Market Talk – July 13, 2020

ASIA:

Google will pump in $10 billion in India over the next 5-7 years. The money will be used to invest in local companies and build more localized products. It’s the largest commitment by a global technology major to the country. Google CEO Pichai had an interaction with Prime Minister Narendra Modi to announce this fund which was named as Google For India Digitization fund.

China issued sanctions targeted at US Senators Ted Cruz and Marco Rubio, US Representative Chris Smith, Ambassador at Large for International Religious Freedom Sam Brownback, and the US Congressional-Executive Commission.

Foxconn plans to invest up to $1 billion to expand a factory in southern India where the Taiwanese contract manufacturer assembles Apple iPhones, Reuters reported. The move, the scale of which has not previously been reported, is part of a quiet and gradual production shift by Apple away from China as it navigates disruptions from a trade war between Beijing and Washington and the coronavirus crisis.

The major Asian stock markets had a green day today:

  • NIKKEI 225 increased 493.93 points or 2.22% to 22,784.74
  • Shanghai increased 59.96 points or 1.77% to 3,443.29
  • Hang Seng increased 44.71 points or 0.17% to 25,772.12
  • ASX 200 increased 58.30 points or 0.98% to 5,977.50
  • Kospi increased 35.81 points or 1.67% to 2,186.06
  • SENSEX increased 99.36 points or 0.27% to 36,693.69
  • Nifty50 increased 34.65 points or 0.32% to 10,802.70

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.00048 or -0.07% to 0.69414
  • NZDUSD decreased 0.00296 or -0.45% to 0.65417
  • USDJPY increased 0.32 or 0.30% to 107.23
  • USDCNY decreased 0.00813 or -0.12% to 7.00087

Precious Metals:

  • Gold increased 4.10 USD/t oz. or 0.23% to 1,803.05
  • Silver increased 0.36 USD/t. oz or 1.94% to 19.0755

Some economic news from last night:

New Zealand:

FPI (MoM) (Jun) increased from -0.8% to 0.5%

Some economic news from today:

Japan:

Tertiary Industry Activity Index (MoM) increased from -7.7% to -2.1%

India:

CPI (YoY) (Jun) increased from 5.84% to 6.09%

EUROPE/EMEA:

Real output in the EU is only expected to return to pre-Covid levels in 2022, according to data from the International Monetary Fund (IMF) on Monday, a pace that could accelerate if a vaccine is found quickly or drag longer in the event of significant new waves of infection, still feared for the winter flu season. Europe’s high-debt countries, which often see debt burdens increase during difficult periods and stabilize but not fall during prosperous years, are likely to bear the brunt of the social impact of unemployment and demand falls that characterize the current crisis, with social distancing likely to dog the pace of recovery until the pandemic ends or is more effectively contained.

Rishi Sunak, the chancellor, has unveiled what is effectively an emergency coronavirus budget, pledging new measures worth up to £30bn that are intended to help protect jobs when the current furlough scheme runs out and the economic crash starts to send unemployment soaring. The job retention bonus will pay firms £1,000 if they retain furloughed staff, provided they are kept on until January.

Care home staff has been excluded from a post-Brexit fast-track visa system for health workers, in a move that critics say could prove “an unmitigated disaster” and may increase the risk of spreading coronavirus. Confirming there would be no special treatment for carers coming from the EU or the rest of the world, the government said it hoped Britons would fill a shortfall of around 120,000 workers, equating to 10% of all posts. Currently, 17% of care jobs are filled by foreign citizens.

Germany has passed through the deepest part of the economic trough brought on by the coronavirus pandemic, the country’s economic ministry said on Monday, with activity increasing but capacity still underutilized. The return of the automotive sector to production after

essentially coming to a halt in April is the key driver of thawing industrial production, with the construction sector expanding at a modest 0.5%.

The major Europe stock markets had a green day:

  • CAC 40 increased 85.75 points or 1.73% to 5,056.23
  • FTSE 100 increased 80.78 points or 1.33% to 6,176.19
  • DAX 30 increased 166.26 points or 1.32% to 12,799.97

 

The major Europe currency markets had a mixed day today:

  • EURUSD increased 0.0047 or 0.42% to 1.13461
  • GBPUSD decreased 0.0068 or -0.53% to 1.25546
  • USDCHF increased 0.0003 or 0.03% to 0.94145

Some economic news from Europe today:

Germany:

German WPI (MoM) (Jun) increased from -0.6% to 0.6%

German WPI (YoY) (Jun) increased from -4.3% to -3.3%

US/AMERICAS:

Dr. Anthony Fauci, America’s spokesman on the coronavirus, has been discredited by top White House officials. “Dr. Fauci has a good bedside manner with the public, but he has been wrong about everything I have ever interacted with him on,” trade advisor Peter Navarro told the Washington Post. Daniel Scavino, the White House’s deputy chief of staff for communications, posted a political cartoon referring to him as “Dr. Faucet” and claiming he is attempting to drown the US economy. Fauci’s recent remarks dismissing the low mortality rate have particularly angered White House officials. Due to his public image, among other factors, it is unknown whether President Trump could fully dismiss Fauci. According to a CNN report, the two men have not spoken in weeks.

China has placed sanctions on Senators Marco Rubio and Ted Cruz as retribution for their remarks regarding China’s treatment of the Uighur Muslim population. “The U.S. actions seriously interfere in China’s internal affairs, seriously violate the basic norms of international relations and seriously damage Sino-U.S. relations,”  Chinese foreign ministry spokeswoman Hua Chunying stated this Monday. Last week, the Trump administration implemented sanctions on three top Chinese Communist Party officials due to the alleged human rights abuses. According to Reuters, nearly one million Muslims are imprisoned in Xijiang.

Biotech company Moderna shares rose 14.65% today after the company announced they expect to have a vaccine approved by early 2021 and are poised to join the Nasdaq. The Wall Street Journal reported Nasdaq’s announcement that the company will “become a component of the Nasdaq-100 Index, the Nasdaq-100 Equal Weighted Index, and the Nasdaq-100 Ex-Tech Sector Index prior to market open on July 20.”

Prime Minister Justin Trudeau announced plans to extend the emergency wage subsidy program until December 2020. The subsidy provides up to 75% of a worker’s wages (C$847 maximum) for employees at eligible companies. Over C$18.01 billion has been provided to 252,370 companies, but the government’s fiscal and economic snapshot suggests the program will cost C$82.3 billion.

US Market Closings:

  • Dow advanced 10.5 points or 0.04% to 26,085.8
  • S&P 500 declined 29.82 points or -0.94% to 3,155.22
  • Nasdaq declined 226.6 points or -2.13% to 10,390.84
  • Russell 2000 declined 19.11 points or -1.34% to 1,403.57

Canada Market Closings:

  • TSX Composite declined 74.41 points or -0.47% to 15,639.41
  • TSX 60 declined 3.63 points or -0.38% to 941.72

Brazil Market Closing:

  • Bovespa declined 1,334.77 points or -1.33% to 98,697.06

ENERGY:

The oil markets had a negative day today:

  • Crude Oil decreased 0.92 USD/BBL or -2.27% to 39.6300
  • Brent decreased 0.97 USD/BBL or -2.24% to 42.2700
  • Natural gas decreased 0.09 USD/MMBtu or -5.17% to 1.7250
  • Gasoline decreased 0.03 USD/GAL or -2.25% to 1.2526
  • Heating oil decreased 0.03 USD/GAL or -2.09% to 1.2164

The above data was collected around 16:25 EST on Monday.

  • Top commodity gainers: Platinum (3.39%), Oat (3.29%), Bitumen (3.52%), and Steel (2.62%)
  • Top commodity losers: Wheat (-2.66%), Natural Gas (-5.17%), Crude Oil (-2.27%), and Gasoline (-2.25%)

The above data was collected around 16:30 EST on Monday.

BONDS:

Japan 0.03%(+1bp), US 2’s 0.16% (+1bps), US 10’s 0.65%(+2bps); US 30’s 1.35%(+2bps), Bunds -0.41% (+6bp), France -0.10% (+5bp), Italy 1.29% (+1bp), Turkey 12.31% (-8bp), Greece 1.23% (+13bp), Portugal 0.46% (+3bp); Spain 0.45% (+2bp) and UK Gilts 0.19% (+4bp).

  • US 3-Month Bill Auction decreased from 0.150% to 0.145%
  • US 6-Month Bill Auction decreased from 0.165% to 0.145%
  • French 12-Month BTF Auction increased from -0.559% to -0.557%
  • French 3-Month BTF Auction decreased from -0.551% to -0.555%
  • French 6-Month BTF Auction increased from -0.557% to -0.552%