Market Talk – February 4, 2020

ASIA:

China is at risk of facing a technical recession, defined as two consecutive quarters of GDP contraction. In 2019, China’s GDP grew by 6.1%, which marked the slowest rate of growth since 1990. Today, China confirmed that the death toll due to the coronavirus has reached 425, and over 20,000 citizens have been infected by the virus.

Singapore’s manufacturing sector expanded in January, according to newly released Purchasing Managers’ Index (PMI) data. The index reached 50.3 last month, marking the second consecutive month of growth after a seven-month contraction.

The major Asian stock markets had a green day today:

  • Shanghai increased 36.68 points or 1.34% to 2783.29
  • Kospi increased 39.02 points or 1.84% to 2,157.90
  • ASX 200 increased 25.40 points or 0.37% to 6,948.70
  • NIKKEI 225 increased 112.65 points or 0.49% to 23,084.59
  • Hang Seng increased 319.00 points or 1.21% to 26,675.98
  • SENSEX increased 917.07 points or 2.30% to 40,789.38

The major Asian currency markets had a mixed day today:

  • AUDUSD increased 0.00471 or 0.70% to 0.67391
  • NZDUSD increased 0.0026 or 0.40% to 0.6486
  • USDJPY increased 0.8490 or 0.78% to 109.4620
  • USDCNY decreased 0.0252 or -0.36% to 6.98860

Precious Metals:

  • Gold decreased 24.4 USD/t oz. or -1.55% to 1,554.79
  • Silver decreased 0.1267 USD/t. oz or -0.72% to 17.5823

Some economic news from last night:

South Korea:

CPI (MoM) (Jan) increased from 0.2% to 0.6%

CPI (YoY) (Jan) increased from 0.7% to 1.5%

Japan:

Monetary Base (YoY) decreased from 3.2% to 2.9%

Australia:

RBA Interest Rate Decision (Feb) remain the same at 0.75%

New Zealand:

Building Consents (MoM) (Dec) increased from -8.4% to 9.9%

Some economic news from today:

Hong Kong:

Retail Sales (YoY) (Dec) increased from -23.6% to -19.4%

New Zealand:

GlobalDairyTrade Price Index decreased from 1.7% to -4.7%

EUROPE/EMEA:

The UK has brought forward a ban on sales of diesel, petrol and hybrid cars from 2040 to 2035 in an effort to be “virtually carbon-free” by 2050. The EU is also considering a meat tax as part of their sustainability push that could be as high as 25%.

A recent report from two prominent UK universities suggests that productivity growth over the last decade has been the worst since the industrial revolution some 250 years ago.

The EU took a stab at US President Trump’s peace plan for Israel and Palestine. The EU criticized the plan, suggesting that it does not adhere to the internationally recognized borders.

According to the FT, EU, and US car makers are weeks away from a Chinese auto parts shortage due to the coronavirus.

The major Europe stock markets had a green day today:

  • CAC 40 increased 102.54 points or 1.76% to 5,935.05
  • FTSE 100 increased 113.51 points, or 1.55% to 7,439.82
  • DAX 30 increased 236.55 points or 1.81% to 13,281.74

The major Europe currency markets had a mixed day today:

  • EURUSD decreased 0.0020 or 0.18% to 1.1043
  • GBPUSD increased 0.0040 or 0.31% to 1.3037
  • USDCHF increased 0.0036 or 0.37% to 0.9694

Some economic news from Europe today:

France:

French Government Budget Balance (Dec) increased from -113.9B to -92.8B

Spain:

Spanish Unemployment Change increased from -34.6K to 90.2K

UK:

Construction PMI (Jan) increased from 44.4 to 48.4

Italy:

Italian CPI (MoM) (Jan) remain the same at 0.2%

Italian CPI (YoY) (Jan) increased from 0.5% to 0.6%

Italian HICP (YoY) (Jan) remain the same at 0.5%

Italian HICP (MoM) (Jan) decreased from 0.2% to -1.7%

Euro Zone:

PPI (MoM) (Dec) decreased from 0.1% to 0.0%

PPI (YoY) (Dec) increased from -1.4% to -0.7%

US/AMERICAS:

The Nasdaq peaked to an all-time high this Tuesday after advancing 194.57 points (2.1%) to 9,467.97. Tesla’s stellar performance this week led the Nasdaq’s advancement after the company advanced 13.73% during today’s session. Investors have been bullish on Tesla this week with shares soaring nearly 20% during Monday’s session. Last week, the company announced a profitable Q4 that was largely due to an uptick in their Model Y production. Tesla’s market cap is now over $141 billion, which makes it the second most valuable automobile company in the world behind Toyota. Strong performances by Ebay (8.78%), Applied Materials (5.51%), and Lam Research (5.50%) also encouraged the index to push higher today.

Reminiscent of 2016, if not worse, the Iowa caucus ended with inconclusive data due to reporting delays. At the time of this writing, the results remain unclear. The Iowa Democratic Party released a statement claiming that the issue was due to “a coding issue in the reporting system.” The Democratic Party utilized a Microsoft-based app during 2016, but switched to the Shadow app this election season for unknown reasons. “We sincerely regret the delay in the reporting of the results of last night’s Iowa caucuses and the uncertainty it has caused to the candidates, their campaigns, and Democratic caucus-goers,” Shadow Inc. stated this Tuesday.

Brazil’s trade deficit reached $1.745 billion in January, according to recently released data. Exports declined by 20% last month YoY to $14.43 billion. Imports declined, albeit less sharply, by 1.3% to $16.175 billion. The Economy Ministry estimates that the country’s overall trade surplus will decline to $32 billion in 2020 compared to $46.7 billion in 2019.

US Market Closings:

  • Dow advanced 407.82 points or 1.44% to 28,807.63
  • S&P 500 advanced 48.67 points or 1.5% to 3,297.59
  • Nasdaq advanced 194.57 points or 2.1% to 9,467.97
  • Russell 2000 advanced 24.56 points or 1.5% to 1,656.76

Canada Market Closings:

  • TSX Composite advanced 132.97 points or 0.77% to 17,512.73
  • TSX advanced 9.18 points or 0.89% to 1,045.18

Brazil Market Closing:

  • Bovespa advanced 938.76 points or 2.13% to 45,047.07

ENERGY:

In 2019, 99.6% of Costa Rica’s electricity came from renewable energy. As the country is lucky enough to be surrounded by free-flowing water which accounts for around 70% of their energy source.

Crude oil continues to slip over concerns of the coronavirus; as the cases rose to over 20,000 people affected globally.

The oil markets had a mixed day today:

  • Crude Oil increased 0.12 USD/BBL or 0.24% to 50.3259
  • Brent increased 0.14 USD/BBL or 0.26% to 54.6899
  • Natural gas increased 0.0443 USD/MMBtu or 2.42% to 1.8798
  • Gasoline decreased 0.0009 1USD/GAL or -0.06% to 1.4657
  • Heating oil increased 0.0346 USD/GAL or 2.20% to 1.6084
  • Top commodity gainers: Coal (3.47%), Palladium (4.55%), Oat (2.50%), and Natural Gas (2.42%)
  • Top commodity losers: Palm Oil (-8.41%), Rubber (-1.64%), Lumber (-2.65%), and Sugar(-1.68%)

The above data was collected around 13:30 EST on Tuesday.

BONDS:

Japan -0.05%(+1bp), US 2’s 1.42% (+7bps), US 10’s 1.61%(+9bps); US 30’s 2.08%(+8bps), Bunds -0.41% (+3bp), France -0.15% (+2bp), Italy 0.96% (+0bp), Turkey 10.03 % (+1bp), Greece 1.19% (-55bp), Portugal 0.27% (+4bp) Spain 0.28% (+4bp) and UK Gilts 0.57% (+5bp).

  • Japan 10-Year JGB Auction decreased from -0.010% to -0.051%