Market Talk – November 10, 2020

Posted Nov 10, 2020 by Martin Armstrong |

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ASIA:

China’s ruling Communist Party is stepping up efforts to rein in some of China’s most powerful companies, jolting investors and dealing a blow to the country’s richest entrepreneurs. China, on Tuesday, unveiled regulations to root out monopolistic practices in the internet industry, seeking to curtail the growing influence of corporations like Alibaba Group Holding Ltd. and Tencent Holdings Ltd. The rules, which sent both stocks tumbling and sparked a wider selloff in Chinese equities, landed about a week after new restrictions on the finance sector that triggered the shock suspension of Ant Group Co.’s $35 billion initial public offering. Alibaba, Ant and Tencent alone commanded a combined market capitalization of nearly $2 trillion before last week, easily surpassing state-owned behemoths like Bank of China Ltd. as the country’s most valuable companies.

Real estate, infrastructure, and pharmaceutical companies were among the winners of India’s first coal mine auctions open to the private sector without restrictions on end-use, the government said on Monday. India, the world’s second-largest consumer, importer, and producer of coal had offered a range of financial incentives to attract investment, but foreign firms have shunned the auctions, and only 19 of the 38 mines received valid bids. Final offers for 19 mines with an annual production capacity of 51 million tonnes ranged from 9.5% to 66.75%, the coal ministry said, adding that the average premium was 29%.

Germany’s Deutsche Bank has agreed to sell its IT services division Postbank Systems to India’s Tata Consultancy Services, it said on Monday. The sale is part of Deutsche’s plan to shed 18,000 staff overall to cut costs and restore profitability. Deutsche Bank will pay TCS’s integration costs of 120 million euros ($142.69 million) as part of the deal.

The major Asian stock markets had a mixed day today:

NIKKEI 225 increased 65.75 points or 0.26% to 24,905.59
Shanghai decreased 13.59 points or -0.40% to 3,360.15
Hang Seng increased 285.31 points or 1.10% to 26,301.48
ASX 200 increased 41.70 points or 0.66% to 6,340.50
Kospi increased 5.63 points or 0.23% to 2,452.83
SENSEX increased 680.22 points or 1.60% to 43,277.65
Nifty50 increased 170.05 points or 1.36% to 12,631.10

The major Asian currency markets had a mixed day today:

AUDUSD decreased 0.00077 or -0.11% to 0.72705
NZDUSD decreased 0.00083 or -0.12% to 0.68168
USDJPY increased 0.15 or 0.15% to 105.33
USDCNY decreased 0.01607 or -0.24% to 6.60287

Precious Metals:

Gold increased 13.14 USD/t oz. or 0.71% to 1,875.00
Silver increased 0.2 USD/t. oz or 0.83%% to 24.270

Some economic news from last night:

China:

CPI (MoM) (Oct) decreased from 0.2% to -0.3%

CPI (YoY) (Oct) decreased from 1.7% to 0.5%

PPI (YoY) (Oct) remain the same at -2.1%

Japan:

Adjusted Current Account decreased from 1.66T to 1.35T

Bank Lending (YoY) (Oct) decreased from 6.4% to 6.2%

Current Account n.s.a. (Sep) decreased from 2.103T to 1.660T

Australia:

NAB Business Confidence (Oct) increased from -4 to 5

NAB Business Survey (Oct) increased from 0 to 1

New Zealand:

Electronic Card Retail Sales (MoM) (Oct) increased from 5.4% to 8.8%

Electronic Card Retail Sales (YoY) (Oct) increased from 7.3% to 8.2%

Some economic news from today:

Japan:

Economy Watchers Current Index (Oct) increased from 49.3 to 54.5

EUROPE/EMEA:

UK Chancellor Rishi Sunak has made a major Brexit announcement by outlining how the City of London’s future will include providing stability for EU financial services firms operating in the UK, while also trying to provide the sector with more routes to international markets. Rishi Sunak has also announced Britain’s first-ever “long-term asset fund” will be “up and running within a year.” He told the House of Commons financial services following Brexit “will be essential to our economic recovery from coronavirus, creating jobs and growth right across our country.” The Chancellor added the UK will also be issuing its first-ever sovereign green bond next year, subject to market conditions.

Germany’s gross domestic product (GDP) grew by a record 8.2% from July to September compared to the second quarter, according to figures released by the Federal Statistical Office on last Friday. The promising figure comes after Germany’s economy contracted by a nearly unprecedented 10% quarter-on-quarter from April to June. The bigger-than-expected rebound was driven by higher private consumption, increased investments in equipment and strong exports, the statistics office said. The government has also revised a full-year shrink in GDP from 5.8% forecast in September to 5.5%.

Economic activity in France is 12 percent lower than usual this month after the country entered its second coronavirus lockdown, the country’s central bank said. The Bank of France said economic activity was expected to be down by 12 percent of normal levels as a result, worse than the four percent drop in October, but better than the 31 percent loss in April during the tougher first lockdown. To see the impact of the lockdown on the economy, the central bank drew on its monthly survey of 8,500 business leaders, which was conducted between October 28 and November 4, with 90 percent of responses coming after the lockdown started. Services requiring direct contact with customers were expected to be the hardest hit, with activity down 40 percent in the wholesale, retail, transport, hotel, and restaurant industries.

The major European stock markets had a green day today:

CAC 40 increased 82.65 points or 1.55% to 5,418.97
FTSE 100 increased 110.56 points, or 1.79% to 6,296.85
DAX 30 increased 67.14 points or 0.51% to 13,163.11

The major European currency markets had a mixed day today:

EURUSD decreased 0.0003 or -0.03% to 1.18201
GBPUSD increased 0.00809 or 0.61% to 1.32468
USDCHF increased 0.00149 or 0.16% to 0.91434

Some economic news from Europe today:

France:

French Unemployment Rate (Q3) increased from 7.1% to 9.0%

French Industrial Production (MoM) (Sep) increased from 1.1% to 1.4%

UK:

Average Earnings ex Bonus (Sep) increased from 0.9% to 1.9%

Average Earnings Index +Bonus (Sep) increased from 0.1% to 1.3%

Claimant Count Change (Oct) increased from -40.2K to -29.8K

Employment Change 3M/3M (MoM) (Sep) decreased from -153K to -164K

Unemployment Rate (Sep) increased from 4.5% to 4.8%

Norway:

Core CPI YTD (Oct) increased from 3.3% to 3.4%

Core Inflation (MoM) (Oct) decreased from 0.2% to 0.1%

CPI (MoM) (Oct) decreased from 0.4% to 0.3%

CPI (YoY) (Oct) increased from 1.6% to 1.7%

PPI (YoY) (Oct) increased from -9.6% to -6.0%

Italy:

Italian Industrial Production (MoM) (Sep) decreased from 7.4% to -5.6%

Italian Industrial Production (YoY) (Sep) decreased from -0.3% to -5.1%

Germany:

German ZEW Current Conditions (Nov) decreased from -59.5 to -64.3

German ZEW Economic Sentiment (Nov) decreased from 56.1 to 39.0

Euro Zone:

ZEW Economic Sentiment (Nov) decreased from 52.3 to 32.8

US/AMERICAS:

Senator Rand Paul is openly questioning the results of the US election. “Your government sent 1.1 million dead people stimulus checks. Wonder how many of these folks also voted absentee?” the senator Tweeted on Monday. Senator Ted Cruz also questioned the validity of the election results, noting that historically mail-in ballots are more likely to be disqualified in a recount. Cruz stated that Biden’s “very narrow majorities in some of these states [are] likely to drop if we see mail-in votes when they’re examined being invalidated as contrary to the law.” A similar incident took place in 2000 when Al Gore was declared the president before a recount that determined George W Bush was the victor.

Senate Majority Leader Mitch McConnell said he would like to have a “highly targeted” stimulus package as the current conditions do not necessitate a multimillion-dollar stimulus. “We need to think about, if we’re going to come up with a bipartisan package here, about what size is appropriate,” McConnell told reporters.

Kathy Boockvar, Pennsylvania’s secretary of state, declared that she plans to dismiss President Trump’s lawsuit alleging voter fraud in her state. Trump’s legal team claimed, “Pennsylvania has created an illegal two-tiered voting system for the 2020 General Election, devaluing in-person votes.” Furthermore, they believe that their campaign was denied legal access to review and assess mail-in ballots.

Canadian Prime Minister Justin Trudeau is already in discussions with Joe Biden on how to combat the cyclically changing climate collectively. “We’ve worked with each other before, and we’re ready to pick up on that work and tackle the challenges and opportunities facing our two countries — including climate change and COVID-19,” Trudeau tweeted, referencing Biden’s time as vice president under Obama. They also discussed working closely within NATO and the G7 as well as combating racial injustices in their respective countries.

US Market Closings:

Dow advanced 262.95 points or 0.9% to 29,420.92
S&P 500 declined 4.97 points or -0.14% to 3,545.53
Nasdaq declined 159.93 points or -1.37% to 11,553.86
Russell 2000 advanced 31.97 points or 1.88% to 1,737.01

Canada Market Closings:

TSX Composite advanced 139.51 points or 0.85% to 16,615.37
TSX 60 advanced 12.83 points or 1.31% to 993.26

Brazil Market Closing:

Bovespa advanced 1,551.8 points or 1.5% to 105,066.96

ENERGY:

The oil markets had a green day today:

Crude Oil increased 0.87 USD/BBL or 2.16% to 41.1600
Brent increased 0.93 USD/BBL or 2.19% to 43.3300
Natural gas increased 0.103 USD/MMBtu or 3.60% to 2.9620
Gasoline increased 0.0261 USD/GAL or 2.25% to 1.1868
Heating oil increased 0.029 USD/GAL or 2.38% to 1.2457

Top commodity gainers: Natural Gas (3.60%), Orange Juice (2.77%), Corn (4.36%), and Soybeans (3.30%)

Top commodity losers: Sugar (-1.34%), Cocoa (-1.05%), Lean Hogs (-0.80%), and Rubber (-7.92%)

The above data was collected around 14:50 EST on Tuesday.

BONDS:

Japan 0.05%(+3bp), US 2’s 0.18% (-0bps), US 10’s 0.96%(+0bps);US 30’s 1.75%(-1bps), Bunds -0.52% (-1bp), France -0.25% (+1bp), Italy 0.74% (+2bp), Turkey 13.04% (+10bp), Greece 0.94% (+6bp), Portugal 0.16% (+0bp), Spain 0.18% (-1bp) and UK Gilts 0.40% (+2bp).