Market Talk – August 20, 2020

ASIA:

The US and China have agreed to go back to the negotiating table in the coming days to review the progress of their “phase one” trade deal, the Chinese commerce ministry said in a statement. Both sides will hold the “discussion over the phone,” the ministry said. It comes after talks scheduled for last Saturday were postponed due to a scheduling conflict, Reuters reported. Among other things, the agreement committed China to buy at least $200 billion more in US goods and services over two years on top of its purchases in 2017. But Beijing has fallen short so far, partly due to the coronavirus pandemic that hit Chinese demand.

India’s anti-trust regulator has dismissed a case against the instant messaging platform WhatsApp saying it had not violated any competition laws by expanding into digital payment services. The case was filed in March and accused the Facebook-owned app of misusing its dominant position in the Indian market to bundle its payment service to existing customers.

Indian Oil Corp, the country’s top refiner, is close to winning its first contract to export up to 720,000 tonnes of clean products to Mauritius under an annual deal from November, Reuters reported. IOC mostly stays away from participating in term tenders for fuel exports as the refiner sells most of its fuel in the local market, besides supplying its retail outlets in Nepal and Bhutan. This year because of falling local demand due to COVID-19 and weak margins, the company is attempting to lock in sales of its fuels.

The major Asian stock markets had a negative day today:

  • NIKKEI 225 decreased 229.99 points or -1.00% to 22,880.62
  • Shanghai decreased 44.23 points or -1.30% to 3,363.90
  • Hang Seng decreased 387.52 points or -1.54% to 24,791.39
  • ASX 200 decreased 47.60 points or -0.77% to 6,120.00
  • Kospi decreased 86.32 points or -3.66% to 2,274.22
  • SENSEX decreased 394.40 points or -1.02% to 38,220.39
  • Nifty50 decreased 96.2 points or -0.84% to 11,312.20

The major Asian currency markets had a negative day today:

  • AUDUSD decreased 0.00076 or -0.11% to 0.71797
  • NZDUSD decreased 0.00495 or -0.75% to 0.65109
  • USDJPY decreased 0.14 or -0.14% to 105.90
  • USDCNY decreased 0.01087 or -0.16% to 6.90984

Precious Metals:

  • Gold increased 6.9 USD/t oz. or 0.36% to 1,939.35
  • Silver increased 0.262 USD/t. oz or 0.98% to 27.066

Some economic news from last night:

China:

PBoC Loan Prime Rate remain the same at 3.85%

Japan:

Foreign Bonds Buying decreased from 1,442.9B to -182.2B

Foreign Investments in Japanese Stocks increased from 165.5B to 371.0B

Some economic news from today:

Hong Kong:

CPI (YoY) (Jul) decreased from 0.70% to -2.30%

EUROPE/EMEA:

Germany is about to become the latest country to trial a universal basic income, starting a three-year study of how it affects the economy and recipients’ well-being. As part of the study, 120 people will receive €1,200, or about $1,430, each month for three years — an amount just above Germany’s poverty line — and researchers will compare their experiences with another group of 1,380 people who will not receive the payments. The study, conducted by the German Institute for Economic Research, has been funded by 140,000 private donations.

Economic activity in France ran at 7% below normal levels in July, a slight improvement on June, as the construction sector neared pre-coronavirus crisis levels of activity and industrial capacity usage nudged higher, the Bank of France said. In its monthly update on business conditions, the central bank said on Monday the euro zone’s second biggest economy contracted 13.8%, in line with its forecast.

Italy has asked the European Union to tap its SURE unemployment scheme for €28.5 billion after extending furlough support to help the economy withstand the hit from the COVID-19 crisis. The Italian government approved a new stimulus package worth €25 billion, setting aside roughly half of that sum to support employment. Italy extended temporary layoff schemes for up to 18 weeks, setting conditions and requiring firms not to cut jobs to qualify for state aid.

The major Europe stock markets had a negative day:

  • CAC 40 decreased 65.99 points or -1.33% to 4,911.24
  • FTSE 100 decreased 98.64 points or -1.61% to 6,013.34
  • DAX 30 decreased 147.33 points or -1.14% to 12,830.00

The major Europe currency markets had a mixed day today:

  • EURUSD increased 0.00019 or 0.02% to 1.18508
  • GBPUSD increased 0.00791 or 0.60% to 1.31909
  • USDCHF decreased 0.00545 or -0.60% to 0.90910

Some economic news from Europe today:

Swiss:

Trade Balance (Jul) increased from 3.204B to 3.379B

Germany:

German PPI (YoY) (Jul) increased from -1.8% to -1.7%

German PPI (MoM) (Jul) increased from 0.0% to 0.2%

Norway:

Interest Rate Decision remain the same at 0.00%

Euro Zone:

Construction Output (MoM) (Jun) decreased from 29.37% to 4.04%

US/AMERICAS:

Weekly jobless claims in the US surpassed the 1 million mark again this week; last week’s figure was revised to 971,000, reflecting an additional 8,000 lost jobs. Last week marked the first time that unemployment filings dipped beneath 1 million since the beginning of the coronavirus crisis.

Former White House advisor Steve Bannon was arrested this Thursday for allegedly scamming donors through his “We Build the Wall” charity. Southern District of New York. Prosecutors believe that Bannon is responsible for funneling $25 million from donors who thought their funds were going toward building a wall between the US and Mexico. “As alleged, not only did they lie to donors, they schemed to hide their misappropriation of funds by creating sham invoices and accounts to launder donations and cover up their crimes, showing no regard for the law or the truth,” Inspector-in-Charge Philip R. Bartlett stated. Bartlett also told reporters he hopes Bannon will be used as an example to show that“no one is above the law, not even a disabled war veteran or a millionaire political strategist.”

Lyft announced that it planned to suspend all services in California at midnight due to a new law that requires the rideshare company to list drivers as employees. After announcing the drastic measure, the California appeals court offered both Lyft an Uber an extension (August 25) to file statements to appeal. Uber previously noted that it would take similar actions in California if the court ordered them to reclassify drivers as employees.

US Market Closings:

  • Dow advanced 46.85 points or 0.17% to 27,739.73
  • S&P 500 advanced 10.66 points or 0.32% to 3,385.51
  • Nasdaq advanced 118.49 points or 1.06% to 11,264.95
  • Russell 2000 declined 7.76 points or -0.49% to 1,564.3

Canada Market Closings:

  • TSX Composite advanced 29.38 points or 0.18% to 16,606.76
  • TSX 60 advanced 1.71 points or 0.17% to 995.77

Brazil Market Closing:

  • Bovespa advanced 614.15 points or 0.61% to 101,467.87

ENERGY:

The oil markets had a mixed day today:

  • Crude Oil decreased 0.18 USD/BBL or -0.42% to 42.7500
  • Brent decreased 0.55 USD/BBL or -1.21% to 44.8200
  • Natural gas decreased 0.054 USD/MMBtu or -2.22% to 2.3770
  • Gasoline increased 0.0111 USD/GAL or 0.87% to 1.2897
  • Heating oil decreased 0.0027 USD/GAL or -0.22% to 1.2434

The above data was collected around 13:34 EST on Thursday.

  • Top commodity gainers: Soda Ash (2.41%), Cotton (1.27%), Oat (1.31%), and Lean Hogs (4.98%)
  • Top commodity losers: Ethanol (-6.98%), Platinum (-2.18%), Sugar (-1.89%), and Natural Gas (-2.22%)

The above data was collected around 13:39 EST on Thursday.

BONDS:

Japan 0.03%(+0bp), US 2’s 0.14% (-0bps), US 10’s 0.64%(-3bps); US 30’s 1.38%(-4bps), Bunds -0.50% (+0bp), France -0.21% (-2bp), Italy 0.97% (-1bp), Turkey 13.85% (+27bp), Greece 1.10% (+0bp), Portugal 0.33% (-1bp); Spain 0.29% (+5bp) and UK Gilts 0.22% (-2bp).

  • US 30-Year TIPS Auction decreased from 0.261% to -0.272%
  • US 4-Week Bill Auction decreased from 0.085% to 0.080%
  • US 8-Week Bill Auction decreased from 0.100% to 0.090%