Global Fundamental Analysis 30/09/2021

Global Fundamental Analysis 30/09/2021, FP Markets

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

U.S. stocks recovered some of yesterday’s big losses as the Treasury yield rally moderated. The yield on the 10-year Treasury settled higher but slipped back to 1.52% afterwards. The WSJ Dollar Index jumped to 88.9, dragging gold prices lower. Oil prices slipped in a choppy trading session that might indicate the market remains vulnerable to sharp moves in either direction.

Australian Market

Australia’s S&P/ASX 200 lost 1.1%. It is the first time the benchmark has lost more than 1% on consecutive days since mid-June 2020. Tech stocks led losses, as they had during a weak U.S. session. The energy and materials sectors fell by 1.8% and 1.0%, respectively.

US Market

U.S. stocks mostly rose, recovering some of their losses from the prior day’s rout as traders scooped up discounted shares. The S&P 500 added 0.2%, regaining a portion of the ground lost Tuesday when the equities benchmark dropped 2% in its worst one-day performance since May. The Dow Jones Industrial Average advanced 0.3%, while the tech-heavy Nasdaq Composite lost 0.2%.  

The stock market has rocketed higher in 2021 and is up 17% for the year even after the recent volatility. One big reason: When worries about the spread of Covid-19, the surprising uptick in inflation or potential rollbacks in monetary stimulus have threatened to derail the rally, investors have stepped in to buy.



Gold futures declined to their lowest finish since late March amid a strengthening dollar. “The precious metal is likely to weaken further amid a stronger dollar,” said Lukman Otunuga, manager, market analysis at FXTM. However, its outlook may be influenced by the Federal Reserve’s “preferred inflation gauge,” the core personal consumption expenditures price index, due out Friday, he said. December gold futures lost 0.8% to settle at $1,722.90 an ounce, following a 0.8% decline on Tuesday. Prices marked the lowest most-active contract settlement since March 31, FactSet data show.


Oil Futures

Oil futures slipped in volatile trading, as official government data showed that U.S. crude inventories climbed for the first time in eight weeks and an index for the U.S. dollar strengthened to its highest level in about a year. The oil market is also under pressure “because the dollar has shown some pretty good strength for the last couple of days,” pressuring prices for dollar-denominated crude oil, said Phil Flynn, senior market analyst at The Price Futures Group

U.S. oil production has climbed, but it’s “still not coming back fast enough to alleviate tight supply concerns,” said Mr. Flynn.  On Wednesday, November West Texas Intermediate crude fell 0.6% to settle at $74.83 a barrel on the New York Mercantile Exchange. November Brent crude, the global benchmark, declined by 0.6% to settle at $78.64 a barrel on the ICE Futures Europe exchange, ahead of its expiration at the end of Thursday’s trading session.



Major currencies were weaker against the US dollar in European and US trade. The Euro fell from highs near US$1.1685 to lows near US$1.1590 and was near the lows at the US close. The Aussie dollar fell from highs near US72.60 cents to lows near US71.70 cents and was near the lows at the US close. And the Japanese yen fell from 111.20 yen per US dollar to JPY112.04 and was near JPY112.00 at the US close.


European Markets

European share markets rebounded on Wednesday helped by takeover action. Reuters reported that “British drugmaker AstraZeneca jumped 4.2% after saying it will take full control of Caelum Biosciences in a deal worth up to $500 million.” Oil & gas stocks rose 0.9% while technology fell 0.7%. The pan-European STOXX 600 index rose by 0.6%. The German Dax index lifted by 0.8%. And the UK FTSE index gained 1.1%. In London trade, shares in Rio Tinto rose by 0.9% and shares in BHP rose by 0.8%.


Asian Markets

Earlier Wednesday, Chinese stocks closed lower amid concerns over China’s electricity crunch. The Shanghai Composite Index fell 1.8%, the Shenzhen Composite Index dropped 2.3% and the ChiNext Price Index declined 1.1%. Energy-related stocks were among the worst performers, tracking lower oil prices. Market focus will likely be on China’s upcoming PMI data later this week, IG said.  

Hong Kong shares saw broad-based gains, with property stocks advancing, leading the benchmark Hang Seng Index 0.7% higher. Shares of property companies gained, as Evergrande-related fears eased. Japanese stocks retreated, dragged by sharp falls in tech and bank shares, as caution grew about the sustainability of policy stimulus, especially in the U.S. The Nikkei Stock Average fell 2.1%. Investors are focusing on policy-related developments after Fumio Kishida, a former foreign minister was elected ruling party leader, assuring him of becoming the next prime minister.

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