Global Fundamental Analysis 06/01/2021

Australian Market

Australia’s S&P/ASX 200 closed flat as strength among mining stocks offset weakness elsewhere. The benchmark traded lower for most of the day and needed a late surge to fully recover from an early 0.7% drop. The materials sector was the best performer for a second consecutive day, rising 1.8%. 

US Market

U.S. stocks climbed as investors awaited the outcome of two electoral races in Georgia that will determine control of the Senate.

The S&P 500 rose 0.7%, and the Dow Jones Industrial Average was up 0.6% as of the 4 p.m. close of trading in New York. The Nasdaq Composite jumped about 1%. The major benchmarks tumbled sharply Monday, after closing at record levels just days earlier.

Money managers are closely monitoring the Georgia Senate runoff elections: If Democrats win both seats, that could make it easier for President-elect Joe Biden’s administration to pass new legislation.

The additional fiscal stimulus would be more likely if Democrats control Congress and the White House, and that could potentially give stocks another leg up, investors say. But the prospect of tax increases and more regulation is also weighing on markets, they caution.

Commodities

Gold prices finished sharply higher, with uncertainty surrounding the U.S. Senate runoff elections in Georgia offering support for the haven metal.

The result of the Senate runoff elections in Georgia will have “massive implications for the country over the coming years,” wrote Craig Erlam, senior market analyst at Oanda, in a daily research note.

Gold for February delivery rose 0.4% to settle at $1,954.40 an ounce, following a 2.7% gain on Monday that took bullion to its highest level since early November, according to FactSet data.

Oil Futures

WTI oil prices ended at their highest level since late February, just narrowly missing the psychological $50 level as they closed 4.9% higher at $49.93 a barrel.

The rally–to the highest prices crude markets have seen since the coronavirus pandemic began–was driven by the OPEC-plus group of major oil producers, including Russia, that agreed today to collectively keep production rates steady through at least February rather than implementing another incremental increase.

Forex

Major currencies rose against the US dollar in European and US trade. The Euro rose from lows near US$1.2255 to highs near US$1.2305 and was near US$1.2290 in late US trade. The Aussie
dollar rose from lows near US76.90 cents to highs near US77.75 cents and was near US77.65 cents in late US trade. And the Japanese yen rose from near 103.05 yen per US dollar to near JPY102.60 and was near JPY102.69 in late US trade.

European Markets

European sharemarkets were mixed on Tuesday. Defensive sectors eased while growth sectors rose. Utilities lost 1.3% and healthcare lost 0.5% while oil and retail stocks rose. The pan-European STOXX 600 index fell by 0.2%. The UK FTSE lifted by 0.6% while the German Dax index fell by 0.6%. In London trade shares in Rio Tinto rose by 0.3% and shares in BHP gained 1.4%.

Asian Markets

Earlier Tuesday, China’s major stock benchmarks extended gains on the year’s second trading day, with the Shanghai Composite Index rising 0.7%. The Shenzhen Composite Index added 1.5% while the ChiNext Price Index went up 0.65%. Makers of baijiu, or Chinese liquor, rallied, with further upside ahead on the back of solid earnings, Citic Securities said.

Hong Kong’s Hang Seng Index closed 0.6% higher, led by consumer stocks. China’s large telcos rose sharply after the New York Stock Exchange reversed its decision to delist them from its bourse.

Japan’s Nikkei Stock Average stocks ended 0.4% lower as weakness in auto, transportation and pharmaceutical stocks offset gains in semiconductor-related stocks amid concerns about additional Covid-19 containment measures.