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Market Talk – April 12, 2022

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Crisis-stricken Sri Lanka defaulted on its $51 billion external debt on Tuesday, calling the move a “last resort” after running out of foreign exchange to import desperately needed goods. Sri Lanka’s finance ministry said in a statement that creditors, including foreign governments, were free to capitalize any interest payments due to them from Tuesday or opt for payback in Sri Lankan rupees. Sri Lanka’s foreign-exchange reserves slumped 16% to $1.94 billion last month. The government was due to make a $36 million interest payment on a 2023-dollar bond April 18, as well as $42.2 million on a 2028 note, Bloomberg-compiled data show. A $1 billion sovereign bond was maturing July 25. Sri Lanka’s dollar bonds due July 2022 fell 1.8 cents on the dollar on Tuesday to a fresh record low 46.07 cents. The rupee lost 0.5%. The nation’s stock market is shut this week for public holidays after trading for shortened hours due to the daily power cuts. The island nation is grappling with its worst economic downturn since independence, with regular blackouts and acute shortages of food and fuel.
The major Asian stock markets had a mixed day today:• NIKKEI 225 decreased 486.54 points or -1.81% to 26,334.98• Shanghai increased 46.20 points or 1.46% to 3,213.33• Hang Seng increased 110.83 points or 0.52% to 21,319.13• ASX 200 decreased 31.20 points or -0.42% to 7,454.00• Kospi decreased 26.34 points or -0.98% to 2,666.76• SENSEX decreased 388.20 points or -0.66% to 58,576.37• Nifty50 decreased 144.65 points or -0.82% to 17,530.30The major Asian currency markets had a mixed day today:• AUDUSD increased 0.00597 or 0.81% to 0.74753• NZDUSD increased 0.00581 or 0.85% to 0.68754• USDJPY   decreased 0.256 or -0.20% to 125.268• USDCNY  decreased 0.01221 or -0.19% to 6.37649Precious Metals:• Gold increased 18.12 USD/t oz. or 0.93% to 1,971.55• Silver increased 0.433 USD/t. oz or 1.73% to 25.507Some economic news from last night:Japan:Bank Lending (YoY) (Mar) increased from 0.3% to 0.5%PPI (MoM) (Mar) decreased from 0.9% to 0.8%PPI (YoY) (Mar) decreased from 9.7% to 9.5%South Korea:M2 Money supply (Feb) decreased from 10.00% to 9.50%Australia:NAB Business Confidence (Mar) increased from 13 to 16NAB Business Survey (Mar) increased from 9 to 18New Zealand:NZIER Business Confidence (Q1) decrease from -28% to -40%NZIER QSBO Capacity Utilization (Q1) increased from 92.7% to 97.1%External Migration & Visitors (Feb) increased from -26.00% to -1.20%Permanent/Long-Term Migration (Feb) increased from -952 to -593Some economic news from todayIndia:CPI (YoY) (Mar) increased from 6.07% to 6.95%Cumulative Industrial Production (Feb) decreased from 13.70% to 12.50%Industrial Production (YoY) (Feb) increased from 1.3% to 1.7%Manufacturing Output (MoM) (Feb) decreased from 1.1% to 0.8%EUROPE/EMEA:
UK economic growth slowed by more than expected in February as a slump in car manufacturing undermined a sharp recovery in holiday bookings after the easing of Covid travel restrictions. The Office for National Statistics said gross domestic product rose by only 0.1% in February, down from a monthly growth rate of 0.8% in January when the economy was recovering from the coronavirus Omicron variant. Tourism rose strongly after the easing of pandemic restrictions led to an increase in people booking holidays in the UK and overseas, with growth of 33.1% for travel agencies and tour operators. The accommodation sector, which includes hotels, recorded a 23% rise in activity as more people travelled within the UK, contributing to the first month of positive growth for hotels and camping grounds since August.

Russia will take legal action if it’s forced to default on its external debt, finance minister Anton Siluanov has told Russian newspaper Izvestia. Last week, Russia was unable to make over $600m debt repayments to bond holders in US dollars because the US Treasury blocked the payments. That prompted Moscow to set aside rubles instead, which could potentially be classed as Russia’s first default since 1998. Rating agency S&P Global Ratings cut its rating on Russia to “selective default” on Friday night, saying it didn’t expect it would be able to convert the rubles into dollars within a 30-day grace period.

The major Europe stock markets had a negative day:• CAC 40 decreased 18.40 points or -0.28% to 6,537.41• FTSE 100 decreased 41.65 points or -0.55% to 7,576.66• DAX 30 decreased 67.83 points or -0.48% to 14,124.95The major Europe currency markets had a mixed day today:• EURUSD decreased 0.0044 or -0.40% to 1.08364• GBPUSD decreased 0.00069 or -0.05% to 1.30169• USDCHF increased 0.00024 or 0.03% to 0.93177Some economic news from Europe today:UK:Average Earnings ex Bonus (Feb) increased from 3.8% to 4.0%Average Earnings Index +Bonus (Feb) increased from 4.8% to 5.4%Claimant Count Change (Mar) increased from -58.0K to -46.9KEmployment Change 3M/3M (MoM) (Feb) increased fro -12K to 10KUnemployment Rate (Feb) decreased from 3.9% to 3.8%Germany:German CPI (MoM) (Mar) increased from 0.9% to 2.5%German CPI (YoY) (Mar) increased from 5.1% to 7.3%German HICP (YoY) (Mar) increased from 5.5% to 7.6%German HICP (MoM) (Mar) increased from 0.9% to 2.5%German WPI (YoY) (Mar) increased from 16.6% to 22.6%German WPI (MoM) (Mar) increased from 1.7% to 6.9%German ZEW Current Conditions (Apr) decreased from -21.4 to -30.8German ZEW Economic Sentiment (Apr) decreased from -39.3 to -41.0Gemran Current Account Balance n.s.a (Feb) increased from 12.5B to 20.8BFrance:French Current Account (Feb) increased from -1.30B to -1.10BFrench Exports (Feb) decreased from 47.6B to 45.7BFrench Imports (Feb) increased from 55.6B to 56.0BFrench Trade Balance (Feb) decreased from -8.0B to -10.3BEuro Zone:ZEW Economic Sentiment (Apr) decreased from 38.7 to -43.0US/AMERICAS:

The Consumer Price Index soared 8.5% in March year-on-year, according to the report released by the Labor Department on Tuesday. Prices have not been this inflated since Reagan was in power in December 1981. Food and energy excluded, CPI rose 6.5%, while core inflation rose 0.3% for the month.

Real earnings are also on the rise in the US, albeit erased by inflation. Wages rose 5.6% in March, but are beneath the rapidly increasing cost of living Hourly earnings saw a seasonally adjusted decline of 0.8%. The cost of shelter, one-third of CPI, rose an additional 0.5%. This makes the cost of simple housing the highest level since May 1991, and marks a 5% gain over the past 12 months.

US Market Closings:

  • Dow declined 87.72 points or -0.26% to 34,220.36
  • S&P 500 declined 15.08 points or -0.34% to 4,397.45
  • Nasdaq declined 40.38 points or -0.3% to 13,371.57
  • Russell 2000 advanced 6.61 points or 0.33% to 1,986.94


Canada Market Closings:

  • TSX Composite declined 75.08 points or -0.34% to 21,715.41
  • TSX 60 declined 5.64 points or -0.43% to 1,314.91


Brazil Market Closing:

  • Bovespa declined 805.99 points or -0.69% to 116,146.86

ENERGY:The oil markets had a green day today:• Crude Oil increased 6.35 USD/BBL or 6.73% to 100.640• Brent increased 6.09 USD/BBL or 6.18% to 104.57• Natural gas increased 0.004 USD/MMBtu or 0.06% to 6.6470• Gasoline increased 0.1397 USD/GAL or 4.65% to 3.1428• Heating oil increased 0.1322 USD/GAL or 4.05% to 3.3999The above data was collected around 14:06 EST on Monday   • Top commodity gainers: Crude Oil (6.73%) and Brent (6.18%),  Gasoline(4.65%),  Heating Oil (4.05%)• Top commodity losers:  Lumber(-6.43%), Coffee (-1.29%), Cocoa(-1.19%) and Palladium (-3.05%)The above data was collected around 13:49 EST on Tuesday.BONDS: Japan 0.25%(+1.1bp), US 2’s 2.37% (-0.125%), US 10’s 2.7099% (-6.44bps); US 30’s 2.82% (+0.012%), Bunds 0.7940% (-1.9bp), France 1.298% (-1.8bp), Italy 2.404% (-6.2bp), Turkey 23.51% (-1bp), Greece 2.845% (-2.6bp), Portugal 1.687% (-2.5bp); Spain 1.743% (-1.9bp) and UK Gilts 1.796% (-5.1bp).