Market Talk – December 22, 2020

ASIA:

Following a US announcement of new visa restrictions on Chinese officials, China hit back with reciprocal actions Tuesday against unnamed American officials in the latest back-and-forth. The Foreign Ministry also called on President Donald Trump not to sign into law legislation approved by Congress on Tibet. The visa action came in response to a State Department announcement Monday that said the US will deny visas to Chinese Communist Party officials whose policies or actions are aimed at repressing religious groups, ethnic minorities, dissidents, or others.

The High Court of Delhi on Monday left it to regulators to decide the fate of the $3.38 billion sale of Future Group’s retail assets to Reliance. Industries Ltd, but allowed US partner Amazon.com Inc to raise objections to it. Hammered by the coronavirus pandemic, Future sold its retail assets to oil-to-clothes conglomerate Reliance in August. Still, Amazon said the deal breached agreements Future made with the US e-commerce leader in 2019. If the deal with Reliance goes ahead, it will delay Amazon’s goal of capturing India’s massive grocery market that Forrester Research estimates will be worth $740 billion a year by 2024.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 decreased 278.03 points or -1.04% to 26,436.39
  • Shanghai decreased 63.79 points or -1.86% to 3,356.78
  • Hang Seng decreased 187.43 points or -0.71% to 26,119.25
  • ASX 200 decreased 70.30 points or -1.05% to 6,599.60
  • Kospi decreased 44.97 points or -1.62% to 2,733.68
  • SENSEX increased 452.73 points or 0.99% to 46,006.69
  • Nifty50 increased 137.90 points or 1.03% to 13,466.30

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.00563 or -0.74% to 0.75231
  • NZDUSD decreased 0.00654 or -0.92% to 0.70332
  • USDJPY increased 0.36 or 0.35% to 103.67
  • USDCNY increased 0.00659 or 0.10% to 6.54192

Precious Metals:

  • Gold decreased 9.06 USD/t oz. or -0.48% to 1,867.15
  • Silver decreased 0.60 USD/t. oz or -2.29% to 25.563

Some economic news from last night:

South Korea:

PPI (MoM) (Oct) decreased from 0.2% to 0.0%

PPI (YoY) (Oct) increased from -0.4% to -0.3%

Australia:

Retail Sales (MoM) increased from 1.4% to 7.0%

EUROPE/EMEA:

Countries across the globe shut their borders to Britain on Monday due to fears of a highly infectious new coronavirus strain, causing travel chaos and raising the prospect of food shortages days before Britain is set to leave the European Union. India, Pakistan, Poland, Spain, Switzerland, Sweden, Russia, Jordan, and Hong Kong suspended travel for Britons after Prime Minister Boris Johnson said a mutated variant of the virus had been identified in the country. Saudi Arabia, Kuwait, and Oman closed their borders completely.

Sweden’s economy will contract less than previously expected this year, the government said in a forecast, but a second wave of the pandemic will crimp the recovery in 2021. Gross domestic product is seen falling 2.9% in 2020, the government said, better than the 4.6% contraction predicted in its September forecast. However, the government cut its forecast for next year to show growth of 3.0% against its previous expectation of a rebound of 4.1%.

The major European stock markets had a green day:

  • CAC 40 increased 73.52 points or 1.36% to 5,466.86
  • FTSE 100 increased 36.84 points or 0.57% to 6,453.16
  • DAX 30 increased 171.81 points or 1.30% to 13,418.11

The major European currency markets had a mixed day today:

  • EURUSD decreased 0.00705 or -0.58% to 1.21687
  • GBPUSD decreased 0.01229 or -0.91% to 1.33320
  • USDCHF increased 0.00367 or 0.41% to 0.88905

Some economic news from Europe today:

UK:

Business Investment (QoQ) (Q3) increased from -26.5% to 9.4%

Business Investment (YoY) (Q3) increased from -26.1% to -19.2%

Current Account (Q3) decreased from -2.8B to -15.7B

GDP (QoQ) (Q3) increased from -19.8% to 16.0%

GDP (YoY) (Q3) increased from -21.5% to -8.6%

Public Sector Net Borrowing (Nov) increased from 20.94B to 30.84B

Public Sector Net Cash Requirement (Nov) increased from 20.027B to 23.518B

Steel Production (Metric Ton) (Nov) increased from 600.10K to 702.20K

Germany:

GfK German Consumer Climate (Jan) decreased from -6.8 to -7.3

Norway:

Unemployment Rate (Oct) remain the same at 5.2%

US/AMERICAS:

Beijing firmly opposes a US proposal that would remove Chinese companies from American indexes unless they adhere to strict auditing. “It will seriously hinder the normal listing of Chinese companies and distort the basic market economy rules that the US has always touted,” foreign ministry spokesman Wang Wenbin stated. Wenbin called the proposal “an unjustified political crackdown” aimed to hurt China, but stated that it would likely backfire and hurt both the Chinese and US economies.

Over 42 million student loan recipients in the US are expected to resume payments next month after the new coronavirus stimulus package excluded extending the interest-free payment period. At the beginning of the pandemic in March, the US Department of Education signed a moratorium period until October, which President Trump extended until December. Currently, 25% of borrowers are in default or delinquency, according to CNBC, with the average person owing around $400 per month. The US student debt deficit has now reached $1.7 trillion. Incoming President-elect Joe Biden originally stated that he would consider forgiving up to $50,000 in student loans for individuals earning less than six-figures. Later, Biden proposed forgiving $10,000 in student debt for all borrowers, and a significant portion of debt for anyone earning under $125,000 who attended a historically black school.

After the US deemed Vietnam a potential currency manipulator last week, experts anticipate that President Trump will impose trade tariffs on the nation before leaving office. Vietnam exported around $65 billion in goods to the US during the first 10 months of 2020, similar to last year’s amount of $66.6 billion. According to Reuters, tariffs could potentially impact over $400 billion worth of apparel, footwear, furniture, household, and electronics.

US GDP grew at an annualized rate of 33.4% last quarter, according to the Commerce Department. The revised figure represents a stronger recovery from the 33.1% increase reported in November. Although the figures look promising, this comes on the tail-end of the worst quarterly contraction on record of -31.4% in Q2. As cases and coronavirus restrictions rise, the prospect of a strong Q4 looks less optimistic.

US Market Closings:

  • Dow declined 200.94 points or -0.67% to 30,015.51
  • S&P 500 declined 7.66 points or -0.21% to 3,687.26
  • Nasdaq advanced 65.4 points or 0.51% to 12,807.92
  • Russell 2000 advanced 19.55 points or 0.99% to 1,989.88

Canada Market Closings:

  • TSX Composite advanced 51.57 points or 0.29% to 17,552.46
  • TSX 60 advanced 3.96 points or 0.38% to 1,046.36

Brazil Market Closing:

  • Bovespa advanced 813.61 points or 0.7% to 116,636.18

ENERGY:

The oil markets had a mixed day today:

  • Crude Oil decreased 0.45 USD/BBL or -0.94% to 47.2900
  • Brent decreased 0.58 USD/BBL or -1.14% to 50.3300
  • Natural gas increased 0.084 USD/MMBtu or 3.11% to 2.7890
  • Gasoline decreased 0.0168 USD/GAL or -1.23% to 1.3436
  • Heating oil decreased 0.012 USD/GAL or -0.81% to 1.4654

The above data was collected around 11:52 EST on Tuesday

  • Top commodity gainers: Natural Gas (3.11%), Lumber (1.33%), Wheat (0.82%) and Orange Juice (0.93%)
  • Top commodity losers: Soda Ash (-2.86%), Rubber (-15.75%), Bitumen (-2.83%), and Silver (-2.29%)

The above data was collected around 11:59 EST on Tuesday.

BONDS:

Japan 0.01%(+0bp), US 2’s 0.12%(-0.006%), US 10’s 0.92%(-2bps); US 30’s 1.66%(-0.026%), Bunds -0.59% (-1bp), France -0.35% (-1bp), Italy 0.53% (-1bp), Turkey 12.55% (-4bp), Greece 0.67% (+0bp), Portugal 0.06% (+2bp); Spain 0.06% (+1bp) and UK Gilts 0.19% (-2bp).