Market Talk – April 1, 2020

ASIA

India’s markets witnessed the biggest sell-off by foreign investors in a single month in March. The 21-day nationwide lockdown to curb the spread of the coronavirus raised fears of a devastating impact on an already-slowing economy. Foreign institutional investors sold nearly $16 billion worth of equity and debt as of Monday, according to depository data, even as Prime Minister Narendra Modi’s government announced economic relief aimed at the poor and regulators relaxed compliance norms.

The Indian government plans to borrow more aggressively than anticipated in the April-September period, even as foreign investors have turned into net sellers in the entire Asian market as the coronavirus spreads. India aims to borrow 4.88 trillion Indian rupees in the period, nearly 63% of its total annual borrowing plan, Economic Affairs Secretary Atanu Chakraborty said on Tuesday. The government plans to issue bonds worth 190 billion rupees to 210 billion rupees weekly through the first six months of the fiscal year that begins on April 1.

Bloomberg reported that the US intelligence community said in a classified report to the White House that the Chinese government has deliberately underreported the total number of coronavirus cases and deaths in the country. “You don’t know what the numbers are in China,” President Donald Trump said at a White House press briefing last week.

Analysts from UBS and Goldman Sachs recently slashed their estimates for China’s growth this year to 1.5% and 3% respectively. This may result in growth that could be entirely be wiped out in 2020, putting millions of jobs at risk. World Bank also warned earlier this week that in a worst case scenario, the $14 trillion economy may not grow at all.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 decreased 851.60 points or -4.50% to 18,065.41
  • Shanghai decreased 15.77 points or -0.57% to 2,734.52
  • Hang Seng decreased 517.69 points or -2.19% to 23,085.79
  • ASX 200 increased 181.80 points or 3.58% to 5,258.60
  • Kospi decreased 69.18 points or -3.94% to 1,685.46
  • SENSEX decreased 1,203.18 points or -4.08% to 28,265.31

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.00668 or -1.09% to 0.60692
  • NZDUSD decreased 0.0032 or 0.54% to 0.5917
  • USDJPY decreased 0.3270 or 0.30% to 107.1450
  • USDCNY increased 0.0413 or 0.58% to 7.1309

Precious Metals:

  • Gold increased 13.2 USD/t oz. or 0.84% to 1,589.65
  • Silver decreased 0.009 USD/t. oz or -0.06% to 13.9410

Some economic news from last night:

Australia:

AIG Manufacturing Index (Mar) increased from 44.3 to 53.7

Manufacturing PMI decreased from 50.2 to 49.7

Building Approvals (MoM) (Feb) increased from -15.3% to 19.9%

Private House Approvals (Feb) decreased from 0.3% to -0.8%

Japan:

Manufacturing PMI (Mar) decreased from 47.8 to 44.8

Construction Orders (YoY) (Feb) increased from -17.0% to 0.7%

Tankan All Big Industry CAPEX (Q1) decreased from 6.8% to 1.8%

Tankan All Small Industry CAPEX (Q1) decreased from -2.2% to -11.7%

Tankan Big Manufacturing Outlook Index (Q1) decreased from 0 to -11

Tankan Large Manufacturers Index (Q1) decreased from 5 to -8

Tankan Large Non-Manufacturers Diffusion Index (Q1) decreased from 18 to -1

Tankan Large Non-Manufacturers Index (Q1) decreased from 20 to 8

Tankan Small Manufacturers Diffusion Index (Q1) decreased from -12 to -29

Tankan Small Manufacturing Index (Q1) decreased from -9 to -15

Tankan Small Non-Manufacturers Diffusion Index (Q1) decreased from 1 to -19

Tankan Small Non-Manufacturing Index (Q1) decreased from 7 to -1

Singapore:

URA Property Index (QoQ) (Q1) remain the same at -1.20%

Indonesia:

Nikkei Manufacturing PMI (Mar) decreased from 51.9 to 45.3

China:

Caixin Manufacturing PMI (Mar) increased from 40.3 to 50.1

South Korea:

Exports (YoY) (Mar) decreased from 4.3% to -0.2%

Imports (YoY) (Mar) decreased from 1.5% to -0.3%

Trade Balance (Mar) increased from 3.98B to 5.04B

Nikkei Manufacturing PMI (Mar) decreased from 48.7 to 44.2

Some economic news from today:

Indonesia:

Inflation (YoY) (Mar) decreased from 2.98% to 2.96%

Inflation (MoM) (Mar) decreased from 0.28% to 0.10%

Core Inflation (YoY) (Mar) increased from 2.76% to 2.87%

Australia:

Commodity Prices (YoY) decreased from -6.0% to -10.2%

EUROPE/EMEA:

The European Automobile Manufacturers Association said that almost 40% of the workforce is affected by the closures due to the coronavirus, meaning 1.1 million workers are forced to stay at home.

A report from Reuters said that greenhouse gasses from Europe fell 8.7% in 2019 compared with the previous year. Europe is heavily investing in renewable energy.

The UK has denied the EU a chance to open up a European Union office in Northern Ireland. The reasoning for the office would be to ensure that the Irish protocol is being implemented.

French President Macron has agreed there should be an EU wide stimulus package, but only after the coronavirus is gone. Italy has demanded more support from the likes of Germany or else they claim the EU will not survive.

The major Europe stock markets had a negative day today:

  • CAC 40 decreased 188.88 points or -4.30% to 4,207.24
  • FTSE 100 decreased 217.39 points, or -3.83% to 5,454.57
  • DAX 30 decreased 391.09 points or -3.94% to 9,544.75

The major Europe currency markets had a mixed day today:

  • EURUSD decreased 0.00921 or -0.83% to 1.09409
  • GBPUSD decreased 0.00297 or -0.24% to 1.23843
  • USDCHF increased 0.00544 or 0.57% to 0.96654

Some economic news from Europe today:

UK:

BRC Shop Price Index (YoY) decreased from -0.6% to -0.8%

Manufacturing PMI (Mar) decreased from 51.7 to 47.8

Germany:

German Retail Sales (MoM) (Feb) increased from 1.0% to 1.2%

German Retail Sales (YoY) (Feb) increased from 2.1% to 6.4%

German Manufacturing PMI (Mar) decreased from 45.7 to 45.4

Spain:

Spanish Manufacturing PMI (Mar) decreased from 50.4 to 45.7

Swiss:

procure.ch PMI (Mar) decreased from 49.5 to 43.7

Italy:

Italian Manufacturing PMI (Mar) decreased from 48.7 to 40.3

Italian Monthly Unemployment Rate (Feb) decreased from 9.8% to 9.7%

France:

French Manufacturing PMI (Mar) decreased from 49.8 to 43.2

Norway:

Manufacturing PMI (Mar) decreased from 51.6 to 41.9

Euro Zone:

Manufacturing PMI (Mar) decreased from 44.8 to 44.5

Unemployment Rate (Feb) decreased from 7.4% to 7.3%

US/AMERICAS:

The coronavirus put an abrupt halt to the US’ 10-year unemployment decline, according to data released by ADP and Moody’s today. Mark Zandi, chief economist at Moody’s, anticipated the unemployment to significantly rise. Weekly jobless claims spiked to 3.3 million last week, and that trend is largely expected to continue into this week. The spike in unemployment surpassed the peak of 665,000 in March 2009 and the all-time level of 695,000 in October 1982.

Sixty percent of American workers polled stated that they will be unable to meet their basic financial needs after a one-month quarantine, according to a survey by the Society for Human Research Management (SHRM) that was released today. Worse, one in five workers polled said they’d be unable to meet their basic financial needs after only one week of quarantine. Basic needs contained within in the survey include groceries, housing, and miscellaneous bills.

“The new Canada Emergency Wage Subsidy would cover 75% of employee wages – up to $847 per employee, per week,” tweeted Bill Morneau, Canada’s minister of finance. Furthermore, the government said they expect employers to make every effort to supplement the additional 25% of lost wages not covered by the emergency bill. Employers who experience a -30% decline in gross earnings in March, April, or May on a YoY basis may qualify for the subsidy. The government will continue to issue payments until June 6, 2020.

Twitter and Facebook removed videos of Brazilian President Jair Bolsonaro after alleging that he was spreading false information regarding the coronavirus. “Twitter recently announced the expansion of its rules to cover content that could be against public health information provided by official sources and could put people at greater risk of transmitting COVID-19,” a spokesperson for Twitter told reporters at Bloomberg. The removal is causing many to question whether media platforms will alter their policies to restrict free speech. Facebook CEO/founder Mark Zuckerberg claims the measures are to protect the public against the spread of the coronavirus rather than restricting freedoms.

US Market Closings:

  • Dow declined 973.65 points or -4.44% to 20,943.51
  • S&P 500 declined 114.09 points or -4.41% to 2,470.50
  • Nasdaq declined 339.52 points or -4.41% to 7,360.58
  • Russell 2000 declined 81.11 points or -7.03% to 1,071.99

Canada Market Closings:

  • TSX Composite declined 502.38 points or -3.76% to 12,876.37
  • TSX 60 declined 31.94 points or -3.90% to 787.95

Brazil Market Closing:

  • Bovespa declined 2,053.06 points or -2.81% to 70,966.7

ENERGY:

There were the first signs of blood from the nosedive of the oil markets today, as a large shale producer in the US filed for bankruptcy as they cannot handle WTI being at 20 USD. Mixed markets today with Brent sliding 2.58% and WTI moving up by 3.52%.

The oil markets had a mixed day today:

  • Crude Oil increased 0.27 USD/BBL or 1.32% to 20.7500
  • Brent decreased 1.45 USD/BBL or -5.50% to 24.9000
  • Natural gas decreased 0.062 USD/MMBtu or -3.76% to 1.5860
  • Gasoline decreased 0.0128 USD/GAL or -2.03% to 0.6180
  • Heating oil decreased 0.0505 USD/GAL or -5.02% to 0.9557
  • Top commodity gainers: Crude Oil (1.32%), Steel (1.70%), Gold (0.84%), and Baltic Dry (14.23%)
  • Top commodity losers: Milk (-10.97%), Lumber (-7.04%), Lean Hogs (-5.83%), and Cheese (-8.97%)

The above data was collected around 15.35 EST on Wednesday.

BONDS:

Japan 0.02%(-0bp), US 2’s 0.23% (-0bps), US 10’s 0.63%(-7bps); US 30’s 1.29%(-7bps), Bunds -0.45% (+0bp), France 0.02% (+3bp), Italy 1.55% (+2bp), Turkey 13.42% (+30bp), Greece 1.76% (+12bp), Portugal 0.86% (+2bp); Spain 0.71% (+3bp) and UK Gilts 0.32% (-3bp).

  • German 5-Year Bobl Auction increased from -0.690% to -0.660%