Market Talk – April 8, 2020

ASIA:

India is planning to extend its nation-wide lockdown after many state governments requested to extend the lockdown retaining all or most of the existing curbs. The likelihood of lifting the lid on mass transit such as trains, metros, and flights and on inter-state movement of people appears slim.

India’s state governments are demanding help from the central government after analysts warned that essential public services and health care for millions of Indians will be in jeopardy without further federal and central bank support. States are slashing salaries, demanding an increase in borrowing limits, and asking for fund transfers from New Delhi as their tax revenues dry up due to large scale travel restrictions to contain the spread of the flu-like respiratory disease.

India has so far identified 5,916 coronavirus cases, of which 178 have died and 506 are recovered.

China’s city Wuhan, the epicenter of COVID-19 outbreak, ended a two-month lockdown on Wednesday, but a northern town started restricting the movement of its residents amid concerns of a second wave of infections in mainland China. China’s Shanghai Composite was down 0.4 % while the Shenzhen Component was down 0.39% as the city of Wuhan, where the outbreak started, lifted its lockdown.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 increased 403.06 points or 2.13% to 19,353.24
  • Shanghai decreased from 5.39 points or -0.19% to 2,815.37
  • Hang Seng decreased 282.92 points or -1.17% to 23,970.37
  • ASX 200 decreased 45.40 points or -0.86% to 5,206.90
  • Kospi decreased 16.46 points or -0.90% to 1,807.14
  • SENSEX decreased 173.25 points or -0.58% to 29,893.96

The major Asian currency markets had a green day today:

  • AUDUSD increased 0.00591 or 0.96% to 0.62321
  • NZDUSD increased 0.00449 or 0.75% to 0.60199
  • USDJPY increased 0.0210 or 0.02% to 108.7240
  • USDCNY increased 0.0057 or 0.08% to 7.0690

Precious Metals:

  • Gold increased 2.15 USD/t oz. or 0.13% to 1,649.55
  • Silver decreased 0.04 USD/t. oz or -0.29% to 14.9410

Some economic news from last night:

Australia:

Home Loans (MoM) decreased from 1.5% to -2.0%

Invest Housing Finance (MoM) decreased from 0.1% to -1.9%

Indonesia:

Retail Sales (YoY) (Feb) decreased from -0.3% to -0.8%

Japan:

Adjusted Current Account increased from 1.63T to 2.38T

Core Machinery Orders (MoM) (Feb) decreased from 2.9% to 2.3%

Core Machinery Orders (YoY) (Feb) decreased from -0.3% to -2.4%

Current Account n.s.a. (Feb) increased from 0.612T to 3.169T

Some economic news from today:

Japan:

Economy Watchers Current Index (Mar) decreased from 27.4 to 14.2

EUROPE/EMEA:

Negotiations have begun in Europe regarding a plan to support the EU economy, with the ECB stating that around 1.5 trillion euros would be needed. News emerged that the finance ministers were close to a deal but nothing was finalized. Negotiations are expected to resume tomorrow.

EU officials have now dismissed the end of the year as a possible target date to complete the transition period of post-Brexit. EU officials are said to describe the target as being in a “fantasy land.”

The WTO said that the most optimistic forecast for 2020 would be a decline of 13% of trade year over year, which represents a worse year than 2008.

Austria, Czech Republic, Denmark, and Norway have signaled that they will start to relax the restrictions imposed to squash the spread of the coronavirus. However, the WHO criticized such a move, stating that it was dangerous to think the virus has now passed.

The major Europe stock markets had a mixed day today:

  • CAC 40 increased 4.48 points or 0.10% to 4,442.75
  • FTSE 100 decreased 26.72 points, or -0.47% to 5,677.73
  • DAX 30 decreased 23.81 points or -0.23% to 10,332.89

The major Europe currency markets had a mixed day today:

  • EURUSD decreased 0.00302 or -0.28% to 1.08698
  • GBPUSD increased 0.00597 or 0.48% to 1.24047
  • USDCHF increased 0.00157 or 0.16% to 0.97067

Some economic news from Europe today:

Norway:

Core CPI YTD (Mar) remain the same at 2.1%

Core Inflation (MoM) (Mar) decreased from 0.5% to 0.3%

CPI (YoY) (Mar) decreased from 0.9% to 0.7%

CPI (MoM) (Mar) increased from -0.1% to 0.0%

PPI (YoY) (Mar) decreased from -7.4% to -12.6%

US/AMERICAS:

Director of the National Institute of Allergy and Infectious Diseases Dr. Anthony Fauci is beginning to sound more optimistic on establishing a timeline for the country to return to normalcy. Dr. Fauci said that US schools may be able to reopen in the fall. “I fully expect — though I’m humble enough that I can’t accurately predict — that by the time we get to the fall that we will have this under control enough, that it certainly will not be the way it is now — where people are shutting schools,” Dr. Fauci said. However, the virus will not vanish by the fall and he continues to stress the importance of developing a vaccine.

Bernie Sanders officially dropped out of the 2020 US presidential election today, paving the way for Joe Biden to become the Democratic nominee. “The path toward victory is virtually impossible,” Sanders said during a live steam announcement where he noted that Biden was surpassing him by around 300 delegates. “If I believed we had a feasible path to the nomination, I would certainly continue the campaign. But it’s just not there,” he relinquished. President Trump said that Elizabeth Warren paved the way for a Biden victory by not suspending her campaign before Super Tuesday. “This ended just like the Democrats & the DNC wanted, same as the Crooked Hillary fiasco. The Bernie people should come to the Republican Party, TRADE!” the president tweeted.

Canada enacted its Quarantine Act on March 25, which included barring foreigners from entering the country. However, a leaked memo reveals that health officials warned policy makers in early February that it was essential to close the border. The memo noted that around 20,000 people were traveling from Canada to China on a weekly basis at the time. “With hindsight, I’m sure there are lots of things that we could have done differently, but I can tell you that every step of the way, we took the advice of our medical professionals and our public health experts seriously and did as best we could,” Prime Minister Trudeau said this Wednesday.

US Market Closings:

  • Dow advanced 779.71 points or 3.44% to 23,433.57
  • S&P 500 advanced 90.57 points or 3.41% to 2,749.98
  • Nasdaq advanced 203.64 points or 2.58% to 8,090.90
  • Russell 2000 52.49 points or 4.61% to 1,191.66

Canada Market Closings:

  • TSX Composite advanced 311.57 points or 2.29% to 13,925.71
  • TSX 60 advanced 16.21 points or 1.95% to 846. 79

Brazil Market Closing:

  • Bovespa advanced 2,66.53 points or 2.97% to 78,624.62

ENERGY:

Crude oil bounced back in the case of WTI by 6.64%. President Trump stating that he could impose a tariff on foreign oil helped push up the domestic market. He also today went on to say that the free market will help curb supply automatically. Today, the EIA report showed there was a significant build of 15.2 million barrels held in storage.

The oil markets had a mixed day today:

  • Crude Oil increased 2.11 USD/BBL or 8.93% to 25.7300
  • Brent increased 1.36 USD/BBL or 4.27% to 33.2300
  • Natural gas decreased 0.105 USD/MMBtu or -5.57% to 1.7800
  • Gasoline increased 0.0363 USD/GAL or 5.03% to 0.7580
  • Heating oil decreased 0.0001 USD/GAL or -0.01% to 1.0569
  • Top commodity gainers: Crude Oil (8.93%), Gasoline (5.03%), Feeder Cattle (5.54%), and Ethanol (4.99%)
  • Top commodity losers: Natural Gas (-5.57%), Bitumen (-3.85%), Lean Hogs (-2.28%), and Orange Juice (-1.79%)

The above data was collected around 15.05 EST on Wednesday.

BONDS:

Japan 0.02%(+1bp), US 2’s 0.25% (-3bps), US 10’s 0.74%(+1bps); US 30’s 1.34%(+1bps), Bunds -0.31% (+1bp), France 0.18% (+1bp), Italy 1.71% (+11bp), Turkey 13.88% (+11bp), Greece 1.86% (+4bp), Portugal 0.94% (+5bp); Spain 0.85% (+4bp) and UK Gilts 0.38% (-3bp).

  • German 10-Year Bund Auction increased from -0.770% to -0.340%
  • UK 10-Year Treasury Gilt Auction increased from 0.307% to 0.376%
  • Italian 12-Month BOT Auction increased from 0.072% to 0.534%
  • US 30-Year Bond Auction increased from 1.320% to 1.325%