levels.  

Some analysts expect India’s rise in Covid-19 cases to potentially lead to significant declines in energy demand, but that may also prompt major oil producers to postpone planned production increases when they meet later this week.  

The Organization of the Petroleum Exporting Countries and their allies, together known as OPEC+, held a technical meeting to review the oil markets, ahead of a key OPEC+ meeting Wednesday.  

India is recording more than a third of all new Covid-19 cases globally each day, or an average of more than 260,000 daily in the last week.  

Against that backdrop, oil prices pared earlier declines. West Texas Intermediate crude for June delivery fell 0.4% to settle at $61.91 a barrel on the New York Mercantile Exchange after tapping an intraday low at $60.66. June Brent crude, the global benchmark, lost 0.7% to settle at $65.65 a barrel on ICE Futures Europe, following earlier lows well under $65.

Forex

Major currencies were mixed against the US dollar in European and US trade. The Euro fell from highs near US$1.2105 to lows near US$1.2060 and ended near US$1.2090 at the US close. The Aussie dollar rose from lows near US77.65 cents to highs near US78.14 cents and was near US78 cents at the US close. But the Japanese yen eased from near 107.65 yen per US dollar to JPY108.20 and was near JPY108.10 at the US close.

European Markets

European sharemarkets were mostly firmer on Monday. Strong metal prices boosted the mining sector. Both copper and iron ore prices are at decade highs. Banks rose 2% and travel & leisure stocks rose by 1.8%. But shares in Volkswagen fell by 2.1% after warning of weaker second-quarter production in the second quarter due to a global chip shortage. The pan-European STOXX 600 index rose by 0.3%. The German Dax index lifted by 0.1% and the UK FTSE index gained 0.4%. In London trade shares in Rio Tinto rose by 1.7% with BHP up by 1.6%.

Asian Markets

Earlier Monday, Chinese stocks ended the session lower as several of last week’s top-performing sectors retreated from those gains. The benchmark Shanghai Composite Index shed 1.0%, while the Shenzhen Composite Index fell 0.8%. The ChiNext Price Index shed 0.8%. Declines were led by steelmakers and renewable-energy stocks, which were among the biggest gainers last week.  

Hong Kong stocks ended lower after consecutive gains the past two sessions The benchmark Hang Seng Index shed 0.4%. Automakers led the downturn amid the industry-wide chip supply shortage.  

The Nikkei Stock Average, however, rose 0.4% as railway and airline stocks rebounded after the government declared a new Covid-19 state of emergency for Tokyo and Osaka. The prospects of such a declaration had dragged these sectors in previous sessions.