Global Fundamental Analysis 27/05/2020

Australian Market

Local shares are trading mostly flat at lunch with the ASX 200 nudging four points higher to 5,784 after the first few hours of trade. The market opened with losses of just over 1% but is rebounding as the session progresses. This follows what were strong gains over the first two days of the week, where the benchmark index rose ~5%

US Market

Stocks surged on optimism about economies reopening and the potential development of a coronavirus vaccine, extending a rally that has pushed major U.S. indexes up more than 30% since late March.  The Dow Jones Industrial Average climbed more than 500 points after the three-day holiday weekend and flirted with the 25000 mark for the first time since early March. The rally was driven by economically sensitive shares in the financials and industrials sectors. Goldman Sachs rose 9%, Raytheon Technologies gained 7.5% and Dow rose 7.4%.

Investors cheered signs of economic activity resuming faster than expected across parts of the U.S. and elsewhere in the world. Restaurant bookings and spending on hotels and airlines appears to be picking up in the U.S., coinciding with a decline in the daily number of new infections.

Commodities

Gold futures ended lower as global equities rallied, in response to the lifting of business lockdowns as the coronavirus pandemic recedes, along with encouraging reports of progress toward a COVID-19 vaccine, dulling the yellow metal’s haven appeal. Gold for June delivery on Comex fell $29.90, or 1.7%, to settle at $1,705.60 an ounce, while July silver lost 9.8 cents, or 0.6%, at $17.595 an ounce.

Oil Futures

Oil futures finished higher with continued cuts in crude production and a pickup in demand, as pandemic-related lockdowns ease around the world, boosting U.S. prices by more than 3%.

West Texas Intermediate crude for July delivery on the New York Mercantile Exchange rose $1.10, or 3.3%, from Friday to settle at $34.35 a barrel. Monday was a holiday for regular trading on Nymex.

Forex

The WSJ Dollar index, which tracks the U.S. dollar against 16 foreign currencies, is up 0.01% during intraday trading, to 92.91, according to Dow Jones Market Data.

European Markets

Asian Markets

Earlier in the day, most major Asia-Pacific equity benchmarks ended the day higher.  In Japan, where the government lifted its state of emergency Monday, the Nikkei 225 rose 2.6%.  Hong Kong’s Hang Seng Index advanced 1.9% and the Shanghai Composite gained 1%.

Japanese stocks were driven by gains in railway and airline stocks, after the government fully lifted a state of emergency that was aimed at containing the spread of the coronavirus. The Nikkei Stock Average rises 2.6% to 21271.17.  Hong Kong shares ended higher, extending their recovery from last week’s steep losses due to concerns over heightened tensions with mainland China. The benchmark Hang Seng Index rose 1.9% to settle at 23384.66.