Global Fundamental Analysis 29/10/2021

Australian Market

Australia’s S&P/ASX 200 edged 0.25% lower, dragged down by weakness in commodity-related stocks. The benchmark followed ASX futures lower after U.S. indices pulled back from record highs, although strength among banking stocks prevented a larger loss. Most other sectors lost ground, with energy and materials leading the way amid lower commodity prices. The ASX 200 is up 0.2% so far this week.

U.S. stocks rose, buoyed by a string of solid earnings reports. The S&P 500 advanced 1% and the Nasdaq Composite gained 1.4% in 4 p.m. trading, with both indexes closing at record highs. The Dow Jones Industrial Average added 0.7%. Forecast-beating results have helped ease investors’ worries that supply-chain difficulties would dent profits, sending stocks higher throughout the month of October.

So far this reporting season, with nearly half of S&P 500 companies having posted results, about 82% of companies have managed to beat analysts’ expectations for earnings, according to FactSet. Apple and Amazon.com reported their latest quarterly results after markets closed.“Earnings growth has been very strong,” said Kiran Ganesh, multiasset strategist at UBS Global Wealth Management, adding that investors had also taken comfort from slow progress in Washington toward legislation that would raise taxes on companies and wealthy individuals.

Commodities

Gold futures climbed to settle above the $1,800 an ounce level, after data showing growth in the U.S. economy significantly slowed in the third quarter. Prices for the metal got a lift as third quarter U.S. gross domestic product data missed expectations, easing concerns about a quicker liftoff in U.S. interest rates than expected, said Chris Gaffney, president of World Markets at TIAA Bank. “Gold is widely seen as an inflation hedge, and rising inflation expectations should lend support to the price of precious metals.”December gold futures rose 0.2% to settle at $1,802.60 an ounce, marking the first most-active contract finish above $1,800 since Monday, FactSet data show.

Oil Futures

Natural-gas futures dropped by nearly 7%, pressured by recent reports that Russian President Vladimir Putin ordered Gazprom to send more natural gas to Europe next month. Oil futures, meanwhile, finished with modest gains, recouping a small portion of the more than 2% they lost Wednesday, but Brent oil settled lower after Iran signaled renewed interest in talks aimed at reviving its nuclear accord.  

Meanwhile, the Energy Information Administration reported that domestic supplies of natural gas rose by 87 billion cubic feet for the week ended Oct. 22. The weekly climb came in well above the five-year average supply build. December natural gas fell 6.7% to settle at $5.782 per million British thermal units, the lowest front-month finish in two weeks, according to Dow Jones Market Data. West Texas Intermediate crude for December delivery rose 0.2% to settle at $82.81 a barrel on the New York Mercantile Exchange. December Brent crude, the global benchmark, fell 0.3% to settle at $84.32 a barrel on ICE Futures Europe.

Forex

Major currencies were firmer against the US dollar in European and US trade. The Euro rose from lows near US$1.1581 to highs near US$1.1690 and was near US$1.1680 at the US close. The Aussie dollar lifted from lows near US75.02 cents to highs near US75.55 cents and was near US75.40 cents at the US close. And the Japanese yen rose from 113.73 yen per US dollar to JPY113.24 and was near JPY113.60 at the US close.

European Markets

European sharemarkets were mixed on Thursday after the European Central Bank kept interest rates and its monetary policy stance unchanged. The pan-European STOXX 600 index closed 0.2%
higher with food and beverage stocks up 1.6%. The German Dax and UK FTSE indexes both lost 0.1%. In London trade shares in Rio Tinto fell by 1.3%, but BHP shares were up by 0.2%.

Asian Markets

Earlier Thursday, Chinese stocks dropped, with the Shanghai Composite Index declining 1.2% to a two-month low, dragged by cyclical sectors. Coal miners were heavily sold off for a second day, as Beijing aims to stabilize coal prices over the long term. Home-appliance makers recovered slightly from recent weakness and consumer-related industries broadly strengthened. The Shenzhen Composite Index fell 1.5% and the ChiNext Price Index was 0.9% lower.  

Hong Kong’s Hang Seng Index closed 0.3% lower, with investors likely focused on major Chinese companies reporting earnings, KGI Securities said. Japanese shares fell on yen strength and overnight weakness of U.S. stock markets, with the Nikkei Stock Average closing 1.0% lower. Losses on the Nikkei were led by a mixed bag of companies including those that posted weak results.