Global Fundamental Analysis 7/05/2020

Australian Market

US Market

U.S. stocks swung between small gains and losses as investors continue to try to untangle data and corporate earnings to determine what the economy might look like in the months ahead.  The S&P 500 lost 0.7% as of the 4 p.m. close of trading in New York. The Dow Jones Industrial Average was down about 218 points, or 0.9%. Both indexes had opened modestly higher.  The Nasdaq Composite was up 0.5%, supported by a continued rally in technology stocks.

Despite Wednesday’s volatility, U.S. stocks have risen in recent days as investors look toward the continued lifting of stay-at-home orders. Several states have already begun to reopen their economies and others are formulating plans to do the same. President Trump in particular has been eager to energize the economy, saying Wednesday that the White House coronavirus task force would focus on reopening the country and developing a vaccine.

Still, however, much about the country’s future remains unknown. The number of confirmed coronavirus cases in the U.S. has climbed beyond 1.2 million, and many fear there could be a resurgence of cases as life begins to return to normal. Executive commentary, meanwhile, hasn’t offered investors reassurance either, as companies have continued to report massive profit declines, dividend cuts and layoffs during first-quarter earnings.

Economic data look similarly grim. The nonfarm private sector in the U.S. lost about 20.2 million jobs from March to mid-April, the ADP National Employment Report revealed Wednesday. Losses were the steepest among large businesses with 500 or more employees, raising new questions about whether more pain in the markets could be ahead.

Commodities

Gold prices settled with a more than 1% loss as the U.S. dollar strengthened and the reopening of some economies around the world reduced the need for safe haven bullion.  June gold fell $22.10, or 1.3%, to settle at $1,688.50 an ounce after it edged down by 0.2% on Tuesday.

Oil Futures

U.S. benchmark oil prices ended the session 2.3% lower at $23.99 a barrel, snapping a five-session winning streak as investors became concerned demand isn’t rebounding quickly enough from coronavirus closures while oil-in-storage is nearing maximum capacity.
EIA data showed a 4.6 million-barrel weekly rise in U.S. oil inventories that was smaller than forecasts for a 7.4 million-barrel rise.

Forex

The U.S. dollar strengthened against most major currencies but weakened 0.4% against the yen.

European Markets

European sharemarkets were mixed on Wednesday. The European Commission forecast the euro zone economy to contract by 7.7% this year. The IHS composite purchasing managers index for the euro zone fell from 29.7 to a record low of 13.6 in April. The pan-European STOXX 600 fell 0.4%. But while the German Dax index fell by 1.2%, the UK FTSE index was up 0.1%. In London trade, shares of Rio Tinto were higher by 0.2% and BHP shares were up by 1.3%.

Asian Markets