Global Fundamental Analysis 12/06/2020

Australian Market

The Asutralian market has started Friday in the red following another session of heavy selling on Wall Street. The ASX 200 fell as much as 3.4% or 202 points within the first hour of trade but has since picked itself up off those lows.
Around lunch, the benchmark index is 120 points or 2% lower at 5,940. It is a second successive day of declines after a strong seven session winning streak to start June.

Investor concern is growing for the potential of a second wave with evidence in the US of several states experiencing spikes in new cases as lockdown restrictions ease. Markets are also still responding to caution by the US Federal Reserve in terms of the expected pace of the economic recovery. Over the past few months, global markets have seen significant improvements, including the ASX’s own ~32% rally since lows were hit on 23 March

US Market

Growing fears of a second wave of coronavirus infections sent the stock market tumbling Thursday, pulling the Dow Jones Industrial Average down more than 1,800 points, its worst day since March.
In the past few days, investors have gotten more signs that the smooth reopening they have been hoping for may be increasingly difficult to achieve-throwing into doubt their hopes for a nascent economic recovery.

Adding to investors’ worries, top officials increasingly believe the economy’s recovery from the pandemic-fueled recession will be slow and uneven. The Dow shed 1,862 points, or 6.9%, to 25128. The S&P 500 lost 5.9% and the Nasdaq Composite declined 5.3%.

Commodities

Gold futures climbed to their highest finish in more than a week, supported by growing concerns of a resurgence in U.S. cases of coronavirus and a sobering economic outlook from the Federal Reserve. August gold rose $19.10, or 1.1%, to settle at $1,739.80 an ounce, marking the highest settlement for a most-active contract since June 1, according to FactSet data. Prices on Wednesday, which settled a half-hour before the 2 p.m. Fed policy statement and interest rate projections, fell by less than 0.1%.

Among other metals, July silver settled 9 cents, or 0.5%, higher at $17.889 an ounce, after finishing Wednesday’s action virtually unchanged. July copper shed 7 cents, or 2.6%, at $2.5865 a pound, after gaining 2.2%, a day earlier. Prices for the industrial metal finished lower for the first time in six sessions.

Oil Futures

U.S. oil prices fell sharply from Wednesday’s three-month high, ending 8.2% lower at $36.34 a barrel as energy investors got swept up in a broader-market selloff, and amid worries over the U.S. economic outlook and an uptick in coronavirus infections.

Forex

The Swiss franc is likely strengthen further against the dollar, its fellow safe haven, as the U.S. currency begins to respond Federal Reserve’s wide-ranging stimulus measures in response to the coronavirus. USD/CHF fell 0.5% to 0.9394, the lowest since mid-March, according to FactSet. The WSJ Dollar Index rose 0.8% to 91.14.

European Markets

European sharemarkets declined by the most in over 11 weeks on Thursday. The pan-European STOXX 600 index ended down by 4.1% – its fourth straight daily decline. Shares of Renault were 14.1% lower after its chairman said nationalisation was not being contemplated. Lufthansa shares fell 9.1% after the German airline announced that up to 26,000 employees could be at risk of job losses. The German Dax index fell by 4.5%. The UK FTSE index was down by 4%. In London trade shares in Rio Tinto fell by 1.8% with shares in BHP down by 4%.

Asian Markets