Market Talk – August 31, 2021

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ASIA:

China’s businesses and the broader economy came under increasing pressure in August as factory activity expanded at a slower pace while the services sector slumped into contraction, raising the likelihood of more near-term policy support to boost growth. The world’s second-biggest economy staged an impressive recovery from a coronavirus-battered slump, but momentum has weakened recently due to domestic COVID-19 outbreaks, high raw material prices, slowing exports, tighter measures to tame hot property prices, and a campaign to reduce carbon emissions. The official manufacturing Purchasing Manager’s Index (PMI) fell to 50.1 in August from 50.4 in July, data from the National Bureau of Statistics (NBS) showed on Tuesday, holding just above the 50-point mark that separates growth from contraction.

The Bank of Japan (BOJ) won’t be able to promote “green” activities in a major way without the Japanese government coming up with credible strategies to achieve the net zero target, former BOJ policy board member Sayuri Shirai said. Lending to banks alone will not be enough to promote green activity, even if the maturity of these loans can be renewed unlimitedly, Shirai told the Reuters Global Markets Forum (GMF) on Monday. Former Reserve Bank of India governor Raghuram Rajan told GMF last week the onus of promoting sustainable investments should lie with governments and not central banks.

 

The major Asian stock markets had a green day today:

  • NIKKEI 225 increased 300.25 points or 1.08% to 28,089.54
  • Shanghai increased 15.79 points or 0.45% to 3,543.94
  • Hang Seng increased 339.45 or 1.33% to 25,878.99
  • ASX 200 increased 30.40 points or 0.41% to 7,534.90
  • Kospi increased 55.08 points or 1.75% to 3,199.27
  • SENSEX increased 662.63 points or 1.16% to 57,552.39
  • Nifty50 increased 201.15 points or 1.19% to 17,132.20

 

 

The major Asian currency markets had a mixed day today:

  • AUDUSD increased 0.00152 or 0.21% to 0.73079
  • NZDUSD increased 0.00455 or 0.65% to 0.70429
  • USDJPY increased 0.12 or 0.11% to 110.07
  • USDCNY decreased 0.00957 or -0.15% to 6.45518

 

Precious Metals:

  • Gold decreased 2.11 USD/t oz. or -0.12% to 1,808.06
  • Silver decreased 0.174 USD/t. oz or -0.72% to 23.886

 

Some economic news from last night:

China:

Chinese Composite PMI (Aug) decreased from 52.4 to 48.9

Manufacturing PMI (Aug) decreased from 50.4 to 50.1

Non-Manufacturing PMI (Aug) decreased from 53.3 to 47.5

Japan:

Jobs/applications ratio (Jul) increased from 1.13 to 1.15

Unemployment Rate (Jul) decreased from 2.9% to 2.8%

Industrial Production (MoM) (Jul) decreased from 6.5% to -1.5%

Industrial Production forecast 1m ahead (MoM) (Aug) increased from -1.1% to 3.4%

Industrial Production forecast 2m ahead (MoM) (Sep) decreased from 1.7% to 1.0%

South Korea:

Industrial Production (YoY) (Jul) decreased from 11.5% to 7.9%

Industrial Production (MoM) (Jul) decreased from 2.3% to 0.4%

Retail Sales (MoM) decreased from 1.4% to -0.6%

Service Sector Output (MoM) (Jul) decreased from 1.6% to 0.2%

Australia:

MI Inflation Gauge (MoM) increased from 0.4% to 0.5%

Building Approvals (MoM) (Jul) decreased from -5.5% to -8.6%

Current Account (Q2) increased from 18.9B to 20.5B

Housing Credit (Jul) decreased from 0.7% to 0.6%

Net Exports Contribution (Q2) decreased from -0.6% to -1.0%

Private House Approvals (Jul) increased from -11.8% to -5.8%

Private Sector Credit (MoM) (Jul) decreased from 0.9% to 0.7%

New Zealand:

Building Consents (MoM) (Jul) decreased from 4.0% to 2.1%

ANZ Business Confidence (Aug) decreased from -3.8 to -14.2

NBNZ Own Activity (Aug) decreased from 26.3% to 19.2%

Singapore:

Bank Lending (Jul) increased from 703.9B to 788.5B

 

Some economic news from today:

India:

Federal Fiscal Deficit (Jul) increased from 2,742.45B to 3,211.43B

GDP Quarterly (YoY) (Q1) increased from 1.6% to 20.1%

Infrastructure Output (YoY) (Jul) increased from 9.3% to 9.4%

Japan:

Construction Orders (YoY) (Jul) decreased from 32.3% to -3.4%

Household Confidence (Aug) decreased from 37.5 to 36.7

Housing Starts (YoY) (Jul) increased from 7.3% to 9.9%

Hong Kong:

M3 Money Supply (Jul) decreased from 10.9% to 1.7%

Retail Sales (YoY) (Jul) decreased from 5.8% to 2.9%

 

EUROPE/EMEA:

The UK’s financial watchdog is warning banks to review their potential exposure to financial crime in Afghanistan amid fears of resurgent terrorist activity in the country following the withdrawal of foreign troops. Hours after the last evacuation flight left Kabul airport, the Financial Conduct Authority issued a notice reminding financial firms to guard against money-laundering risks after US military operations were wound down and the Taliban took control of the country. The FCA said banks and other financial firms were expected to monitor and assess customer transactions with individuals, groups, or businesses in Afghanistan to “mitigate the risks [of] their firm being exploited to launder money or finance terrorism.”

Inflation in Eurozone has hit a decade high. Consumer prices rose by 3% year-on-year in August, well over the European Central Bank’s 2% target. Economists predicted the ECB would not be swayed from continuing its pandemic stimulus program, although the jump in prices — led by energy and industrial goods — could cause some anxiety.

In the commodities world, aluminum hit its highest level in a decade, boosted by strong demand and concerns that China might cut output in an attempt to lower energy use and emissions. Shares in Zoom have tumbled over 15% on fears that its growth is slowing as workers return to the office, while UK software firm Blue Prism surged by a third as it holds talks with American private equity firms about a possible offer.

 

The major Europe stock markets had a negative day:

  • CAC 40 decreased 7.12 points or -0.11% to 6,680.18
  • FTSE 100 decreased 28.31 points or -0.40% to 7,119.70
  • DAX 30 decreased 52.22 points or -0.33% to 15,835.09

 

The major Europe currency markets had a mixed day today:

  • EURUSD increased 0.00021 or 0.02% to 1.17990
  • GBPUSD decreased 0.0013 or -0.09% to 1.37460
  • USDCHF decreased 0.00098 or -0.11% to 0.91622

 

Some economic news from Europe today:

Norway:

Central Bank Currency Purchase (Sep) remain the same at -1,700.0M

Credit Indicator (YoY) (Jul) remain the same at 5.3%

France:

French HICP (YoY) increased from 1.5% to 2.4%

French Consumer Spending (MoM) (Jul) decreased from 0.3% to -2.2%

French CPI (YoY) increased from 1.2% to 1.9%

French CPI (MoM) increased from 0.1% to 0.6%

French GDP (QoQ) (Q2) increased from 0.0% to 1.1%

French HICP (MoM) increased from 0.1% to 0.7%

French PPI (MoM) (Jul) increased from 1.1% to 1.3%

Germany:

German Unemployment Change (Aug) increased from -90K to -53K

German Unemployment Rate (Aug) decreased from 5.6% to 5.5%

German Unemployment (Aug) decreased from 2.591M to 2.538M

German Unemployment n.s.a. (Aug) decreased from 2.590M to 2.578M

Italy:

Italian GDP (QoQ) (Q2) remain the same at 2.7%

Italian GDP (YoY) (Q2) remain the same at 17.3%

Italian CPI (YoY) (Aug) increased from 1.9% to 2.1%

Italian CPI (MoM) (Aug) remain the same at 0.5%

Italian HICP (YoY) (Aug) increased from 1.0% to 2.6%

Italian HICP (MoM) (Aug) increased from -1.0% to 0.3%

Italian PPI (MoM) (Jul) increased from 1.4% to 2.1%

Italian PPI (YoY) (Jul) increased from 9.1% to 10.4%

Spain:

Spanish Current account (Jun) decreased from 0.90B to 0.28B

UK:

BoE Consumer Credit (Jul) decreased from 0.302B to -0.042B

M4 Money Supply (MoM) (Jul) decreased from 0.6% to 0.1%

Mortgage Approvals (Jul) decreased from 80.27K to 75.15K

Mortgage Lending (Jul) decreased from 17.73B to -1.37B

Net Lending to Individuals decreased from 18.0B to -1.4B

Euro Zone:

Core CPI (YoY) increased from 0.7% to 1.6%

Core CPI (MoM) increased from -0.4% to 0.3%

CPI (YoY) (Aug) increased from 2.2% to 3.0%

CPI (MoM) increased from -0.1% to 0.4%

CPI, n.s.a (Aug) increased from 107.60 to 108.00

HICP ex Energy & Food (YoY) (Aug) increased from 0.9% to 1.6%

HICP ex Energy and Food (MoM) increased from -0.3% to 0.3%

US/AMERICAS:

Home prices in the US soared to record highs in June, according to the S&P CoreLogic Case-Shiller national home price index. Average home prices spiked 18.6% in June from 16.8% in May, surpassing any reading noted since the agency began collecting data in 1987. Compared to the last housing boom in 2006, home prices are now 41% higher. The 10-city composite advanced 18.5% from 16.6% the month prior, while the 20-city composite rose 19.1% from 17.1%. Phoenix (29.3%), San Diego (27.1%), and Seattle (25%) saw the most drastic increases, although all cities in the 20-city composite saw notable gains. Prospective buyers are competing for limited inventory as the National Association of Realtors noted a 12% YoY contraction in supply from last July.

Enhanced unemployment benefits for unemployed US citizens are set to expire this weekend. Around 8.8 million individuals will lose their benefits in full, according to the think tank Century Foundation. An additional three million individuals will have their aid reduced to $300 per week, with the average recipient seeing $321 weekly. Although the Biden administration encouraged the aid to continue, numerous analysts believe removing enhanced benefits will promote workforce participation amid an ongoing labor shortage.

Federal Reserve Vice Chairman Richard Clarida supports Chairman Jerome Powell’s stance on beginning to taper the buying program this year. Both members would like to see “robust” job gains before easing their purchase program, and Clarida is optimistic that will occur, citing “substantial” progress. “I don’t think it takes 800,000 per month, but robust gains,” the vice chairman stated in response to the economy adding an average of 800,000 positions per month over the last three months.

US Market Closings:

  • Dow declined 39.11 points or -0.11% to 35,360.73
  • S&P 500 declined 6.11 points or -0.13% to 4,522.68
  • Nasdaq declined 6.66 points or -0.04% to 15,259.24
  • Russell 2000 advanced 7.78 points or 0.34% to 2,273.77

 

Canada Market Closings:

  • TSX Composite declined 12.03 points or -0.06% to 20,582.94
  • TSX 60 declined 2.22 points or -0.18% to 1,231.33

 

Brazil Market Closing:

  • Bovespa declined 958.93 points or -0.8% to 118,781.03

 

ENERGY:

 

The oil markets had a mixed day today:

 

  • Crude Oil decreased 0.34 USD/BBL or -0.49% to 68.8700
  • Brent decreased 0.42 USD/BBL or -0.57% to 72.9900
  • Natural gas increased 0.057 USD/MMBtu or 1.32% to 4.3620
  • Gasoline decreased 0.0217 USD/GAL or -0.94% to 2.2910
  • Heating oil decreased 0.008 USD/GAL or -0.37% to 2.1323

 

The above data was collected around 11:57 EST on Tuesday

 

  • Top commodity gainers: Natural Gas (1.32%) and Steel (1.02%), Aluminum (1.69%) and Tin (1.08%)
  • Top commodity losers: Corn (-2.22%), Cocoa (-1.41%), Oat (-6.62%), and Sugar (-1.83%)

 

The above data was collected around 12:02 EST on Tuesday.

 

BONDS:

 

Japan 0.024%(+0bp), US 2’s 0.2100%(+0.006%), US 10’s 1.3054%(+2.52bps); US 30’s 1.9235%(+0.03%),Bunds -0.3830% (+5.6bp), France -0.0280% (+5.5bp), Italy 0.7106% (+9.8bp), Turkey 16.63% (-2bp), Greece 0.7480% (+5bp), Portugal 0.205% (+3bp); Spain 0.344% (+13.52bp) and UK Gilts 0.6220% (+4.1bp).