Market Talk – January 11, 2022

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ASIA:

China’s real estate sector is having a rocky start in 2022, as some of the country’s most high-profile developers struggle to shake off a crisis that has been growing for months. This week, two major credit rating agencies downgraded Shanghai-based developer Shimao Group further into junk territory. The company has been grappling with mounting debt and is considering selling some properties to reduce its debt load. Moody’s on Monday cut Shimao’s rating to B2 citing “elevated” liquidity risks, a large amount of debt due in the near term, and weakening access to funding.

 

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 decreased 256.08 points or -0.90% to 28,222.48
  • Shanghai decreased 26.08 points or -0.73% to 3,567.44
  • Hang Seng decreased 7.48 points or -0.03% to 23,739.06
  • ASX 200 decreased 57.00 points or -0.77% to 7,390.10
  • Kospi increased 0.66 points or 0.02% to 2,927.38
  • SENSEX increased 221.26 points or 0.37% to 60,616.89
  • Nifty50 increased 52.45 points or 0.29% to 18,055.75

 

 

The major Asian currency markets had a mixed day today:

  • AUDUSD increased 0.00175 or 0.24% to 0.71974
  • NZDUSD increased 0.00073 or 0.11% to 0.67725
  • USDJPY increased 0.16 or 0.14% to 115.44
  • USDCNY decreased 0.00354 or -0.06% to 6.37710

 

Precious Metals:

  • Gold increased 16.07 USD/t oz. or 0.89% to 1,817.48
  • Silver increased 0.302 USD/t. oz or 1.34% to 22.753

 

Some economic news from last night:

Japan:

Foreign Reserves (USD) (Dec) remain the same at 1,405.8B

South Korea:

Current Account (Nov) increased from 6.95B to 7.16B

Australia:

Exports (MoM) (Nov) increased from -3% to 2%

Imports (MoM) (Nov) increased from -2% to 6%

Retail Sales (MoM) (Nov) increased from 4.9% to 7.3%

Trade Balance (Nov) decreased from 10.781B to 9.423B

Indonesia:

Motorbike Sales (YoY) decreased from 95.60% to 67.40%

Retail Sales (YoY) (Nov) increased from 6.5% to 10.8%

 

Some economic news from today

Japan:

Coincident Indicator (MoM) (Nov) increased from 1.1 to 3.8%

Leading Index (MoM) (Nov) increased from 1.3% to 1.5%

Leading Index increased from 101.5 to 103.0

 

 

EUROPE/EMEA:

UK inflation will run at more than double the Bank of England’s two per cent target for a whole year, reveals fresh forecasts published today.

The rate of price increases will peak at 6.7 per cent this April, lifted higher by the energy bill cap being hoisted around 50 per cent, according to investment bank BNP Paribas.

October’s 2021 official inflation rate hit 4.2 per cent. BNP Paribas predict the rate will not fall below four per cent until November this year, meaning the cost of living will remain at least double the Bank’s target for an entire year.

The major Europe stock markets had a green day:

  • CAC 40 increased 67.61 points or 0.95% to 7,183.38
  • FTSE 100 increased 46.12 points or 0.62% to 7,491.37
  • DAX 30 increased 173.54 points or 1.10% to 15.941.81

 

The major Europe currency markets had a mixed day today:

  • EURUSD increased 0.00368 or 0.32% to 1.13677
  • GBPUSD increased 0.00442 or 0.33% to 1.36237
  • USDCHF decreased 0.00341 or -0.37% to 0.92381

 

 

Some economic news from Europe today:

Spain:

Spanish Industrial Production (YoY) (Nov) increased from -0.7% to 4.8%

Italy:

Italian Retail Sales (MoM) (Nov) decreased from 0.2% to -0.4%

Italian Retail Sales (YoY) (Nov) increased from 4.0% to 12.5%

UK:

Labour Productivity (Q3) decreased from 0.1% to -1.4%

BRC Retail Sales Monitor (YoY) (Dec) decreased from 1.8% to 0.6%

US/AMERICAS:

Rate hikes are coming, as Fed Chairman Jerome Powell indicated today before the US Senate Committee on Banking, Housing and Urban Affairs. The central bank will cease their asset purchasing program in March, and plans to gradually raise rates over the course of the year. Powell said the Fed may allow the balance sheet to run off in an attempt to normalize policy. In an attempt to control inflation, rates will increase by a quarter percentage point incrementally three or four times throughout 2022. Powell said the Fed is prepared to use its tool to control inflation, and will raise rates if the problem persists.

Powell seemed pleased with the workforce recovery as the unemployment rate now sits at 3.9%, close to the pre-pandemic level of 3.5%. If inflation does become persistent, if these high levels of inflation get entrenched in our economy and people’s thinking, then inevitably that will lead to much higher monetary policy from this,” he said. “That could lead to a recession and that will be bad for workers.”

US Market Closings:

  • Dow advanced 182.89 points or 0.51% to 36,251.76
  • S&P 500 advanced 42.81 points or 0.92% to 4,713.1
  • Nasdaq advanced 210.62 points or 1.41% to 15,153.45
  • Russell 2000 declined 22.85 points or 1.05% to 2,194.00

 

Canada Market Closings:

  • TSX Composite advanced 202.49 points or 0.96% to 21,274.81
  • TSX 60 advanced 10.57 points or 0.82% to 1,293.13

 

Brazil Market Closing:

  • Bovespa advanced 1,833.78 points or 1.8% to 103,778.98

 

 

ENERGY:

 

The oil markets had a green day today:

 

  • Crude Oil increased 2.97 USD/BBL or 3.80% to 81.1900
  • Brent increased 2.71 USD/BBL or 3.35% to 83.5800
  • Natural gas increased 0.075 USD/MMBtu or 1.84% to 4.1540
  • Gasoline increased 0.0763 USD/GAL or 3.35% to 2.3517
  • Heating oil increased 0.0741 USD/GAL or 2.98% to 2.5617

 

The above data was collected around 13:58 EST on Tuesday

 

  • Top commodity gainers: Crude Oil (3.80%) and Brent (3.35%), Gasoline (3.35%), Zinc (3.83%)
  • Top commodity losers: Coal (-2.96%), Methanol (-3.16%), Rice (-0.52%), and Oat (-0.56%)

 

The above data was collected around 14:02 EST on Tuesday.

 

 

BONDS:

 

Japan 0.16%(+2.3bp), US 2’s 0.8945% (-0.00%), US 10’s 1.7640% (+0.9bps); US 30’s 2.0781% (-0.01%), Bunds -0.021% (+1.5bp), France 0.301% (+1.6bp), Italy 1.385% (+10bp), Turkey 23.57% (+0bp), Greece 1.584% (+1.6bp), Portugal 0.629% (+4.2bp); Spain 0.684% (+2.89bp) and UK Gilts 1.169% (-2.2bp).