Weekly Market Wrap

ASX News Feb 1, 2021 / Reading Time: 2 mins
By Edward Heng Reading Time: 2 mins

1st of February 2021

Domestic Markets | S&P/ASX200 down -200pts (-3.0%)

Markets followed a global sell-off as volatility entered the market.

CBA -$1.58 (-1.9%)
FMG -$2.53 (-10.4%)

The S&P/ASX200 dropped 2.8% for the week, continuing the pattern alternating weekly gains and losses. The week saw Australia’s quarterly CPI figure (the most significant inflation number) come in at 0.9% on an annualised basis.

Global Markets | Dow Jones down -1,292pts (4.1%)

Poor earnings results caused markets to slump.

S&P 500 -161pts (4.2%)
Nasdaq -572pts (4.2%)

Wall Street had heavily red week with all major indices falling by more than 3%. Poor earnings results from some of the biggest names on the index combined with the Reddit-fuelled trading craze caused the weekly decline.

Europe | DAX, CAC, FTSE
European markets struggled this week, with the Euro Stoxx 50 declining 3.4%. ECB President Christine Lagarde said that there were expectations that Europe would see a double-dip recession due to the hard COVID winter and poor vaccine rollout.

The Asian markets plummeted last week, with the CSI 300 Index losing 3.9% and Nikkei 225 Index falling by 3.4%. Both indices followed global equities in selling off as investors reacted negatively to the volatility in the market, which was in part due to the Reddit Rally in certain heavily shorted US stocks.

Commodities | Gold down -10USD/oz (0.5%)

Gold prices declined but poised to rally due to equity concerns.

Copper -0.07USD/Lbs (-2.0%)
Iron Ore -11.0USD/T (-6.5%)

Precious Metals | Gold, Silver
Precious metals enjoyed mixed fortunes this week, with gold dropping 0.5% to $1,842.83 as gold booked its worst January since 2011 due to improving US Treasury yields and a strong US dollar. The GameStop trading story boosted silver prices to 3-week highs, improving 5.7% week on week to $26.89. This came after online brokers restricted access to GME, with disgruntled users of Reddit’s r/wallstreetbets subreddit suggesting that piling would be a good move as ‘brokers can’t stop us buying silver’.

Oil | WTI Crude, Brent
Oil markets were flat this week, with both Brent and WTI Crude moving less than 0.1% in either direction – Brent crude was marginally up to $55.88 a barrel while WTI crude was slightly down to $52.20 a barrel. Although oil demand concerns persist, losses were limited as US crude oil inventories unexpectedly declined for the week while OPEC’s oil output rose by less than expected, after Iraq engaged in voluntary production cuts.

Iron Ore
Iron ore prices plunged 6.5%, dropping to a still elevated $158 per tonne. This decline came about as Chinese steel mills reported continued lower production, combined with rising levels of iron ore inventories. However, a drop in the run rate of iron ore shipments from Australia, China’s biggest iron ore supplier, meant that the drop in iron prices was tempered.

Copper prices declined 2% in the past week, falling to $3.56 per pound by the end of the month. The decline in the price of copper came about to restrictions in China which meant that the outlook for economic growth and demand was clouded in the short term – though infrastructure stimulus to fuel global recovery is expected to see the price of copper continue to rise.