Market Talk – July 1, 2021

Posted Jul 1, 2021 by Martin Armstrong |

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ASIA:

The Indian government announced some fresh relief measures for the economy, the first such package after the second COVID-19 wave, focusing largely on extending loan guarantees and concessional credit for pandemic-hit sectors and investments to ramp up healthcare capacities. The government pegged the total financial implications of the package, which included the reiteration of some steps that were already announced such as the provision of food grains to the poor till November and higher fertilizer subsidies, at approx. 97 billion USD. Economists, however, noted that the elements of direct stimulus in the package and its upfront fiscal costs in 2021-22, are likely to be limited. More stimulus steps may be needed to shore up the economy through the rest of the year, they said.

The major Asian stock markets had a negative day today:

NIKKEI 225 decreased 84.49 points or -0.29% to 28,707.04
Shanghai decreased 2.42 points or -0.07% to 3,588.78
Hang Seng closed
ASX 200 decreased 47.40 points or -0.65% to 7,265.60
Kospi decreased 14.62 points or -0.44% to 3,282.06
SENSEX decreased 164.11 points or -0.31% to 52,318.60
Nifty50 decreased 41.50 points or -0.26% to 15,680.00

The major Asian currency markets had a mixed day today:

AUDUSD decreased 0.00304 or -0.41% to 0.74687
NZDUSD decreased 0.00182 or -0.26% to 0.69765
USDJPY increased 0.47 or 0.42% to 111.60
USDCNY increased 0.00551 or 0.09% to 6.47353

Precious Metals:

Gold increased 0.15 USD/t oz. or 0.01% to 1,769.95
Silver decreased 0.12 USD/t. oz or -0.47% to 25.983

Some economic news from last night:

China:

Caixin Manufacturing PMI (Jun) decreased from 52.0 to 51.3

Japan:

Manufacturing PMI (Jun) decreased from 53.0 to 52.4

Foreign Bonds Buying decreased from 983.5B to -1,026.5B

Foreign Investments in Japanese Stocks increased from -191.7B to -147.1B

Tankan All Big Industry CAPEX (Q2) increased from 3.0% to 9.6%

Tankan All Small Industry CAPEX (Q2) increased from -5.5% to 0.9%

Tankan Big Manufacturing Outlook Index (Q2) increased from 4 to 13

Tankan Large Manufacturers Index (Q2) increased from 5 to 14

Tankan Large Non-Manufacturers Diffusion Index (Q2) increased from -1 to 3

Tankan Large Non-Manufacturers Index (Q2) increased from -1 to 1

Tankan Small Manufacturers Diffusion Index (Q2)increased from -12 to -6

Tankan Small Manufacturing Index (Q2) increased from -13 to -7

Tankan Small Non-Manufacturers Diffusion Index (Q2) increased from -16 to -12

Tankan Small Non-Manufacturing Index (Q2) increased from -11 to -9

South Korea:

Exports (YoY) (Jun) decreased from 45.6% to 39.7%

Imports (YoY) (Jun) increased from 37.9% to 40.7%

Trade Balance (Jun) increased from 2.94B to 4.44B

Nikkei Manufacturing PMI (Jun) increased from 53.7 to 53.9

Australia:

Exports (MoM) (May) increased from 3% to 6%

Imports (MoM) (May) increased from -3% to 3%

Trade Balance (May) increased from 8.157B to 9.681B

AIG Manufacturing Index (Jun) increased from 61.8 to 63.2

Manufacturing PMI decreased from 60.4 to 58.6

New Zealand:

Building Consents (MoM) (May) decreased from 5.1% to -2.8%

Singapore:

URA Property Index (QoQ) (Q2) remain the same at 0.90%

Indonesia:

Nikkei Manufacturing PMI (Jun) decreased from 55.3 to 53.5

Some economic news from today:

India:

Nikkei Markit Manufacturing PMI (Jun) decreased from 50.8 to 48.1

M3 Money Supply increased from 9.9% to 10.7%

Indonesia:

Core Inflation (YoY) (Jun) increased from 1.37% to 1.49%

Inflation (MoM) (Jun) decreased from 0.32% to -0.16%

Inflation (YoY) (Jun) decreased from 1.68% to 1.33%

Australia:

Commodity Prices (YoY) increased from 40.7% to 49.1%

EUROPE/EMEA:

The Eurozone economy may well avoid the most pessimistic scenario envisaged at the start of the COVID-19 pandemic but it still faces risks from virus mutations, European Central Bank President Christine Lagarde said on Thursday. The ECB is beginning to debate whether to cut back on its massive bond-buying program as the economy emerges from its coronavirus-induced slump, with divisions emerging between policymakers in different countries. In its annual report published on Thursday, the ESRB said the EU’s most indebted states could ill afford a surge in yields after borrowing massively to finance their responses to the pandemic.

The major Europe stock markets had a green day:

CAC 40 increased 45.99 points or 0.71% to 6,553.82
FTSE 100 increased 87.69 points or 1.25% to 7,125.16
DAX 30 increased 72.77 points or 0.47% to 15,603.81

The major Europe currency markets had a mixed day today:

EURUSD decreased 0.00032 or -0.03% to 1.18525
GBPUSD decreased 0.00634 or -0.46% to 1.37660
USDCHF increased 0.00034 or 0.04% to 0.92543

Some economic news from Europe today:

Germany:

German Retail Sales (YoY) (May) decreased from 5.1% to -2.4%

German Retail Sales (MoM) (May) increased from -6.8% to 4.2%

German Manufacturing PMI (Jun) increased from 64.4 to 65.1

Swiss:

procure.ch PMI (Jun) decreased from 69.9 to 66.7

Retail Sales (YoY) (May) decreased from 37.7% to 2.8%

CPI (MoM) (Jun) decreased from 0.3% to 0.1%

CPI (YoY) (Jun) remain the same at 0.6%

Spain:

Spanish Manufacturing PMI (Jun) increased from 59.4 to 60.4

Italy:

Italian Manufacturing PMI (Jun) decreased from 62.3 to 62.2

Italian Monthly Unemployment Rate (May) decreased from 10.7% to 10.5%

Italian Public Deficit (Q1) increased from 5.2% to 13.1%

France:

French Manufacturing PMI (Jun) decreased from 59.4 to 59.0

Norway:

Manufacturing PMI (Jun) increased from 58.5 to 60.8

Euro Zone:

Unemployment Rate (May) decreased from 8.1% to 7.9%

Manufacturing PMI (Jun) increased from 63.1 to 63.4

UK:

Manufacturing PMI (Jun) decreased from 64.2 to 63.9

US/AMERICAS:

US weekly jobless claims declined significantly, according to the Labor Department. Initial filings reached 364,000 during the week ending on June 26, marking a 51,000 decrease from the week prior. Analysts had anticipated claims to come in at 390,000. Tomorrow, the Labor Department will release their nonfarm payrolls figures for June. According to some sources, the US workforce strengthened notably in June as the unemployment rate is expected to fall to 5.6%.

Treasury Secretary Janet Yellen announced today that 130 nations have approved her call for a global minimum tax (GMT) rate. The nations compose 90% of global GDP and the imposition will mark a drastic change in international business. Although Yellen is pushing a 15% rate, the official number has not been reported yet. “For decades, the United States has participated in a self-defeating international tax competition, lowering our corporate tax rates only to watch other nations lower theirs in response. The result was a global race to the bottom: Who could lower their corporate rate further and faster? No nation has won this race,” Yellen stated. Critics claim this will cause the US to be less competitive as companies may choose to work with nations who have not agreed. Calming concerns, China has also agreed to join the GMT.

Robinhood announced plans to launch their IPO after raising $80 billion in customer assets. The company will be listed on the Nasdaq under the symbol “HOOD” Unlike most IPOs that launch in the red, Robinhood posted a net income of $7.45 million in 2020 on a net revenue of $949 million. That is a drastic increase from the $107 million loss the company experienced in 2019 on a net revenue of $278 million. The company is aiming to raise $100 million in its initial offering.

US Market Closings:

Dow advanced 130.63 points or 0.38% to 34,633.14
S&P 500 advanced 22.3 points or 0.52% to 4,319.80
Nasdaq advanced 18.42 points or 0.13% to 14,522.38
Russell 2000 advanced 18.8 points or 0.81% to 2,329.34

Canada Market Closings:

TSX Composite declined 5.44 points or -0.03% to 20,165.58
TSX 60 declined 1.07 points or -0.09% to 1,209.15

Brazil Market Closing:

Bovespa declined 1,135.47 points or -0.9% to 125,666.19

ENERGY:

The oil markets had a mixed day today:

Crude Oil increased 1.45 USD/BBL or 1.97% to 74.9200
Brent increased 1.07 USD/BBL or 1.43% to 75.6900
Natural gas decreased 0.042 USD/MMBtu or -1.15% to 3.6080
Gasoline increased 0.0163 USD/GAL or 0.73% to 2.2581
Heating oil increased 0.0222 USD/GAL or 1.04% to 2.1505

The above data was collected around 11:31 EST on Thursday

Top commodity gainers: Crude Oil (1.97%), Sugar (1.93%), Palm Oil (3.20%) and Steel (1.78%)
Top commodity losers: Rubber (-3.51%), Bitumen (-1.17%), Live Cattle (-0.88%), and Natural Gas (-1.15%)

The above data was collected around 11:38 EST on Thursday.

BONDS:

Japan 0.04%(-1bp), US 2’s 0.25%(+0%), US 10’s 1.4815%(+1.35bps); US 30’s 2.0870%(-0.00%), Bunds -0.2000% (+0.3bp), France 0.1300% (-0.4bp), Italy 0.8084% (-1.59bp), Turkey 16.79% (+11bp), Greece 0.8340% (+0.7bp), Portugal 0.389% (-1.9bp); Spain 0.409% (-1.2bp) and UK Gilts 0.729% (+1.2bp).