Global Fundamental Analysis 03/09/2020

OPENING CALL: The Australian share market is to open higher.

U.S. stocks rose, with the Dow passing 29,000 and the S&P 500 and Nasdaq both reaching fresh records. The yield on the 10-year Treasury slipped to 0.65%. The WSJ Dollar Index surged 0.29% to 87.8. Strength in the dollar helped send oil, gold and silver prices lower.

Overnight Summary

Market Quotes by TradingView

EACH MARKET IN FOCUS

Australian Market

Australia’s S&P/ASX 200 index recovered all of Tuesday’s losses as traders shrugged off weaker-than-expected 2Q GDP data confirming the country’s first recession in 29 years. The index closed up 1.8% at 6063.2 on broad-based gains.

US Market

U.S. stocks extended their rally, giving the S&P 500 its 22nd record close of 2020 and pushing the Dow industrial above 29000 for the first time since February.

The S&P gained 1.5% to 3580, and the Dow Jones Industrial Average rose 1.6% to 29100. The tech-heavy Nasdaq Composite picked up 1% and notched its 43rd record of the year.

Commodities

The rebounding dollar also drove a slide in gold and silver prices, highlighting a risk to this year’s booming rally in precious metals.

Most actively traded gold futures for December delivery slid 1.7% to $1,944.70 a troy ounce on the Comex division of the New York Mercantile Exchange. Prices have wobbled since hitting a record near $2,070 early last month, though they are still up about 28% for the year.

Gold’s precious-metal peer silver, meanwhile, slid 4.4% to $27.395, extending a recent period of outsize volatility.

Oil Futures

U.S. oil prices dropped 2.9% to end the session at $41.51 a barrel, marking their lowest closing price in nearly a month and the biggest one-day decline since late July.

A rebounding dollar amid hopes for a stronger U.S. economic rebound is playing a key role in falling oil prices.

Forex

Major currencies fell against the US dollar in European and US trade. The Euro fell from highs near US$1.1910 to lows near US$1.1820 and was near US$1.1850 at the US close. The Aussie dollar fell from highs near US73.65 cents to lows near US73.00 cents and was near US73.35 cents at the US close. And the Japanese yen eased from near 105.97 yen per US dollar to JPY106.29 and was near JPY106.20 at the US close.

European Markets

European sharemarkets snapped a 4-day losing streak on Wednesday with the pan-European STOXX 600 index up by 1.7%. Signs of recovery in global manufacturing sector drove chemicals up 2.2% to record highs. Shares in Nvidia rose 3.8% on broker upgrades. Technology shares rose 2%.The German Dax index rose by 2.1% despite a fall in July retail sales. The UK FTSE index rose by 1.4%. In London trade, shares in Rio Tinto rose by 0.1% but shares in BHP fell by 0.7%.

Asian Markets

Earlier Wednesday, Chinese stocks were mixed by the end of the session. The benchmark Shanghai Composite Index lost 0.2% to settle at 3404.80, mainly dragged by industrials, including metal companies, coal producers and construction-material makers. Meanwhile, the Shenzhen Composite Index added 0.5% to 2771.85 and the ChiNext Price Index climbed 0.8% to 2771.85.

Japanese stocks rose, led by gains in electronics shares, on continuing hopes for a recovery from the Covid-19 pandemic. The Nikkei Stock Average rose 0.5% to 23247.15. Investors are paying attention to PM Abe’s successor.

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