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Weekly Market Update: 22nd of February 2021

Weekly Market Update: 22nd of February 2021

Julius Zondag

Weekly Market Update: 22nd of February 2021

Domestic Markets | ASX200 down 16pts (0.2%)

CBA down $4.36 (5.0%)
FMG up $0.14 (0.59%)

The ASX200 fell 16 points over the course of the week to 6,794 points, as profits takers cancelled out companies generally reporting better earnings results than expected and the Australian unemployment rate decreasing faster than expected.

Global Markets | Dow Jones up 13pts (0.0%)

S&P 500 down 32pts (0.8%)
Nasdaq down 237pts (1.7%)

While the Dow finished flat, the S&P500 and Nasdaq both recorded negative weeks as the uncertain timeline on the COVID-19 stimulus bill clouded the market. House Speaker Nancy Pelosi has however said that she hopes to see the $1.9tn bill passed before the end of the month.

Europe | Euro Stoxx 50 up 10pts (0.3%)
The Euro Stoxx 50 only finished up 10 points a bright start was washed away by disappointing earnings results. Concerns surrounding increasing inflation rates in the EU while the economy is still struggling were heighted by German Bundesbank President Jens Weidmann predating German inflation would exceed 3% in 2021.

The Japanese Nikkei 225 rose above the 30,000-point mark for the first time since 1990 this week, finishing at 30,018. It still needs to rise almost 30% to reach highs not seen since the Japanese bubble burst. The CSI 300 was only open for Thursday and Friday, due to Chinese New Year.

Commodities | Gold fell 39.00USD/oz (2.1%)

Silver fell 0.08USD/oz (0.3%)
Copper up 0.27USD/Lbs (4.0%)
Iron Ore up 11.99USD/T (7.5%)

Precious Metals | Gold, Silver
Precious metals reversed last week's gains by once again experiencing a down week, with gold seeing its worst week since January, dropping to $1,783.35. This drop in the price of gold came as US Treasury yields which made gold less attractive to investors, despite the boost that is expected when US COVID stimulus package passes through the Senate. While silver also finished down, it had a more positive week as expectations for a faster economic recovery saw expectations for increased demand due to silver’s industrial uses.

Oil | WTI Crude, Brent
The recent rally of oil prices cooled off this week with WTI crude falling 0.9% to $59.04 a barrel while Brent crude only finished up marginally after initially reaching 11-month highs during the week. Despite increased optimism about the state of the global economy, the oil sell-off came about as investors took some of the risk off of the table and took profits. The big freeze which Texas saw this past week caused disruptions to Texan oilfields, which could result in short-term WTI supply shortages.

Iron Ore
Iron ore prices were boosted this week with as information filtered through that Chinese demand would be stronger than expected. This is because steel factories are expected to get back to full production faster than normal after Chinese New Year as COVID meant that many workers weren’t able to return to their families this year. Iron ore currently sits at $171.50/t, which has been a point of resistance in recent months.

Copper prices breached the $4/lb. mark for the first time since August 2011 this week, finishing at $4.07/lb. At these levels, copper only sits 40 cents below the highs set in 2011, and it is expected that coppers will set a new record-high later this year. This week’s rally has been attributed to production guidance from the largest 25 copper miners indicating that there could be a significant supply deficit in 2021, as inventories continue to get lower. The rally of Dr. Copper, a significant economic barometer, is a broader indication of the state of the economy.

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