Market Talk – December 19, 2022

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ASIA:

Japan’s economy, the world’s third largest, shrank less than initially estimated in the third quarter, bolstering a view that it is slowly recovering from COVID-19 doldrums even as large export markets show further signs of weakening. Separate data showed the economy had recorded its first current account deficit in eight years in October, reflecting high import costs imposed on households and businesses by a decline in the yen’s value to multi-decade lows this year. The revised 0.8 percent annualized quarterly contraction in the gross domestic product (GDP) released by the Cabinet Office on Thursday compared with economists’ median forecast for a 1.1 percent annualized decline in a Reuters poll and an early official estimate of a contraction of 1.2 percent.

 

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 decreased 289.48 points or -1.05% to 27,237.64
  • Shanghai decreased 60.74 points or -1.92% to 3,107.12
  • Hang Seng decreased 97.86 points or -0.50% to 19,352.81
  • ASX 200 decreased 14.80 points or -0.21% to 7,133.90
  • Kospi decreased 7.85 points or -0.33% to 2,352.17
  • SENSEX increased 468.38 points or 0.76% to 61,806.19
  • Nifty50 increased 151.45 points or 0.83% to 18,420.45

 

 

The major Asian currency markets had a green day today:

  • AUDUSD increased 0.00333 or 0.50% to 0.67173
  • NZDUSD increased 0.00036 or 0.06% to 0.63776
  • USDJPY increased 0.11 or 0.08% to 136.800
  • USDCNY increased 0.0056 or 0.08% to 6.98250

 

Precious Metals:

  • Gold decreased 3.51 USD/t oz. or -0.20% to 1,788.83
  • Silver decreased 0.166 USD/t. oz or -0.72% to 23.045

 

Some economic news from last night:

New Zealand:

Westpac Consumer Sentiment (Q4) decreased from 87.6 to 75.6

 

EUROPE/EMEA:

 

Many of Britain’s supermarkets, including market leader Tesco and Asda, have rationed sales, blaming the bout of bird flu that has ravaged flocks across Europe and the United States and, they say, led to a British shortage. But British farmers argue that while the outbreak is a factor, there are not enough eggs because they lose money on every box sold, forcing many to cut production and some to quit altogether. The association estimates the total UK laying flock has fallen 6% to 36.4 million over the past 12 months, suggesting even tighter supply ahead. Britain’s National Farmers Union (NFU) says the eggs shortage could be just the beginning, as the new era of costly energy and grains combined with labor shortages could bring more empty shelves unless food producers and retailers agree on fairer terms for the future.

British factories’ output and export orders slid this month, according to a survey on Monday that underlined the troubles faced by the manufacturing sector, including high inflation and a weak global economy. The Confederation of British Industry (CBI) said its gauge of manufacturing output during the three months to December fell to its lowest level since September 2020.

Italian ministers lashed out at the European Central Bank on Friday, labeling as “baffling” and “crazy” a decision to hike borrowing costs that raised the financial pressure on one of the euro zone’s most indebted countries. Three senior ministers took aim after the ECB on Thursday raised its benchmark rate by 50 basis points as widely expected and signaled further increases ahead while laying out plans to reduce its bond purchases.

 

The major Europe stock markets had a green day:

  • CAC 40 increased 20.66 points or 0.32% to 6,473.29
  • FTSE 100 increased 29.19 points or 0.40% to 7,361.31
  • DAX 30 increased 49.80 points or 0.36% to 13,942.87

 

The major Europe currency markets had a mixed day today:

  • EURUSD increased 0.00471 or 0.45% to 1.06291
  • GBPUSD increased 0.00425 or 0.35% to 1.21825
  • USDCHF decreased 0.00352 or -0.38% to 0.92998

 

Some economic news from Europe today:

UK:

CBI Industrial Trends Orders (Dec) decreased from -5 to -6

Germany:

German Business Expectations (Dec) increased from 80.2 to 83.2

German Current Assessment (Dec) increased from 93.2 to 94.4

German Ifo Business Climate Index (Dec) increased from 86.4 to 88.6

Euro Zone:

Construction Output (MoM) (Oct) increased from 0.45% to 1.27%

Wages in euro zone (YoY) (Q3) decreased from 3.20% to 2.10%

Labor Cost Index (YoY) (Q3) decreased from 3.80% to 2.90%

 

 US/AMERICAS:

Homebuilder sentiment in the US has dropped for 12 consecutive months, according to the National Association of Home Builders. Single-family housing sentiment fell by 2 points to 31 this month based on he National Association of Home Builders/Wells Fargo Housing Market Index. As with most indexes, anything beneath 50 is considered a contraction. In comparison, the index was a solid 84 in December 2021, and levels are now at a 10-year low.

According to Statistics Canada, job vacancies dropped in Q3 after reaching a high in Q2. Canadian employers were seeking to hire 959,600 employees during Q3, marking a 3.3% decline from the previous quarter. Job vacancies reached 5,4% in Q3, falling from the high of 5.7% in Q2. There are now 1.1 unemployed persons for every available job in Canada.

US Market Closings:

  • Dow declined 162.92 points or -0.49% to 32,757.54
  • S&P 500 declined 34.7 points or -0.9% to 3,817.66
  • Nasdaq declined 159.38 points or -1.49% to 10,546.03
  • Russell 2000 declined 24.84 points or -1.41% to 1,738.58

 

Canada Market Closings:

  • TSX Composite declined 242.52 points or -1.25% to 19,200.76
  • TSX 60 declined 12.27 points or -1.05% to 1,160.43

 

Brazil Market Closing:

  • Bovespa advanced 1,884.05 points or 1.83% to 104,739.75

 

ENERGY:

Oil prices rose on Monday as optimism around China relaxing its COVID-19 restrictions outweighed fears of a global recession that would weigh on energy demand. China, the world’s top crude oil importer, is experiencing its first of three expected waves of COVID-19 cases after Beijing relaxed mobility restrictions but said it plans to step up support for the economy in 2023. Brent crude gained 96 cents to $80.00 a barrel by 12:56 p.m. EST (1756 GMT), while U.S. West Texas Intermediate crude rose $1.23 to $75.52.

The oil markets had a mixed day today:

 

  • Crude Oil increased 1.901 USD/BBL or 2.56% to 76.191
  • Brent increased 1.553 USD/BBL or 1.96% to 80.593
  • Natural gas decreased 0.7169 USD/MMBtu or -10.86% to 5.8831
  • Gasoline increased 0.0507 USD/GAL or 2.38% to 2.1830
  • Heating oil decreased 0.0164 USD/GAL or -0.53% to 3.1035

 

The above data was collected around 12:16 EST on Monday                      

 

  • Top commodity gainers: Crude Oil (2.56%), Gasoline (2.38%), Rice (2.07%) and Cotton (3.98%)
  • Top commodity losers: Oat (-2.27%), Steel (-3.44%), Lumber (-2.45%) and Natural Gas (-10.86%)

 

The above data was collected around 12:36 EST Monday.

  

BONDS:

 

Japan 0.256%(+0.5bp), US 2’s 4.26% (+0.082%), US 10’s 3.592% (+11bps); US 30’s 3.64% (+0.112%), Bunds 2.208% (+4.3bp), France 2.723% (+5.4bp), Italy 4.388% (+10.8bp), Turkey 10.32% (-16bp), Greece 4.329% (+2.2bp), Portugal 3.242% (+4.7bp); Spain 3.294% (+5.2bp) and UK Gilts 3.501% (+17.4bp).