Global Fundamental Analysis 03/06/2021

Australian Market

Australia’s S&P/ASX 200 index ended 1.1% higher, wiping out its losses for the week so far to finish at a record after data showed surprisingly strong economic growth. The benchmark more than doubled its early gains after official data showed Australia’s gross domestic product grew at 1.8% in the three months to March, compared with economists’ expectations of a 0.6% rise. Energy and materials sectors led, rising 4.1% and 1.9%, respectively, amid higher commodity prices.

US Market

Major U.S. stock indexes ended the day with small gains as concerns around the consequences of a strong economic recovery, marked by inflation, continued to buffet the market.  

The S&P 500 bounced around the flatline in afternoon trading, then finished 0.1% higher. The Dow Jones Industrial Average rose less than 0.1%, and the Nasdaq Composite picked up 0.1%. The market’s more seismic moves were concentrated around a handful of stocks popular with individual investors, including AMC Entertainment and BlackBerry.

Both of those stocks are on a tear again after surging earlier this year.  

The Nikkei Stock Average closed 0.5% higher, led by gains in railway and real-estate stocks, partly on hopes for progress in Covid-19 vaccination and an economic reopening. 

Commodities

Gold futures edged higher to reclaim their highest settlement since early January, on the back of a slide in yields for U.S. government debt, as investors awaited a monthly report on U.S. nonfarm payrolls due at the end of the week.  

Gold for August delivery edged up by 0.3% to settle at $1,909.90 an ounce, following a 0.02% slip on Tuesday on Comex. Prices for the most-active contract, which scored a gain of nearly 8% in May, settled at their highest since early January, FactSet data show. In electronic trading shortly after the release of the Fed Beige Book’s report on current economic conditions, August gold moved up a bit further to $1,910.30.

Oil Futures

Oil futures extended their rise to their highest finish in more than two years, buoyed by optimism over the outlook for global demand as events in Iran raised risks to supply stability in the region.  

West Texas Intermediate crude for July delivery, the U.S. benchmark, rose 1.6% to settle at $68.83 a barrel on the New York Mercantile Exchange. That was the highest front-month contract finish since Oct. 22, 2018, according to Dow Jones Market Data.

August Brent crude, the global benchmark, advanced 1.6% to $71.35 a barrel on ICE Futures Europe.  

Reports of a massive fire at a state-owned oil refinery near Tehran followed news that the largest warship in Iran’s navy caught fire and sank on Wednesday.

Forex

Major currencies were firmer against the US dollar in European and US trade. The Euro held between US$1.2165 and US$1.2215 and was near US$1.2210 at the US close. The Aussie dollar held between US77.15 cents and US77.55 cents and was near the highs at the US close. And the Japanese yen lifted from 109.85 yen per US dollar to JPY109.50 and was near JPY109.55 at the US close.

European Markets

European sharemarkets advanced on Wednesday. Oil & gas shares rose 0.9% with food & beverage, technology and mining amongst the gains. The pan-European STOXX 600 index climbed 0.3% to record highs. The German Dax index gained 0.2%. And the UK FTSE index was up by 0.4%. In London trade shares in Rio Tinto were flat while shares in BHP fell by 0.3%.

Asian Markets

Chinese stock markets finished the session lower, weakening from broad gains in recent days. The benchmark Shanghai Composite Index snapped a two-day winning streak, shedding 0.8%, its largest one-day percentage loss in more than two weeks.

The Shenzhen Composite Index fell 1.2% while the ChiNext Price Index declined 1.7%. The consumer-services sector led the downturn, with weakness concentrated in education companies and tourism agencies.

Steelmakers further weighed on the market amid expectations of lower steel prices after China eased production curbs.