Posted Feb 22, 2022 by Martin Armstrong
India and the United Arab Emirates signed a broad trade and investment pact on Friday that will eventually cut all tariffs on each other’s goods and aims to increase annual trade between the two nations to $100 billion within five years. The virtual signing ceremony marks the first trade deal sealed by the Gulf state since it began pursuing such pacts last September in a bid to strengthen its status as a business hub. The Comprehensive Economic Partnership Agreement (CEPA), as it is known, is expected to boost annual bilateral non-oil trade from $60 billion to $100 billion within the next three to five years, India’s Prime Minister’s office said.
Japan’s manufacturing activity expanded at the slowest pace in five months in February as output contracted, underscoring the prolonged impact that global supply chain disruptions are having on the world’s third-largest economy. Activity in the services sector shrank at the fastest rate since May 2020 as demand weakened after the country saw coronavirus infections spike to a record due to the Omicron variant. The au Jibun Bank Flash Japan Manufacturing Purchasing Managers’ Index (PMI) fell to a seasonally adjusted 52.9 from a final 55.4 in the previous month. A reading below 50 indicates contraction from the previous month, above 50 expansion. The au Jibun Bank Flash Services PMI Index dropped to a seasonally adjusted 42.7, down from the prior month’s final of 47.6. The au Jibun Bank Flash Japan Composite PMI, which is calculated by using both manufacturing and services, dropped to 44.6 from January’s final of 49.9, marking the lowest level since June 2020’s 40.8.
The major Asian stock markets had a negative day today:
- NIKKEI 225 decreased 461.26 points or -1.71% to 26,449.61
- Shanghai decreased 33.47 points or -0.96% to 3,457.15
- Hang Seng decreased 650.07 points or -2.69% to 23.520.00
- ASX 200 decreased 72.30 points or -1.00% to 7,161.30
- Kospi decreased 37.01 points or -1.35% to 2,706.79
- SENSEX decreased 382.91 points or -0.66% to 57,300.68
- Nifty50 decreased 114.45 points or -0.67% to 17,092.20
The major Asian currency markets had a mixed day today:
- AUDUSD increased 0.00451 or 0.63% to 0.72229
- NZDUSD increased 0.00584 or 0.87% to 0.67475
- USDJPY increased 0.41 or 0.36% to 114.944
- USDCNY decreased 0.00776 or -0.12% to 6.32156
- Gold decreased 2.32 USD/t oz. or -0.12% to 1,903.31
- Silver increased 0.320 USD/t. oz or 1.34% to 24.258
Some economic news from last night:
Corporate Services Price Index (CSPI) (YoY) increased from 1.1% to 1.2%
Consumer Confidence (Feb) decreased from 104.4 to 103.1
Some economic news from today
BoJ Core CPI (YoY) decreased from 0.9% to 0.8%
CPI (YoY) (Jan) decreased from 2.40% to 1.20%
The prospect of a third successive interest rate rise from the Bank of England is looming larger after news that the easing of Covid restrictions is generating growth and inflationary pressure. Evidence of the strongest performance by the private sector since last summer left economists convinced Threadneedle Street would again increase borrowing costs when its monetary policy committee meets next month. While most analysts predicted an interest rate rise of 0.25 percentage points to 0.75%, some said the latest snapshot of activity from the IHS Markit and the Chartered Institute of Procurement and Supply (Cips) purchasing managers’ index meant a 0.5 point move to 1% was possible.
The Spanish economy ended 2021 on a strong note. GDP growth came in at 2% quarter-on-quarter, which was higher than expectations. Due to the Covid-19 Omicron wave consumption contracted, but investment and exports grew sharply. The economy is now about 4% smaller than pre-pandemic levels. This contrasts with the eurozone as a whole, which reached its pre-pandemic level in 4Q21. Survey data, however, points to a weakening in the first quarter of this year caused by Omicron. But from the second quarter onwards we expect the economy to grow faster again. The main reasons for this are a vibrant labour market, a boost to public investment, and a continued recovery of the tourism sector. High inflation, however, is currently a threat, even though we think it will come down over the year.
The major Europe stock markets had a mixed day:
- CAC 40 decreased 0.74 points or -0.01% to 6,787.60
- FTSE 100 increased 9.88 points or 0.13% to 7,494.21
- DAX 30 decreased 38.12 points or -0.26% to 14,693.00
The major Europe currency markets had a green day today:
- EURUSD increased 0.00334 or 0.30% to 1.13311
- GBPUSD increased 0.00049 or 0.04% to 1.35909
- USDCHF increased 0.00496 or 0.54% to 0.92080
Some economic news from Europe today:
Public Sector Net Borrowing (Jan) decreased from 16.08B to -3.65B
Public Sector Net Cash Requirement (Jan) decreased from 18.072B to -21.984B
CBI Industrial Trends Orders (Feb) decreased from 24 to 20
Italian CPI (MoM) (Jan) increased from 0.4% to 1.6%
Italian CPI (YoY) (Jan) increased from 3.9% to 4.8%
Italian CPI Ex Tobacco (MoM) (Jan) increased from 3.8% to 4.7%
Italian HICP (MoM) (Jan) decreased from 0.5% to 0.0%
Italian HICP (YoY) (Jan) increased from 4.2% to 5.1%
German Business Expectations (Feb) increased from 95.8 to 99.2
German Current Assessment (Feb) increased from 96.2 to 98.6
German Ifo Business Climate Index (Feb) increased from 96.0 to 98.9
President Biden officially announced this Tuesday that there has been “an invasion” of Ukraine by Russia. The president is responding by placing sanctions on VEB, a major Russian bank, as well as its military bank. This means that the banks cannot use the USD for transactions. Individuals will be targeted as well as economic sanctions deepen.
Americans must now wait to collect Social Security as lawmakers raised the age of retirement to 67. Americans may begin collecting payments at 62 but will face a penalty of 5/9 of 1% monthly until they reach 67 for three years. After three years, benefits will be reduced further to 5/12 of 1% monthly. This comes as the Social Security Administration announced that 2022 will be their highest payout year on record. The cost-of-living adjustment or COLA will be 5.9%, an average increase of $92, with the average person receiving $1,657 per month, which is not enough to retire on alone.
US Market Closings:
- Dow declined 482.57 points or -1.42% to 33,596.61
- S&P 500 declined 44.11 points or -1.01% to 4,304.76
- Nasdaq declined 166.55 points or -1.23% to 13.381.52
- Russell 2000 declined 29.16 points or -1.45% to 1,980,17
Canada Market Closings:
- TSX Composite declined 100.38 points or -0.48% to 20,907.82
- TSX 60 declined 6.19 points or -0.49% to 1,267.42
Brazil Market Closing:
- Bovespa advanced 1,166.5 points or 1.04% to 112,891.8
OPEC+ should stick to its current agreement to add 400,000 barrels of oil per day each month to output, ministers of Arab oil-producing countries said on Sunday as they gathered in Saudi Arabia, rejecting calls to pump more to ease pressure on prices. The Organization of the Petroleum Exporting Countries and allies led by Russia, a group known as OPEC+, agreed on Feb. 2 to stick to moderate rises in oil output, citing persistent uncertainty. On Wednesday, the International Energy Agency urged OPEC+ to narrow the gap between its oil production targets and actual output.
The oil markets had a mixed day today:
- Crude Oil increased 0.9200 USD/BBL or 1.00% to 92.9200
- Brent increased 1.43 USD/BBL or 1.50% to 96.8200
- Natural gas increased 0.148 USD/MMBtu or 3.34% to 4.5790
- Gasoline decreased 0.0293 USD/GAL or -1.06% to 2.7245
- Heating oil decreased 0.0343 USD/GAL or -1.20% to 2.8225
The above data was collected around 13:30 EST on Tuesday
- Top commodity gainers: Natural Gas (3.34%) and Bitumen (5.26%), Wheat (3.24%), Palm Oil (2.91%)
- Top commodity losers: Oat (-3.01%), Feeder Cattle (-1.09%), Cotton(-1.80%) and Heating Oil (-1.20%)
The above data was collected around 13:40 EST on Tuesday.
Japan 0.194%(-1.5bp), US 2’s 1.52% (+0.094%), US 10’s 1.9216% (-0.52bps); US 30’s 2.22% (+0.025%), Bunds 0.233% (+3.3bp), France 0.726% (+1bp), Italy 1.934% (+1.8bp), Turkey 21.00% (+21bp), Greece 2.575% (+3.2bp), Portugal 1.158% (+3.2bp); Spain 1.276% (+2.6bp) and UK Gilts 1.4720% (+6.8bp).