Market Talk – December 23, 2020

NOTE: We wish our readers a happy and healthy holiday season. Due to decreased market activity, and some well deserved time off, we will suspend Market Talk until January 4, 2021. Thank you for your continued support. We look forward to providing you with Market Talk blog postings again in the new year!

ASIA:

China should avoid a “premature” exit from its economic support policies given the “precarious” global outlook next year, according to the World Bank. “A premature policy exit and excessive tightening [following the coronavirus pandemic] could derail the recovery,” the Washington-based World Bank warned on Wednesday, urging the People’s Bank of China to “proceed cautiously” in tightening its monetary policy. To rescue its coronavirus-hit economy earlier this year, China unleashed a flurry of stimulus measures, including the issuance of special treasury bonds, lower lending rates and tax exemptions, while it also lifted the fiscal deficit ratio to a record high of 3.6 per cent of gross domestic product (GDP). And after its economy shrank by 6.8 per cent in the first quarter after the coronavirus shut down large swathes of the country, China was the first major economy to show a recovery with a growth rate of 3.2 per cent in the second quarter and 4.9 per cent in third. The stimulus effort, though, brought with it concerns over its record high debt level.

Indian Prime Minister Narendra Modi’s party said on Tuesday there was no question of the government repealing agriculture laws fiercely opposed by farmers who are worried deregulation will reduce their incomes. Tens of thousands of protesters have camped out on the outskirts of New Delhi and blocked national highways for over three weeks to protest against India’s biggest farm reforms in decades. The new law aim to link potential bulk buyers, such as WalMart Inc, Reliance Industries Ltd and Adani Enterprises Ltd, directly with farmers, bypassing government-regulated wholesale markets and layers of commission agents.

The major Asian stock markets had a green day today:

  •  NIKKEI 225 increased 88.40 points or 0.33% to 26,524.79
  • Shanghai increased 25.54 points or 0.76% to 3,382.32
  • Hang Seng increased 223.85 points or 0.86% to 26,343.10
  • ASX 200 increased 43.50 points or 0.66% to 6,643.10
  • Kospi increased 26.14 points or 0.96% to 2,759.82
  • SENSEX increased 437.49 points or 0.95% to 46,444.18
  • Nifty50 increased 134.80 points or 1.00% to 13,601.10

The major Asian currency markets had a mixed day today:

  • AUDUSD increased 0.00379 or 0.50% to 0.75784
  • NZDUSD increased 0.00544 or 0.77% to 0.71008
  • USDJPY decreased 0.05 or -0.05% to 103.52
  • USDCNY decreased 0.00648 or -0.10% to 6.53223

Precious Metals:

  • Gold increased 12.78 USD/t oz. or 0.69% to 1,872.34
  • Silver increased 0.42 USD/t. oz or 1.68% to 25.545

Some economic news:

Australia:
Housing Credit (Nov) remain the same at 0.3%
Private Sector Credit (MoM) (Nov) increased from 0.0% to 0.1%

Japan:
BoJ Core CPI (YoY) decreased from 0.0% to -0.1%
Coincident Indicator (MoM) (Nov) decreased from 1.4% to 1.0%
Leading Index increased from 93.3 to 94.3

Singapore:
CPI (YoY) (Nov) increased from -0.2% to -0.1%

EUROPE/EMEA:

The EU has rejected the latest UK offer on fishing but is ready to pursue a post-Brexit trade deal even beyond the end of the year, diplomats said on Tuesday. According to sources in a meeting of ambassadors, EU negotiator Michel Barnier cannot guarantee there will be a deal but Brussels’ “door will remain open” even after Britain leaves the single market. According to the diplomats, Britain had suggested EU access to UK fish stocks be reduced by 35 per cent, phased in over three years. The EU had suggested a level 25 per cent, and over six years As Germany ends its two-year tenure as non-permanent member of the UN Security Council this month, its envoy to the world body appealed to China to free two detained Canadians for Christmas, prompting Beijing’s deputy envoy to respond: “Good riddance”. In his final remarks to the UN Security Council on Germany’s 2019/2020 term, Ambassador Christoph Heusgen said on Wednesday, “let me end my tenure in the Security Council by appealing to my Chinese colleagues to ask Beijing for the release of Michael Kovrig and Michael Spavor. Christmas is the right moment for such a gesture.”

The major European stock markets had a green day:

  • CAC 40 increased 60.73 points or 1.11% to 5,527.59
  • FTSE 100 increased 42.59 points or 0.66% to 6,495.75
  • DAX 30 increased 169.12 points or 1.26% to 13,587.23

The major European currency markets had a mixed day today:

  • EURUSD increased 0.00079 or 0.06% to 1.21838
  • GBPUSD increased 0.01171 or 0.87% to 1.35010
  • USDCHF decreased 0.00022 or -0.02% to 0.88830

Some economic news:

Germany:
German Import Price Index (MoM) (Nov) increased from 0.3% to 0.5%
German Import Price Index (YoY) (Nov) increased from -3.9% to -3.8%

France:
French PPI (MoM) (Nov) increased from 0.1% to 1.7%

Spain:
Spanish GDP (YoY) (Q3) increased from -21.6% to -9.0%
Spanish GDP (QoQ) (Q3) increased from -17.9% to 16.4%
Spanish PPI (YoY) increased from -4.1% to -2.8%

Italy:
Italian Business Confidence (Dec) increased from 90.9 to 95.9
Italian Consumer Confidence (Dec) increased from 98.4 to 102.4

US/AMERICAS:

US President Donald Trump threatened on Tuesday not to sign a $892-billion coronavirus relief bill that includes desperately needed money for individual Americans, saying it should be amended to increase the amount in the stimulus checks. The outgoing Republican president’s threat, with less than a month left in office, throws into turmoil a bipartisan effort in Congress to provide help for people whose lives have been upended by the pandemic. Trump said he wants Congress to increase the amount in the stimulus checks to $2,000 for individuals or $4,000 for couples, instead of the “ridiculously low” $600 for individuals currently in the bill. Both the U.S. House of Representatives and the Senate passed the legislation on Monday night.

According to a survey by the US Census Bureau, one-third of Americans may face foreclosure or evictions in the next two months. According to the Census Bureau’s Household Pulse Survey, 35.3% of US adults are “not current on rent or mortgage where eviction or foreclosure in the next two months is either very likely or somewhat likely.” The moratorium on evictions was set to expire on December 31, but the new coronavirus aid package is extending the period until January 31, 2021. Diane Yentel, the president and CEO of the National Low Income Housing Coalition, called the one-month extension “insufficient to keep people housed for the duration of the pandemic.” Despite the $25 billion allocated to rental assistant in the new relief bill, estimates state there is over $70 billion due in back pay. Yentel is urging Congress to develop a new solution before the moratorium expires.

President-elect Joe Biden deemed the new $900 billion coronavirus relief package a “down payment,” and called upon Congress to offer additional aid in 2021. “Our darkest days in this battle against COVID are ahead of us, not behind us,” Biden stated to reporters on Tuesday. The president-elect indicated that he would encourage a third round of direct stimulus payments to Americans as well. Biden will officially take over the presidency on January 20, 2021.

US Market Closings:

  • Dow advanced 114.32 points or 0.38% to 30,129.83
  • S&P 500 advanced 2.75 points or 0.07% to 3,690.01
  • Nasdaq declined 36.80 points or -0.29% to 12,771.11
  • Russell 2000 advanced 17.22 points or 0.87% to 2,007.10

Canada Market Closings:

  •  TSX Composite advanced 41.11 points or 0.23% to 17,593.57
  • TSX 60 advanced 0.89 points or 0.09% to 1,047.25

Brazil Market Closing:

  • Bovespa advanced 1,170.67 points or 1.00% to 117,806.85

ENERGY:

The oil markets had a mixed day today:

  • Crude Oil increased 1.03 USD/BBL or 2.19% to 48.0500
  • Brent increased 1.06 USD/BBL or 2.12% to 51.1400
  • Natural gas decreased 0.176 USD/MMBtu or -6.33% to 2.6040
  • Gasoline increased 0.04 USD/GAL or 2.99 % to 1.3795
  • Heating oil increased 0.033 USD/GAL or 2.26% to 1.4946
  • Top commodity gainers: Gasoline (2.99%), Heating Oil (2.26%), Crude Oil (2.19%) and Lean Hogs (2.95%)
  • Top commodity losers: Natural Gas (-6.29%), Rubber (-14.38%), Lumber (-1.92%), and Canola (-1.99%)

The above data was collected around 17:04 EST on Wednesday.

BONDS:

Japan 0.01%(+0bp), US 2’s 0.12%(+0.002%), US 10’s 0.95%(+3bps); US 30’s 2.00%(+0.03%), Bunds -0.60% (+0bp), France -0.35% (-0bp), Italy 0.55% (+3bp), Turkey 12.45% (-2bp), Greece 0.65% (-2bp), Portugal 0.07% (+2bp); Spain 0.07% (+2bp) and UK Gilts 0.29% (+10bp).