Market Talk – February 7, 2020

ASIA:

India’s Ministry of External Affairs offered help to evacuate Pakistani students from the epicenter of the deadly coronavirus outbreak in China’s Wuhan after Pakistan refused to evacuate its citizens from Wuhan. In a statement released by India’s Foreign Affairs Ministry, India’s Foreign Minister S Jaishankar told Indian Parliament on Friday that when India sent two Air India flights to bring back its students, the offer was made to all neighbors including Pakistan. However, only seven nationals of Maldives availed the offer.

India’s central government in its monetary policy meeting decided to hold the rates steady and retain an accommodative policy stance as it sought to support faltering growth and avoid high inflation levels. It is likely that the central bank may cut the rate twice (by 25bp each) at the end of 2020 during financial year 2020-21 which begins on April 1, 2020.

Singapore raised its national disease response level to orange, its second-highest level, as the number of coronavirus cases linked to China rose to 33. Singapore also released some precautionary measures for organizations. Event organizers have been advised to cancel or defer non-essential large-scale events. Employers are required to conduct regular temperature taking of their employees at least twice daily. Additionally, people are advised not to shake hands and use alternative greeting methods. Next week, Singapore’s airshow will proceed with additional measures amid the coronavirus outbreak.

The major Asian stock markets had a mixed day today:

  • Shanghai increased 9.45 points or 0.33% to 2,875.96
  • Kospi decreased 15.99 points or -0.72% to 2,211.95
  • ASX 200 decreased 26.60 points or -0.38% to 7,022.60
  • NIKKEI 225 decreased 45.61 points or -0.19% to 23,827.98
  • Hang Seng decreased 89.43 points or -0.33% to 27,404.27
  • SENSEX decreased 164.18 points or -0.40% to 41,141.85

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.0054 or 0.80% to 0.6677
  • NZDUSD decreased 0.0057 or 0.88% to 0.6402
  • USDJPY decreased 0.2060 or 0.19% to 109.7670
  • USDCNY increased 0.0283 or 0.41% to 7.0052

Precious Metals:

  • Gold increased 4.24 USD/t oz. or 0.27% to 1,573.61
  • Silver decreased 0.0937 USD/t. oz or -0.53% to 17.7388

Some economic news from last night:

China:

Exports (YoY) increased from 7.6% to 9.1%

Imports (YoY) decreased from 16.3% to -1.5%

Trade Balance (USD) decreased from 46.79B to 39.16B

Japan:

Average Cash Earnings (YoY) decreased from 0.1% to 0.0%

Household Spending (YoY) (Dec) decreased from -2.0% to -4.8%

Household Spending (MoM) (Dec) decreased from 2.6% to -1.7%

Overall wage income of employees (Dec) decreased from 0.1% to 0.0%

Overtime Pay (YoY) (Dec) decreased from -2.00% to -2.60%

Foreign Reserves (USD) (Jan) increased from 1,323.8B to 1,342.3B

Australia:

AIG Services Index (Jan) decreased from 48.7 to 46.6

New Zealand:

Inflation Expectations (QoQ) increased from 1.8% to 1.9%

Indonesia:

FX Reserves (USD) (Jan) increased from 129.20B to 131.70B

Some economic news from today:

China:

FX Reserves (USD) decreased from 3.108T to 3.088T

Japan:

Coincident Indicator (MoM) (Dec) decreased from -0.6% to 0.0%

Leading Index increased from 90.8 to 91.6

Leading Index (MoM) (Dec) increased from -0.8% to 0.8%

Hong Kong:

Foreign Reserves (USD) (Jan) increased from 441.40B to 445.90B

Singapore:

Foreign Reserves USD (MoM) (Jan) decreased from 279.5B to 278.6B

India:

FX Reserves, USD increased from 466.69B to 471.30B

EUROPE/EMEA:

The EU foreign policy chief Josep Borell met with US Secretary of State Mike Pompeo today in Washington to discuss EU-US relations. The conclusion was that the ties must be strong in order for world stability. They discussed the ongoing issue in Syria, Trump’s proposed peace plan for the Middle East, as well as the US’ tensions with Iran. Later in the day, Borell also met House Speaker Nancy Pelosi in which they further discussed the topic of Iran.

Italy has denied China’s request to restart the flights between the two countries. This may raise some diplomatic tensions between the countries. Rome posed a ban on Jan 31, 2020, that blocked flights to and from China. Beijing has been lobbying in the last few days to have the ban lifted.

The EU requested the end of the bombing in Syria by the Syrian forces as there are tremendous causalities of war. Also, the EU requested for the army to give a window of opportunity for civilians to flee.

The major Europe stock markets had a negative day today:

  • CAC 40 decreased 8.43 points or -0.14% to 6,029.75
  • FTSE 100 decreased 38.09 points, or -0.51% to 7,466.70
  • DAX 30 decreased 61.01 points or -0.45% to 13,513.81

 

The major Europe currency markets had a mixed day today:

  • EURUSD decreased 0.00363 or -0.33% to 1.09437
  • GBPUSD decreased 0.0032 or -0.25% to 1.2895
  • USDCHF increased 0.0030 or 0.31% to 0.9777

Some economic news from Europe today:

Germany:

Gemran Current Account Balance n.s.a (Dec) increased from 24.1B to 29.4B

German Exports (MoM) (Dec) increased from -2.2% to 0.1%

German Imports (MoM) (Dec) decreased from -0.6% to -0.7%

German Industrial Production (MoM) (Dec) decreased from 1.2% to -3.5%

German Trade Balance (Dec) increased from 18.5B to 19.2B

Norway:

Manufacturing Production (MoM) (Dec) increased from -0.4% to 0.0%

GDP (QoQ) (Q4) increased from 0.0% to 1.6%

GDP Mainland (QoQ) (Q4) decreased from 0.6% to 0.2%

France:

French Current Account (Dec) decreased from 0.50B to -0.60B

French Exports (Dec) decreased from 42.1B to 41.9B

French Imports (Dec) decreased from 47.5B to 46.0B

French Industrial Production (MoM) (Dec) decreased from 0.3% to -2.8%

French Non-Farm Payrolls (QoQ) (Q4) remain the same at 0.2%

French Reserve Assets Total (Jan) increased from 175,209.0M to 182,471.0M

French Trade Balance (Dec) increased from -5.4B to -4.1B

Spain:

Spanish Industrial Production (YoY) (Dec) decreased from 1.6% to 0.8%

UK:

Halifax House Price Index (MoM) (Jan) decreased from 1.8% to 0.4%

Halifax House Price Index (YoY) increased from 4.0% to 4.1%

Italy:

Italian Retail Sales (YoY) (Dec) decreased from 1.0% to 0.9%

Italian Retail Sales (MoM) (Dec) increased from -0.2% to 0.5%

US/AMERICAS:

The US Labor Department released a robust jobs report for January showing a 225,000 increase in payrolls. Analysts had expected an increase of only 158,000. The education and health services sector showed the most notable upsurge after adding an additional 72,000 positions last month. Construction rose by 44,000 positions, and leisure and hospitality increased by 36,000. The manufacturing sector, however, showed signs of decline with 12,000 fewer jobs from December, as did the retail sector which decreased by 8,300 jobs.

Canada released a strong jobs report this Friday as well, with the number of new positions doubling analysts’ expectations. According to Statistics Canada, the nation added 34,500 new positions in January. Unemployment declined to an almost historic low of 5.5%. Manufacturing is on the rise with the goods-producing sector rising by 49,100 full-time jobs. Hourly wages are up by 4.4% compared to December’s posting of 3.8%. The Bank of Canada is poised to review interest rates next month, and many now believe January’s solid jobs report will provide less of an incentive for the central bank to drop rates.

The United Kingdom recently agreed to allow Chinese company Huawei to play a role in expanding their 5G network, which has put the nation at odds with the United States. Vice President Mike Pence told reporters at CNBC today that he and Prime Minister Boris Johnson previously discussed entering a free trade deal after the UK broke away from the European Union. The vice president hinted that the free trade agreement may now be off the table due to the UK’s decision to employ Huawei. The FBI and other US agencies have pointed to intellectual theft by China as one of the biggest concerns for national security.

US Market Closings

  • Dow declined 277.26 points or -0.94% to 29,102.51
  • S&P 500 declined 18.07 points or -0.54% to 3,327.71
  • Nasdaq declined 51.64 points or -0.54% to 9,520.51
  • Russell 2000 declined 20.68 points or -1.23% to 1,656.78

Canada Market Closings

  • TSX Composite declined 102 points or -0.57% to 17,655.49
  • TSX 60 declined 5.62 points or -0.53% to 1,053.03

Brazil Market Closing

  • Bovespa declined 1,1419.68 points or -1.23% to 113,770.29

ENERGY:

Crude oil continued to slip today after no real breakthrough in negotiations with the OPEC+ to cull production due to the global slowdown.

The oil markets had a mixed day today:

  • Crude Oil decreased 0.45 USD/BBL or -0.88% to 50.5669
  • Brent decreased 0.31 USD/BBL or -0.56% to 54.5597
  • Natural gas decreased 0.0031 USD/MMBtu or -0.17% to 1.8663
  • Gasoline increased 0.0234 1USD/GAL or 1.56% to 1.5262
  • Heating oil decreased 0.0288 USD/GAL or -1.72% to 1.6474
  • Top commodity gainers: Lumber (1.80%), Cocoa (1.76%), Gasoline (1.56%), and Sugar (1.42%)
  • Top commodity losers: Bitumen (-5.42%), Rubber (-2.41%), Coal (-2.33%), and Copper (-1.87%)

The above data was collected around 13:57 EST on Friday.

BONDS:

Japan -0.03%(-1bp), US 2’s 1.42% (-3bps), US 10’s 1.60%(-5bps); US 30’s 2.06%(-6bps), Bunds -0.38% (-2bp), France -0.13% (-2bp), Italy 0.95% (-2bp), Turkey 10.52 % (+29bp), Greece 1.06% (-66bp), Portugal 0.29% (-1bp) Spain 0.29% (-1bp) and UK Gilts 0.58% (-1bp).