Global Fundamental Analysis 01/02/2021

Australian Market

Australia’s S&P/ASX 200 index closed 0.6% lower, with banks, mining and energy stocks bearing much of the pain. Materials and financial sectors, which together account for almost half the ASX 200’s market capitalization, fell by 1.3% and 1.6%, respectively, despite positive leads from Wall Street. The ASX 200 index dropped 2.8% for the week, its biggest fall since October.

US Market

U.S. stocks ended lower as frenzied trading continued to drive GameStop and other heavily shorted shares, pointing to a volatile end to 2021’s first month of trading.

The Dow Jones Industrial Average fell 2% and the S&P 500 declined 1.9% — a day after rising nearly 1%. The tech-heavy Nasdaq Composite also lost 2%. While the market has been fixated on the shorts vs. Reddit feud, investors shouldn’t be surprised by the market’s recent losses, observers said, given that it has been in a long upswing. This week in fact represents the worst week for the major indexes since Oct. 30, before the election.

Commodities

Gold futures ended higher, scoring their first gain in seven sessions but returned a loss for the month, even though investors focused on worries about rising speculation on Wall Street and the efficacy of Covid-19 vaccines.

April gold rose $9.10, or 0.5%, to settle at $1,846.70. It settled 0.4% lower on Thursday, marking gold’s sixth-straight day of declines, the longest skid for prices since the seven-session loss ended March 5, 2019, FactSet data show.

Oil Futures

U.S. oil futures settled lower, weighed down by ongoing concerns over energy demand. But prices ended the month with a more than 7% gain, with Saudi Arabia set to implement a unilateral production cut of 1 million barrels a day starting in February.

March West Texas Intermediate crude fell 14 cents, or 0.3%, to settle at $52.17 a barrel on the New York Mercantile Exchange. March Brent crude, which expired at the end of the day’s session, rose 35 cents, or 0.6%, to end at $55.88 a barrel.

Forex

Major currencies were firmer against the US dollar in European and US trade. The Euro rose from lows near US$1.2080 to highs near US$1.2140 and was near US$1.2125 at the US close. The Aussie dollar rose from lows near US75.90 cents to highs near US76.98 cents and was near US76.85 cents at the US close. And the Japanese yen rose from near 104.45 yen per US dollar to JPY104.17 and was around JPY104.24 at the US close.

European Markets

European sharemarkets ended mixed on Thursday. Stocks largely clawed back early losses helped by a rebound in US stocks at the start of their trading session. The pan-European STOXX 600 index rose by 0.1%. The German Dax index rose by 0.3% and the French market lifted 0.9%. But the UK FTSE index fell by 0.6%, with a stronger pound weighing on exporter stocks. In London trade shares in Rio Tinto fell by 0.9% while shares in BHP rose by 0.2%.

Asian Markets

The Nikkei Stock Average ended down 1.9% amid concerns over the rising number of coronavirus cases in Japan. Corporate earnings will continue to be closely watched. Utility stocks led the losses.

China’s major stock benchmarks slipped as concerns over further liquidity tightening by the central bank weighed on sentiment. The Shanghai Composite Index lost 0.6%, while the Shenzhen Composite Index fell 0.8% and the ChiNext Price Index slid 1.0%.