Market Talk – April 9, 2020

Market Talk will resume on Monday, April 13. We would like to wish our readers who celebrate a happy Easter weekend.

ASIA:

India’s factory output rose to a seven-month high of 4.5% in February, before the government imposed a nationwide lockdown in March that crippled normal economic activity. Mining and manufacturing grew at 10% and 3.2% respectively during the month, while electricity generation rose 8.1%. Data released earlier showed India’s eight infrastructure sectors, which contribute over 40% of the Index of Industrial Production (IIP), touched an 11-month high of 5.5% in February.

India will divert 19 million barrels of Gulf oil from state-run firms to strategic petroleum reserves (SPRs) skipping direct purchases from producers to help refiners get rid of extra oil as their storage is full, sources close to the matter said.

The death toll due to the novel coronavirus in India rose to 166 and the number of cases to 5,734 on Thursday, according to the Union Health Ministry.

The Chinese government has signaled an end to the human consumption of dogs, with the agriculture ministry today releasing a draft policy that would forbid canine meat. The ministry called dogs a “special companion animal” and one not internationally recognized as livestock.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 decreased 7.47 points or -0.04% to 19,345.77
  • Shanghai increased from 10.53 points or 0.37% to 2,825.90
  • Hang Seng increased 329.96 points or 1.38% to 24,300.33
  • ASX 200 increased 180.40 points or 3.46% to 5,387.30
  • Kospi increased 29.07 points or 1.61% to 1,836.21
  • SENSEX increased 1,265.66 points or 4.23% to 31,159.62

The major Asian currency markets had a mixed day today:

  • AUDUSD increased 0.00592 or 0.95% to 0.62942
  • NZDUSD increased 0.00387 or 0.64% to 0.60557
  • USDJPY decreased 0.4020 or 0.37% to 108.5640
  • USDCNY decreased 0.0133 or 0.19% to 7.0542

Precious Metals:

  • Gold increased 26.30 USD/t oz. or 1.60% to 1,673.00
  • Silver increased 0.25 USD/t. oz or 1.66% to 15.2140

Some economic news from last night:

New Zealand:

Electronic Card Retail Sales (MoM) (Mar) decreased from 0.5% to -3.9%

Electronic Card Retail Sales (YoY) (Mar) decreased from 8.6% to -1.8%

India:

M3 Money Supply decreased from 9.5% to 8.8%

Japan:

Foreign Bonds Buying decreased from 2.5B to -1,056.4B

Foreign Investments in Japanese Stocks increased from -1,422.1B to 422.7B

South Korea:

Interest Rate Decision (Apr) remain the same at 0.75%

Some economic news from today:

India:

Cumulative Industrial Production (Feb) increased from 0.50% to 0.90%

Industrial Production (YoY) (Feb) increased from 2.1% to 4.5%

Manufacturing Output (MoM) (Feb) increased from 1.6% to 3.2%

Japan:

Machine Tool Orders (YoY) decreased from -29.6% to -40.8%

EUROPE/EMEA:

The Italian Prime Minister told the BBC that the whole European Union can fail as a project due to its response in handling the coronavirus. The biggest disagreement with Italy and some members of the Eurozone is over the concept of introducing “coronabonds” to help breathe more capital into the economy, as member states such as Netherlands and Germany opposed the idea. Today, Angela Merkel reiterated that Germany will not be supporting a Eurozone bond.

German Chancellor Angela Merkel spoke about “cautious hope” regarding the latest recovery numbers out of Germany. However, she warned that now is not the time to relax the restrictions, but she praised Germany’s handling of affairs.

The French finance minister has again presented a budget with the assumption of a 6% decline in GDP and 100 billion euros of emergency spending. The previous budget presented 4 weeks ago only assumed a 1% contraction and 45 billion of emergency funds. The French minister called it the worst recession in 45 years.

The major Europe stock markets had a green day today:

  • CAC 40 increased 64.10 points or 1.44% to 4,506.85
  • FTSE 100 increased 164.93 points, or 2.90% to 5,842.66
  • DAX 30 increased 231.85 points or 2.24% to 10,564.74

The major Europe currency markets had a mixed day today:

  • EURUSD increased 0.00688 or 0.63% to 1.09278
  • GBPUSD increased 0.00696 or 0.56% to 1.24606
  • USDCHF decreased 0.00457 or -0.47% to 0.96743

Some economic news from Europe today:

UK

RICS House Price Balance (Mar) decreased from 29% to 11%

Thomson Reuters IPSOS PCSI (Apr) decreased from 55.5 to 41.6

NIESR GDP Estimate decreased from 0.1% to -4.8%

NIESR Monthly GDP Tracker decreased from 0.1% to -4.8%

Construction Output (YoY) (Feb) decreased from 0.5% to -2.7%

Construction Output (MoM) (Feb) decreased from -0.2% to -1.7%

GDP (MoM) decreased from 0.0% to -0.1%

GDP (YoY) decreased from 0.7% to 0.3%

Index of Services increased from 0.0% to 0.2%

Industrial Production (MoM) (Feb) decreased from 0.2% to 0.1%

Industrial Production (YoY) (Feb) remain the same at -2.8%

Manufacturing Production (MoM) (Feb) increased from 0.4% to 0.5%

Manufacturing Production (YoY) (Feb) decreased from -3.7% to -3.9%

Monthly GDP 3M/3M Change increased from 0.0% to 0.1%

Trade Balance (Feb) decreased from -5.76B to -11.49B

Trade Balance Non-EU (Feb) decreased from 0.22B to -5.57B

Germany:

Germany Thomson Reuters IPSOS PCSI (Apr) decreased from 53.29 to 44.33

Gemran Current Account Balance n.s.a (Feb) increased from 16.8B to 23.7B

German Exports (MoM) (Feb) increased from 0.1% to 1.3%

German Imports (MoM) (Feb) decreased from 0.6% to -1.6%

German Trade Balance (Feb) increased from 18.7B to 21.6B

France:

France Thomson Reuters IPSOS PCSI (Apr) decreased from 43.05 to 38.20

Italy:

Italy Thomson Reuters IPSOS PCSI (Apr) decreased from 37.73 to 31.82

Italian Industrial Production (YoY) (Feb) decreased from -0.2% to -2.4%

Italian Industrial Production (MoM) (Feb) decreased from 3.6% to -1.2%

US/AMERICAS:

Over 16 million Americans lost their jobs in the past three weeks, contracting the US workforce by 10% in that time period. The Labor Department reported that 6.6 million Americans lost their livelihoods last week, a slight downturn from the 6.9 million jobs lost the week prior. In response, the Federal Reserve said the Payroll Protection Program (PPP) will include $500 billion in loans to assist small businesses.

The Federal Reserve also released details of their additional $2.3 trillion stimulus package, an announcement that caused equities to jump during early trading. “The Fed’s role is to provide as much relief and stability as we can during this period of constrained economic activity, and our actions today will help ensure that the eventual recovery is as vigorous as possible,” Chairman Jerome Powell stated today. The aforementioned loans in the PPP program are designated for businesses with under 10,000 employees that grossed less than $2.5 billion during the last fiscal year.

On an optimistic note, Powell stated in an interview this Thursday that the recovery could be “robust” once the coronavirus is contained. The chairman acknowledged that the US entered this downturn on strong footing, which should make the recovery process easier. Once businesses reopen, the unemployment rate should sharply decline. In the meantime, the Fed will maintain low rates to achieve “maximum-employment and price-stability goals,” Powell noted.

Canada’s unemployment rate spiked to 7.8% in March or a total of 1.01 million lost jobs, according to data released by Statistics Canada today. In contrast, the unemployment rate was just 5.6% in February when the coronavirus crisis began. Worse still, many analysts are anticipating a sharp increase in unemployment during April. The Bank of Canada lowered its overnight rate to 0.25% in March, and are expected to reevaluate that decision next Wednesday.

US Market Closings:

  • Dow advanced 285.80 points or 1.22% to 23,719.37
  • S&P 500 advanced 39.84 points or 1.45% to 2,789.82
  • Nasdaq advanced 62.67 points or 0.77% to 8,153.58
  • Russell 2000 advanced 55.06 points or 4.62% to 1,246.73

Canada Market Closings:

  • TSX Composite advanced 240.92 points or 1.73% to 14,166.63
  • TSX 60 advanced 12.65 points or 1.49% to 859.44

Brazil Market Closing:

  • Bovespa declined 942.68 points or -1.2% to 77,681.94

ENERGY:

A huge trading range in the Crude markets today, as Crude at one point of the day was trading 12% up before turning down negative. Saudi Arabia and Russia reportedly were due to make cuts that would see 20 million barrels per day disappear from the supply. However, it later emerged that the cuts will be much less, more likely around 12 million barrels per day plus an additional 5 million barrels from those outside the group.

The oil markets had a mixed day today:

  • Crude Oil increased 2.1 USD/BBL or 8.37% to 27.1900
  • Brent increased 2.57 USD/BBL or 7.83% to 35.4100
  • Natural gas decreased 0.02 USD/MMBtu or -1.11% to 1.7770
  • Gasoline increased 0.0333 USD/GAL or 4.30% to 0.8070
  • Heating oil increased 0.0214 USD/GAL or 2.01% to 1.0861
  • Top commodity gainers: Crude Oil (8.37%), Gasoline (4.30%), Brent (7.83%), and Steel (3.46%)
  • Top commodity losers: Palm Oil (-2.89%), Live Cattle (-3.88%), Lean Hogs (-4.53%), and Feeder Cattle (-2.72%)

The above data was collected around 11.00 EST on Thursday.

BONDS:

Japan 0.02%(+0bp), US 2’s 0.24% (-2bps), US 10’s 0.76%(-0bps); US 30’s 1.39%(+3bps), Bunds -0.34% (-3bp), France 0.11% (-6bp), Italy 1.57% (-8bp), Turkey 13.44% (-44bp), Greece 1.76% (-7bp), Portugal 0.90% (-4bp); Spain 0.81% (-3bp) and UK Gilts 0.35% (-4bp).

  • US 4-Week Bill Auction increased from 0.090% to 0.190%
  • US 8-Week Bill Auction increased from 0.095% to 0.290%
  • Italian 3-Year BTP Auction increased from 0.74% to 0.86%
  • Italian 30-Year BTP Auction decreased from 2.500% to 2.490%
  • Italian 7-Year BTP Auction increased from 0.92% to 1.37%