Global Fundamental Analysis 10/11/2021

Australian Market

Australia’s S&P/ASX 200 lost 0.2%, weighed by banking stocks. The materials sector added 1.0% amid gains by gold and iron ore miners, while Chalice jumped 29% after what it said was the largest nickel sulphide discovery globally in over 20 years.

US Market

U.S. stocks retreated from record levels, breaking an eight-day winning streak for the S&P 500. The S&P 500 fell 0.4%. On Monday, it notched its eighth consecutive winning session and eighth straight all-time closing high, the longest streak of records since 1997.

The Dow Jones Industrial Average ticked down 0.3% after the blue-chip index closed at a record for the 44th time in 2021. The technology-focused Nasdaq Composite fell 0.6%. Some investors view the pullback as a breather after the rally. Propelled by strong third-quarter earnings, stocks have continued to trend upward against the backdrop of supply-chain issues and concerns about inflation.” I don’t read anything into it,” said Jerry Braakman, chief investment officer for First American Trust in California. “That’s just a natural reaction to a great eight-day run.”

Commodities

Gold futures rose, stretching their streak of consecutive gains to a fourth session, as inflation concerns and interest-rate expectations remained in focus. On the charts, “gold is attempting to break out through resistance between $1,830 and $1,835, but futures have failed to do so four times since July and until we get a decisive breakout, the gold market will remain trendless,” said analysts at Sevens Report Research.  

December gold futures climbed by 0.2% to settle at $1,830.80 an ounce, after trading as low as $1,821. It was a fourth straight session rise for most-active gold futures, the longest run since a five-day rise ended July 7, according to Dow Jones Market Data.

Oil Futures

Oil futures rose, but analysts said the upside was limited ahead of a potential release of crude from the U.S. Strategic Petroleum Reserve. That put the spotlight on the U.S. Energy Information Administration’s monthly Short-Term Energy Outlook, which is typically not a big market mover. Analysts said the report is seen playing a role in a decision by the Biden administration on whether to tap the SPR.  

“The focus is likely to be on the EIA’s forecasts for gasoline demand and gasoline prices. In its last report a month ago, the EIA was still predicting that pump prices would gradually decline until the end of 2022 and that gasoline would cost a good $3 per gallon in December,” said Carsten Fritsch, commodity analyst at Commerzbank, in a note. “Prices have climbed further in the meantime, however.”West Texas Intermediate crude for December delivery rose 1% to $82.75 a barrel on the New York Mercantile Exchange. January Brent, the global benchmark, gained 0.5% to settle at $83.87 a barrel on ICE Futures Europe.

Forex

Major currencies were mixed against the US dollar in European and US trade. The Euro held broadly between US$1.1570 and US$1.1605 and was near US$1.1595 in afternoon US trade. The Aussie dollar fell from highs near US74.30 cents to lows near US73.60 cents and was near US73.80 cents in afternoon US trade.

‘And the Japanese yen eased from near 112.70 yen per US dollar to
JPY113.10 and was near JPY112.90 in afternoon US trade.

European Markets

European share markets were modestly weaker on Tuesday. Banks fell 0.9% in line with lower bond yields and basic resources fell 1.1%. But retail rose 1.1% with real estate up 0.6%. The pan-European STOXX 600 index fell by 0.2% – the first fall in nine sessions. The German Dax index fell by less than 0.1% and the UK FTSE index fell by 0.4%. In London trade shares in Rio Tinto fell by 0.7% while BHP shares fell by 1.5%.

Asian Markets

Earlier Tuesday, Chinese stocks closed higher, helped by bank stocks’ gains. The Shanghai Composite Index rose 0.2% and the Shenzhen Composite Index added 0.8%. The ChiNext Price Index advanced 0.9%. Bank stocks were stronger amid positive sentiment over developments for Covid-19 treatments and as global economies reopened. Chinese education stocks were supported by news that China plans to issue licenses for education companies to resume after-school tutoring.  

Hong Kong shares edged higher as sentiment was aided by positive Covid-19 news and a recent slew of strong U.S. earnings. The Hang Seng Index rose 0.2% and the Hang Seng TECH Index gained 0.45%. Mizuho Bank said risk appetite remained buoyant amid easing fears of imminent interest rate hikes, increased reopening hopes and the passage of U.S. infrastructure stimulus. Japanese stocks dropped as the USD/JPY fell to its lowest level in four weeks. The Nikkei Stock Average closed 0.8% lower.