Market Talk – April 26, 2019

ASIA:

Japanese PM Abe has been in advanced talks since the beginning of the week with European Leaders, discussions about protectionism and free trade agreements were at the forefront of the conversation. Due to current trade agreements savings in excess of 1.1billion Euros for European businesses exporting to Japan. The backdrop of the conversation was China and Japanese concerns over the influence China has over the Pacific region.

Today in Beijing, 37 head of states met to discuss the prospect of the belt initiative. President Jinping laid out a clear message that this initiative was purely economic and China has no interests in trying to export their social values to the rest of the world. Both Putin and Erdogan spoke at the conference welcoming China as the new center of commerce and perhaps taking a swipe at the US. President Trump and most notable western leaders were not present at the conference.

As Amazon last week announced they will be closing its ecommerce operations in China, they followed with an announcement that they opened a new data center in Hong Kong for its Amazon Web Services division – a clear bid to double down on the growth of its cloud business.

The major Asian stock markets had a mixed day today: SENSEX increased 336.47 points(0.87%) to 39,067.33; Hang Seng increased 55.21 points(0.19%) to 29,605.01; ASX 200 increased 3.50 points(0.05%) to 6,385.60; however Shanghai ; KOSPI and NIKKEI 225 took the opposite route ,Shanghai decreased 37.43 points(-1.20%) to 3,086.40; KOSPI decreased 11.19 points (-0.51%) to 2,179.31; NIKKEI 225 decreased 48.85 points(-0.22%) to 22,258.73.

The major Asian currency markets had a mixed day today: The AUDUSD increased 0.0027 or 0.38% to 0.7040 and The NZDUSD increased 0.0042 or 0.63% to 0.6666; however The USDJPY and The USDCNY took the opposite route; decreased 0.0110 or 0.01% to 111.6090 and 0.0120 or 0.18% to 6.7372 respectfully.

Gold increased 9.9USD/t oz. or 0.78% to 1,288.82 and Silver increased 0.115 USD/t. oz or 0.77% to 15.0511

Some economic news:

New Zealand

  • Exports (Mar) increased from 4.71B to 5.70B
  • Imports (Mar) decreased from 4.78B to 4.77B
  • Trade Balance (YoY) (Mar) increased from -6.690M to -5.620M
  • Trade Balance (MoM) (Mar) increased from -68M to 922M

Japan:

  • Jobs/applications ratio (Mar) remain the same at 1.63
  • Tokyo Core CPI (YoY) (Apr) increased from 1.1% to 1.3%
  • Tokyo CPI (YoY) (Apr) increased from 0.9% to 1.4%
  • Unemployment Rate (Mar) increased from 2.3% to 2.5%
  • Industrial Production (MoM) (Mar) decreased from 0.7% to -0.9%
  • Industrial Production forecast 1m ahead (MoM) (Apr) increased from 1.3% to 2.7%
  • Industrial Production forecast 2m ahead (MoM) (May) increased from 1.1% to 3.6%
  • Retail Sales (YoY) (Mar) increased from 0.6% to 1.0%
  • Housing Starts (YoY) (Mar) increased from 4.2% to 10.0%
  • Construction Orders (YoY) (Mar) increased from -3.4% to 0.0%

Australia:

  • Export Price Index (QoQ) (Q1) increased from 4.4% to 4.5%
  • Import Price Index (QoQ) (Q1) decreased from 0.5% to -0.5%
  • PPI (QoQ) (Q1) decreased from 0.5% to 0.4%
  • PPI (YoY) (Q1) decreased from 2.0% to 1.9%

Singapore:

  • URA Property Index (QoQ) (Q1) decreased from -0.10% to -0.70%
  • Unemployment Rate (Q1) remain the same at 2.2%
  • Industrial Production (MoM) (Mar) increased from -3.8% to -2.6%
  • Industrial Production (YoY) (Mar) decreased from 2.6% to -4.8%

South Korea:

  • Consumer Confidence (Apr) increased from 100 to 102

India:

  • Bank Loan Growth increased from 13.2% to 14.2%
  • Deposit Growth increased from 10.0% to 10.6%
  • FX Reserves, USD decreased from 414.90B to 414.15B

EUROPE:

The liberal democrats have launched their European election campaign with a stop Brexit message, the party indicated they were happy to work with other but the wish was not reciprocated and that no party would come together to form a bigger group.

A recent study shows that one in ten European voters support far right populist parties.

A German Minister stated that they wish to sign the Chinese Belt and Road initiative as a group. Other EU leaders have called for more transparency and more information regarding the project before pledging to agree with the initiative.

The major European stock markets had a mixed day today: CAC 40 increased 11.70 points or 0.21% to 5,569.36 and DAX increased 32.58 points or 0.27% to 12,315.18; however The FTSE 100 took the opposite route decreased 5.94 points, or -0.08% to 7,428.19.

The major European currency markets had a mixed day today: The EURUSD increased 0.0018 or 0.16% to 1.1148 and The GBPUSD increased 0.0024 or 0.18% to 1.2921; However The USDCHF took the opposite route  decreased 0.0012 or 0.12% to 1.0190

Some economic news:

France

  • French Consumer Confidence (Apr) remain the same at 96
  • France Jobseekers Total decreased from 3,388.7K to 3,382.6K

UK

  • Gross Mortgage Approvals increased from 39.1K to 40.0K
  • CBI Industrial Trends Orders (Apr) decreased from 1 to -5

US / AMERICAS:

Wall Street rebounded today, with a notable earnings week coming to a close. The Dow gained over 81 points (26,543.33, up +0.31%), while the S&P 500 (2,939.88 close, up +0.47%) and the Nasdaq (8,146.40 close, up +0.34%) both posted another record close. The Russell 2000 had the strongest come back on a percentage basis (1,591.82 close, up +1.03%).

Healthcare (+0.96%) sector bounced back today while Energy (-1.21%) was the laggard thanks to ongoing concerns over oil. Intel (-8.99%) continued its slide this week after lowering its 2019 guidance; Tesla (-5.04%), Nvidia (-4.72%), Target (-5.65%), Exxon Mobile (-2.10%), and Walmart (-1.92%) were some of the notable individual decliners. Ford (+10.92%) had a big day following its earnings report; Workday (2.81%), UnitedHealth (+2.69%), P&G (2.58%), Amazon (+2.54%), and Caterpillar (2.13%) were among today’s other winners.

Both Target and Walmart felt the impact of Amazon’s announcement to invest in 1-day shipping for Prime members, while Exxon Mobile posted less than stellar earnings in a tenuous time in oil markets.

On the rather active IPO front, Uber’s valuation is reportedly between $80 – $90 billion, well below what most believed would be somewhere north of $100 billion. This is no doubt resulting from the downturn of competitor’s Lyft stock since its IPO, and while Uber may end up raising less capital out of the gate, it may not suffer the same early pitfalls and negative sentiment as its rival. It was also revealed this week that PayPal invested $500 million into the ride hailing company ahead of its IPO.

Business messaging company Slack released its S-1 today: ~10 million daily active users; ~$400 million in revenue; ~$139 million in losses.

Next week is another big week for earnings (including Alphabet / Google, Apple, Qualcomm and others slated to report. Next week also brings another Fed meeting, and while no change is expected to rates after recently pausing plans for increases, one can never really tell what will be announced or how the market will (over)react these days.

On the economic front, the Commerce Department reported a 3.2% Q1 GDP – well above expectations of 2.5%. This is also a bit of a surprise given the government shutdown lasted most of January.

Canadian markets were also up today, with the TSX Composite closing at 16,613.46 (+0.23%) and the TSX 60 closing at 995.88 (+0.22%).

Brazil’s Bovespa turned back down, closing at 96,236.04 (-0.33%).

ENERGY:

Oil moves lowers as President Trump told Reuters reporter the following “Gasoline prices are coming down. I called up OPEC, I said you’ve got to bring them down. You’ve got to bring them down,”. This is in contrast to Saudi oil minister stating that the Saudi nation will not ramp up the oil production any time soon.

The most of oil markets had a negative day today: Crude Oil decreased 2.35 USD/BBL or -3.60% to 62.9869; Brent decreased 2.73 USD/BBL or -3.67% to 71.4734; Gasoline decreased 0.0453 USD/GAL or -2.12% to 2.0873 and Heating oil decreased 0.0555 USD/GAL or -2.65% to 2.0384; however Natural gas took the opposite route  increased 0.016 USD/MMBtu or 0.64% to 2.5336

Top commodity gainers are Copper (9.82%), Palladium(3.39%) ,Cocoa(2.18%) and Platinum(1.78%),. Biggest losers are Brent (-3.77%), Crude Oil(-3.71%) ;Heating oil(-2.75%) and Palm Oil (-1.90%).

The above data were collected around noon 16:15 EST time on Friday

BONDS:

Japan -0.03%(+0bp), US 2’s 2.29% (-10bps), US 10’s 2.50%(-9bps), US 30’s 2.92%(-8bps), Bunds -0.01% (+1bp), France 0.35% (-2bp), Italy 2.56% (-3bp), Turkey 18.30% (+100bp), Greece 3.31% (-45bp), Portugal 1.13% (-7bp), Spain 1.03% (-4bp) and UK Gilts 1.14% (-6bp).

Italian 6-Month BOT Auction increased from -0.062% to -0.028%