Market Talk – August 13, 2020

ASIA:

The Chinese Communist Party (CCP) has called for protecting Xi Jinping as difficulties mount for China. Both Xi and the CCP are under pressure due to widespread domestic criticism and the poor economic situation, in addition to the debilitating punitive actions inflicted almost each week against China by the United States. An editorial published by CCP’s flagship theoretical magazine Qiu Shi on July 15, contains over 60 references to President Xi, crediting him and the CCP with guiding China to its present stage of development, and categorically stating that Xi “personally” commanded the effort to fight the coronavirus epidemic – a sensitive topic inside China and the subject of much of the criticism. It proclaims that the Chinese people are fortunate to have him as their leader, calling this “the luck of the party, the country, the people and the Chinese nation.”

India’s state-owned oil majors have stopped hiring Chinese tankers to ship their crude and petroleum products after relations deteriorated between the two countries, although the move is unlikely to impact trade flows. China-flagged and owned vessels have been barred from bidding on tenders for chartering tankers to import crude into India, or export products such as diesel out of the country. The ban followed India’s implementation last month of regulations on business with nations sharing its border, referring to China and Pakistan without naming them.

Experts reported Indian economy is heading for its worst slump in more than four decades, with the International Monetary Fund estimating the nation’s gross domestic product (GDP) will shrink 4.5% this year. Latest data from Apple Inc. and Alphabet Inc.’s Google showed mobility suffered in recent weeks after notching up an increase since May, when Asia’s third-largest economy began exiting a nationwide lockdown to contain the coronavirus outbreak. Data from private research firm, Centre for Monitoring India Economy Pvt., shows unemployment is rising continuously. The drop-in activity may be directly linked to India’s efforts to fight the virus outbreak. The nation, which is adding more than 50,000 cases daily, is seeing some of its most-industrialized states re-imposing lockdowns to stop the spread of Covid-19.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 increased 405.65 points or 1.78% to 23,249.61
  • Shanghai increased 1.46 points or 0.04% to 3,320.73
  • Hang Seng decreased 13.35 points or -0.05% to 25,230.67
  • ASX 200 decreased 41.00 points or -0.67% to 6,091.00
  • Kospi increased 5.18 points or 0.21% to 2,437.53
  • SENSEX decreased 59.14 points or -0.15% to 38,310.49
  • Nifty50 decreased 7.95 points or -0.07% to 11,300.45

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.0019 or -0.27% to 0.71458
  • NZDUSD decreased 0.0034 or -0.52% to 0.65435
  • USDJPY increased 0.13 or 0.12% to 106.97
  • USDCNY increased 0.01899 or 0.27% to 6.95239

Precious Metals:

  • Gold increased 25.38 USD/t oz. or 1.32% to 1,946.75
  • Silver increased 1.42 USD/t. oz or 5.55% to 26.972

Some economic news from last night:

Japan:

PPI (YoY) (Jul) increased from -1.6% to -0.9%

PPI (MoM) (Jul) remain the same at 0.6%

South Korea:

M2 Money supply (Jun) decreased from 8.60% to 8.00%

Australia:

MI Inflation Expectations increased from 3.2% to 3.3%

Employment Change (Jul) decreased from 210.8K to 114.7K

Full Employment Change (Jul) increased from -38.1K to 43.5K

Participation Rate (Jul) increased from 64.0% to 64.7%

Unemployment Rate (Jul) increased from 7.4% to 7.5%

New Zealand:

FPI (MoM) (Jul) increased from 0.5% to 1.2%

Some economic news from today:

China:

FDI (Jul) increased from -1.30% to 0.50%

India:

CPI (YoY) (Jul) increased from 6.23% to 6.93%

EUROPE/EMEA:

France could become the next nation to be added to the UK’s list of countries where travelers have to quarantine on their return. Prime Minister Boris Johnson has said his government will be “absolutely ruthless” in deciding whether travelers from the country must self-isolate for 14 days on arrival in the UK.

Experts suggest the German economy simply can not afford another lockdown. Many economic indicators show that the country is recovering quickly after the initial crash: Incoming orders are growing, and the business climate index for small and medium-sized companies is improving. However, it would be easy to underestimate how precarious the economic situation still is. If the economy doesn’t keep on stabilizing, we could see bankruptcies and redundancies on an unprecedented scale.

France is deploying two Rafale fighter jets and a naval frigate in the eastern Mediterranean because of tensions between Greece and Turkey. Mr Macron told Greek Prime Minister Kyriakos Mitsotakis that the French military would monitor the situation. French President Emmanuel Macron has urged Turkey to halt oil and gas exploration in disputed waters in the area. A Turkish survey ship began such a mission on Monday, angering Greece. There are also tensions around Cyprus over rival exploration rights. The Republic of Cyprus and Greece do not accept any such rights for Turkish-controlled northern Cyprus in the region.

 

The major Europe stock markets had a negative day:

  • CAC 40 decreased 30.93 points or -0.61% to 5,042.38
  • FTSE 100 decreased 94.50 points or -1.50% to 6,185.62
  • DAX 30 decreased 64.92 points or -0.50% to 12,993.71

 

The major Europe currency markets had a mixed day today:

  • EURUSD increased 0.00091 or 0.08% to 1.18036
  • GBPUSD increased 0.00025 or 0.02% to 1.30488
  • USDCHF decreased 0.00138 or -0.15% to 0.91037

 

Some economic news from Europe today:

UK:

RICS House Price Balance (Jul) increased from -13% to 12%

Thomson Reuters IPSOS PCSI (Aug) increased from 43.7 to 45.3

France:

France Thomson Reuters IPSOS PCSI (Aug) increased from 40.62 to 41.59

French Unemployment Rate (Q2) decreased from 7.8% to 7.1%

Germany:

German CPI (YoY) (Jul) decreased from 0.9% to -0.1%

German CPI (MoM) (Jul) decreased from 0.6% to -0.5%

German HICP (MoM) (Jul) decreased from 0.7% to -0.5%

German HICP (YoY) (Jul) decreased from 0.8% to 0.0%

German WPI (YoY) (Jul) increased from -3.3% to -2.6%

German WPI (MoM) (Jul) decreased from 0.6% to 0.5%

Germany Thomson Reuters IPSOS PCSI (Aug) increased from 49.23 to 50.29

Norway:

Consumer Confidence (Q3) decreased from -3.40 to -6.60

Spain:

Spanish CPI (MoM) (Jul) decreased from 0.5% to -0.9%

Spanish CPI (YoY) (Jul) decreased from -0.3% to -0.6%

Spanish HICP (MoM) (Jul) decreased from 0.4% to -1.6%

Spanish HICP (YoY) (Jul) decreased from -0.3% to -0.7%

Italy:

Italy Thomson Reuters IPSOS PCSI (Aug) increased from 36.74 to 37.82

US/AMERICAS:

The Justice Department took part in one of the largest cryptocurrency seizure operations after seizing $2 million from over 300 accounts. Three terrorist groups were found to be collecting cryptocurrency to fund their activities. “Terrorist networks have adapted to technology, conducting complex financial transactions in the digital world, including through cryptocurrencies. IRS-CI special agents in the DC cybercrimes unit work diligently to unravel these financial networks,” Secretary of the Treasury Steven Mnuchin stated.

Fannie Mae and Freddie Mac announced plans to raise fees on mortgage refinancing. Fannie Mae noted that the increased volatility in the marketplace and economic uncertainty has resulted in higher risk costs. Beginning in September, the fee will amount to 0.5% of the loan amount to the consumer’s cost.

Apartment vacancies in Manhattan reached record highs in July, according to a new report by CNBC with data collected by Douglas Elliman and Miller Samuel. Over 13,000 apartments were left vacant last month, largely due to people fleeing the city amid the coronavirus pandemic.

The US deficit rose to $2.81 trillion for the first ten months of the year, the Treasury Department reported this week. Federal government spending reached $63 billion in July alone, which  was a small sum compared to the amount paid out during the worse of the coronavirus pandemic.

US Market Closings:

  • Dow declined 80.12 points or -0.29% to 27,896.72
  • S&P 500 declined 6.92 points or -0.2% to 3,373.43
  • Nasdaq advanced 30.26 points or 0.27% to 11,042.5
  • Russell 2000 declined 3.46 points or -0.22% to 1,579.79

Canada Market Closings:

  • TSX Composite declined 45.22 points or -0.27% to 16,530.06
  • TSX 60 declined 4.5 points or -0.45% to 990.98

Brazil Market Closing:

  • Bovespa declined 1,657.19 points or -1.62% to 100,460.6

ENERGY:

The oil markets had a mixed day today:

  • Crude Oil decreased 0.33 USD/BBL or -0.77% to 42.3400
  • Brent decreased 0.36 USD/BBL or -0.79% to 45.0700
  • Natural gas increased 0.037 USD/MMBtu or 1.72% to 2.1940
  • Gasoline decreased 0.004 USD/GAL or -0.32% to 1.2370
  • Heating oil decreased 0.0124 USD/GAL or -0.99% to 1.2404

The above data was collected around 15:51 EST on Thursday.

  • Top commodity gainers: Orange Juice (4.03%), Coffee (3.12%), Silver (5.55%), and Corn (3.34%)
  • Top commodity losers: Ethanol (-9.09%), Copper (-3.06%), Brent (-0.79%), and Heating Oil (-0.99%)

The above data was collected around 15:58 EST on Thursday.

BONDS:

Japan 0.04%(+0bp), US 2’s 0.16% (+0bps), US 10’s 0.71%(+4bps); US 30’s 1.41%(+5bps), Bunds -0.41% (+7bp), France -0.12% (+5bp), Italy 1.09% (+7bp), Turkey 14.12% (+25bp), Greece 1.13% (+3bp), Portugal 0.42% (+8bp); Spain 0.40% (+16bp) and UK Gilts 0.25% (+1bp).

 

  • US 4-Week Bill Auction increased from 0.080% to 0.085%
  • US 8-Week Bill Auction remain the same at 0.100%
  • US 30-Year Bond Auction increased from 1.330% to 1.406%
  • Italian 3-Year BTP Auction decreased from 0.30% to 0.08%
  • Italian 7-Year BTP Auction decreased from 0.95% to 0.72%
  • Italian 30-Yer BTP Auction decreased from 2.490% to 1.910%