Global Fundamental Analysis 29/01/2021

Australian Market

Australia’s S&P/ASX 200 index closed 1.9% lower for its biggest one-day loss since September. The heavyweight materials and financial sectors, which together account for almost half the ASX 200’s market capitalization, fell 2.5% and 1.6%, respectively, as the benchmark index followed a negative lead from U.S. stocks.

US Market

U.S. stocks, from health care to technology to financials, rallied, giving major indexes a boost as the euphoria in some of the most overheated segments of the market showed signs of easing.

All 11 sectors of the S&P 500 traded higher, led by health care, industrial and financial stocks. Some of the gains followed better-than-expected earnings reports from companies such as American Airlines Group, but much of the green that flashed across the stock market was attributed to opportunistic investors willing to pounce on stocks following their biggest pullback since October, analysts said.

The Dow Jones Industrial Average rose 301 points, or 1%, as of the 4 p.m. close. The S&P 500 added 1%. The Nasdaq Composite also traded higher, gaining 0.5%. Those gains helped ease losses indexes have suffered throughout the week. The euphoria surrounding stocks like GameStop and AMC Entertainment showed signs of abating.

Commodities

Gold futures ended lower to notch a sixth-straight decline – their longest streak of session losses since March 2019.

February gold lost $7, or 0.4%, to settle at $1,837.90 an ounce. Meanwhile, silver was the bigger mover on Comex, though prices settled off the day’s best level.

Oil Futures

Oil futures settled with a loss, as concerns over a slowdown in energy demand, due to the impact of the latest resurgence of coronavirus pandemic, undermined support provided Wednesday from a bigger-than-expected drop in U.S. crude supplies.

West Texas Intermediate crude for March delivery fell by 51 cents, or 1%, to settle at $52.26 a barrel on the New York Mercantile Exchange. March Brent crude, which expires at the end of Friday’s session, declined by 28 cents, or 0.5%, to $55.06 a barrel on ICE Futures Europe.

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 pared some early losses to close down 1.5%, following selloffs on Wall Street overnight. U.S.-China relations are likely to be closely watched, following media reports that U.S. President Joe Biden has reaffirmed his commitment to back Japan regarding its dispute over some islands with China. Electronics stocks were among the worst performers.

China’s major stock benchmarks suffered one of the largest falls so far in 2021, as investors worry the central bank’s latest liquidity withdrawal could foreshadow systematic credit tightening. The Shanghai Composite Index shed 1.9%, nearly erasing its year-to-date gains. The Shenzhen Composite Index fell 2.8%, while the ChiNext Price Index lost 3.6%.