Weekly Market Update: 7th of June 2021

Domestic Markets | S&P/ASX200 17,295.4pts up 116pts (1.6%)

CBA $102.52 up $1.96 (2.0%)
FMG $22.97 up $0.85 (3.8%)

The ASX200 crossed the 7,200-point mark for the first time on Monday, 15 months after originally threatening those highs. Although this landmark saw profit taking, the market rose above it as the week went on, closing at new record all-time highs.

Global Markets | Dow Jones 34,756.4pts up 227pts (0.7%)

S&P 500 4,229.9pts up 26pts (0.6%)
Nasdaq 13,814.5pts up 66pts (0.5%)

In a shortened week due to Memorial Day in the US, all three major indices rose in a choppy week, as investors contended with a raft of economic data. With investors fearing that high inflation could cause Federal Reserve intervention, markets are seeming to prefer results in line with expectations rather than data which strongly beats expectations.

Europe | Euro Stoxx 600 452.57pts up 3.6pts (0.8%)

Strong performance from the oil and gas commodities helped Europe’s stock market to edge higher again during the course, to hit new all-time highs once again. The British FTSE once again underperformed, with banks seeing the index finish up 0.7%.

Asia | HSI, CSI, KOSPI, NIKKEI

The Korean KOSPI was the only of the Asian majors to finish the week in the green, rising 1.5% over the course of week as investors shrugged off the resumption of short selling. The other three indices all fell 0.7%, with US inflation fears and COVID cases in Japan causing the drops.

Commodities | Gold $1891.21/oz fell $11.43USD/oz (-0.6%)

Silver $27.79/oz fell $0.09USD/oz (-0.3%)
Copper $4.54/lb fell $0.14USD/oz (-3.0%)
Iron Ore $208/t rose $14.50USD/t (7.5%)

Precious Metals | Gold, Silver

Precious metals experienced a heavy drop early in the week as investors speculated that strong economic data could cause the Feds to unexpectedly change monetary policy. These fears were however eased as US job data came back weaker than expected, which indicates that the Feds narrative that the economy is not recovering evenly, which saw investors buy back into the metals which are expected to serve as important inflation hedges. Still, the 0.6% drop in gold was the worst decline since March.

Oil | WTI Crude, Brent

Oil markets enjoyed a strong week with WTI crude rising above $69 for the first time since October 2018, while Brent crude also enjoyed a strong rise to reach $72.4for the first time in two years. This came in as the US reported a larger than expected decline in oil inventories while OPEC+ agreed to gradually ease supply curbs – while this adds supply, it also serves as strong bullish signal.

Iron Ore

Iron ore prices rebounded quickly as the traders seemed to shrug off Chinese measures which would serve to curb steel production and thus cool down iron ore prices. This strong, surprising result also came in a week where Brazil’s iron ore exports returned close to levels not seen since Vale’s Brumadinho dam collapsed. Chinese steel production figures for May indicate that scrap steel increased its popularity as a steel input, given iron ores high price.

Copper

Copper declined this week as high current prices meant that Chinese demand for the red metal eased. Supply concerns from BHP were eased as it reported that production was still on track despite strikes at two of their mines. Capping losses however, was the news that Vale will suspend operations at one of its mines with a copper exposure, after its proposal for a five-year contract was rejected by the United Steelworkers union.