Global Fundamental Analysis 20 Jan 2021
Opening Call: The Australian share market is to open higher.
U.S. stocks climbed after President-elect Joe Biden’s pick for Treasury Secretary, Janet Yellen, backed more robust relief spending. The yield on the 10-year Treasury was flat at 1.09%. The WSJ Dollar Index ticked lower to 85.36. Oil markets followed stocks higher. Gold rose slightly amid a softening dollar.
Australian shares climbed 1.2%, erasing their losses in the previous session amid strong gains by banks and miners. Tech and health stocks also rose as the benchmark S&P/ASX 200 built on overnight momentum from overseas markets.
U.S. stocks climbed as Janet Yellen endorsed higher coronavirus relief spending and some of the country’s biggest banks beat expectations for fourth-quarter earnings.
The Dow Jones Industrial Average rose 0.4% as of the 4 p.m. close of trading in New York. The S&P 500 advanced 0.8%, while the technology-heavy Nasdaq Composite jumped 1.5%.
The gains came as U.S. markets reopened after a long holiday weekend, marking an upbeat start to the week after all three major indexes posted declines last week.
Ms Yellen backed major fiscal stimulus to help workers and businesses battered by the coronavirus pandemic as she testified before the Senate Finance Committee, which will vote on her nomination for Treasury secretary. In prepared remarks, she said the U.S. risks a longer, more painful recession unless Congress approves more aid, and encouraged lawmakers to “act big” to shore up the recovery.
Gold futures ended higher, clawing back from losses last week that drove the precious metal to its lowest settlement in seven weeks.
The move up for bullion comes against the backdrop of a softer U.S. dollar and as the market digested testimony from Janet Yellen, President-elect Joe Biden’s pick to run the Treasury Department, to the Senate Finance Committee.
February gold climbed 0.6% to settle at $1,840.20 an ounce. Prices recouped part of Friday’s 1.2% decline, which drove gold to its lowest finish since Dec. 1.
Oil futures settled higher, taking a cue from rallying equity markets and a weaker dollar as traders shook off a cut in the International Energy Agency’s forecast for 2021 crude demand.
Natural-gas futures, meanwhile, suffered their biggest one-day loss of 2021, while also settling at their lowest level on the year to date, as the latest weather forecasts dulled the demand outlook for the heating fuel.
West Texas Intermediate crude for February delivery rose 1.2% to settle at $52.98 a barrel on the New York Mercantile Exchange. March WTI crude, the most actively traded contract, climbed 1.1% to $52.98 a barrel. March will become the front-month contract at the end of Wednesday’s session.
March Brent crude, the global benchmark, gained 2.1% to settle at $55.90 a barrel on ICE Futures Europe.
February natural gas settled at $2.546 per million British thermal units, dropping 7%. That was the biggest one-day loss and lowest front-month contract finish since late December, according to Dow Jones Market Data.
Major currencies were mixed against the US dollar in European and US trade. The Euro rose from lows near US$1.2084 to highs near US$1.2143 and was near US$1.2125 at the US close. The Aussie dollar fell from highs near US77.23 cents to lows near US76.88 cents and was near US76.95 cents at the US close. And the Japanese yen rose from near 104.07 yen per US dollar to near JPY103.83 and was around JPY103.90 at the US close.
European sharemarkets fell on Tuesday. The pan-European STOXX 600 index lost 0.2% with basic resources and travel shares both down 1.3%. Shares of Ladbrokes owner Entain plunged 11.9%
after MGM Resorts said it had abandoned an US$11 billion takeover attempt of the firm. The German Dax index also slid 0.2% and the UK FTSE index edged lower by 0.1%. In London trade shares in Rio Tinto lost 1.0% and shares in BHP fell by 0.2%..
Earlier Tuesday, Chinese stocks ended the session lower, as the market continued to weaken after a strong New Year rally. The benchmark Shanghai Composite Index lost 0.8%, while the Shenzhen Composite Index was down 1.0%. The ChiNext Price Index was the day’s top decliner, shedding 2.1%. The tech sector, which includes electronics suppliers and software developers, weighed on the market.
Hong Kong shares, however, ended the session sharply higher. The benchmark Hang Seng Index rose 2.7%, its largest one-day percentage gain since November. Nearly all index constituents tracked up, with Chinese real-estate developers leading gains.
Japanese stocks also rose amid hopes for a global economic recovery from the pandemic. Auto and semiconductor-related stocks led the way, pushing the Nikkei Stock Average 1.4% higher.