Market Talk – July 15, 2020

ASIA:

The Chinese government has said it is “strongly opposed” to the UK’s “groundless” ban of Huawei’s 5G kit. Foreign Ministry spokeswoman Hua Chunying added Beijing would “take measures to safeguard” the “legitimate interests” of Chinese companies.

The US has welcomed the move of Britain to ban Huawei 5G kit and announced new restrictions against the firm. Secretary of State Mike Pompeo said the US would curb travel access for some of Huawei’s workers. China has also vowed to retaliate after the US ended Hong Kong’s preferential trade status and imposed sanctions on officials who crackdown on rights. Beijing condemned Mr. Trump’s decision, saying it would impose sanctions on relevant people and entities in the US.

India’s wholesale price gauge contracted for a third month in June, data released by the Ministry of Commerce and Industry showed on Tuesday, with prices falling 1.81% from a year earlier. The annual retail inflation, the main gauge for the central bank to monitor prices, however, rose to 6.09% in June, data released on Monday showed.

India’s auto sales volume will not return to the peak levels seen in 2018 for another three-to-four years, an industry body executive said on Tuesday, as the COVID-19 pandemic has aggravated disruption in a sector already hit by weak demand. In the fiscal year that began on April 1, sales of cars, sport utility vehicles (SUVs), motorbikes, and trucks have already fallen 75% from a year ago to about 1.5 million vehicles, data released by the Society of Indian Automobile Manufacturers (SIAM) showed.

Google is in advanced talks to buy a $4 billion stake in Jio platforms, the digital arm of Reliance Industries Limited, seeking to join rival Facebook Inc. in chasing growth in a promising internet and e-commerce market, Bloomberg reported. Global technology leaders from Facebook to Intel Corp. are looking for multiple ways to grab a slice of the Indian market, where millions of first-time internet users are added every month.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 increased 358.49 points or 1.59% to 22,945.50
  • Shanghai decreased 53.31 points or -1.56% to 3,361.30
  • Hang Seng increased 3.69 points or 0.01% to 25,481.58
  • ASX 200 increased 111.80 points or 1.88% to 6,052.90
  • Kospi increased 18.27 points or 0.84% to 2,201.88
  • SENSEX increased 18.75 points or 0.05% to 36,051.81
  • Nifty50 increased 10.85 points or 0.10% to 10,618.20

The major Asian currency markets had a mixed day today:

  • AUDUSD increased 0.00192 or 0.27% to 0.70017
  • NZDUSD increased 0.00284 or 0.43% to 0.65697
  • USDJPY decreased 0.28 or -0.26% to 106.95
  • USDCNY decreased 0.01793 or -0.26% to 6.98366

Precious Metals:

  • Gold increased 2.00 USD/t oz. or 0.11% to 1,811.25
  • • Silver increased 0.13 USD/t. oz or 0.66% to 19.4070

Some economic news from last night:

Japan:

Reuters Tankan Index (Jul) increased from -46 to -44

BoJ Interest Rate Decision remain the same at -0.10%

South Korea:

Export Price Index (YoY) (Jun) increased from -8.4% to -6.0%

Import Price Index (YoY) (Jun) increased from -13.0% to -7.3%

Unemployment Rate (Jun) decreased from 4.5% to 4.3%

Exports (YoY) (Jun) remain the same at -10.9%

Imports (YoY) (Jun) increased from -11.4% to -11.2%

Trade Balance (Jun) decreased from 3.67B to 3.63B

M2 Money supply (May) increased from 7.90% to 8.60%

Australia:

Westpac Consumer Sentiment (Jul) decreased from 6.3% to -6.1%

New Zealand:

Visitor Arrivals (MoM) increased from -98.9% to 82.3%

 

Some economic news from today:

Indonesia:

Export Growth (YoY) (Jun) increased from -28.95% to 2.28%

Import Growth (YoY) (Jun) increased from -42.20% to -6.36%

Trade Balance (Jun) decreased from 2.09B to 1.27B

Car Sales (YoY) (Jun) increased from -95.80% to -78.80%

India:

Exports (USD) (Jun) increased from 19.05B to 21.91B

Imports (USD) (Jun) decreased from 22.20B to 21.11B

Trade Balance (Jun) increased from -3.15B to -0.79B

EUROPE/EMEA:

The UK’s fast-food chains and coffee shops have set out the details of how customers can benefit from VAT cuts on food and drink that have come into force in the hospitality sector. McDonald’s, Nando’s, Pret a Manger and Starbucks are among the brands promising price reductions on their menus after the chancellor, Rishi Sunak, announced VAT would be reduced from 20% to 5% from 15 July until 12 January 2021.

The UK home secretary, Priti Patel, has said she is looking at giving young Hong Kongers a new right to come to the UK. Britain has made an offer of citizenship to 2.9 million people in Hong Kong eligible for a British national overseas (BNO) passport, but this excludes anyone born after 1997.

The German government is preparing legislation that will hold companies operating in the country to account for ensuring that social and environmental minimum standards are upheld in their supply chains and by production partners abroad. The ministers for labor and for development cooperation, Hubertus Heil and Gerd Müller, jointly advocated the introduction of a supply chain act after a survey of thousands of large companies revealed that only a small fraction already apply and monitor compliance with minimum standards of upstream business partners.

The French government has promised a further 100 billion euros to finance France’s economic recovery from the coronavirus pandemic- on top of 460 billion already allocated. French President in a live television interview to mark the July 14 holiday was unapologetic about the unprecedented economic reforms such as labor market liberalization, implemented since he was elected in 2017. But he acknowledged that he had failed to reconcile a divided nation and that France would face a surge in unemployment as a result of the pandemic.

The major Europe stock markets had a green day:

  • CAC 40 increased 101.52 points or 2.03% to 5,108.98
  • FTSE 100 increased 112.90 points or 1.83% to 6,292.65
  • DAX 30 increased 233.62 points or 1.84% to 12,930.98

The major Europe currency markets had a green day today:

  • EURUSD increased 0.00012 or 0.01% to 1.14084
  • GBPUSD increased 0.00246 or 0.20% to 1.25888
  • USDCHF increased 0.00591 or 0.63% to 0.94546

Some economic news from Europe today:

UK:

Core CPI (YoY) (Jun) increased from 1.2% to 1.4%

Core CPI MoM (MoM) (Jun) increased from 0.1% to 0.2%

Core PPI Output (MoM) (Jun) remain the same at 0.0%

Core PPI Output (YoY) (Jun) decreased from 0.6% to 0.5%

Core RPI (YoY) (Jun) remain the same at 1.3%

Core RPI (MoM) (Jun) increased from 0.0% to 0.2%

CPI (MoM) (Jun) increased from 0.0% to 0.1%

CPI (YoY) (Jun) increased from 0.5% to 0.6%

CPI, n.s.a (Jun) increased from 108.50 to 108.60

PPI Input (MoM) (Jun) increased from 0.9% to 2.4%

PPI Input (YoY) (Jun) increased from -9.4% to -6.4%

PPI Output (MoM) (Jun) increased from -0.2% to 0.3%

PPI Output (YoY) (Jun) increased from -1.2% to -0.8%

RPI (YoY) (Jun) increased from 1.0% to 1.1%

RPI (MoM) (Jun) increased from -0.1% to 0.2%

Norway:

Trade Balance (Jun) decreased from -1.2B to -10.2B

Italy:

Italian CPI (YoY) (Jun) remain the same at -0.2%

Italian CPI (MoM) (Jun) increased from -0.2% to 0.1%

Italian CPI Ex Tobacco (MoM) (Jun) increased from -0.4% to -0.3%

Italian HICP (YoY) (Jun) decreased from -0.3% to -0.4%

Italian HICP (MoM) (Jun) increased from -0.3% to 0.0%

Euro Zone:

Reserve Assets Total (Jun) increased from 895.81B to 904.94B

US/AMERICAS:

Full-time minimum wage workers do not earn enough to secure housing anywhere in the US, according to the National Low Income Housing Coalition’s (NLIHC) annual “Out of Reach” report. A two-bedroom apartment is out of reach for all minimum wage workers, and only 95% could afford a one-bedroom apartment. According to the NLIHC, a minimum wage worker would need to clock in 97 hours per week to afford a two-bedroom unit, or 79 hours to afford a one-bedroom unit. That would entail working over two full-time jobs, plus overtime pay, to secure housing.

Dallas Federal Reserve President Robert Kaplan spoke optimistically to reporters at CNBC about an economic recovery in 2021. “In ’21, we will see an above-trend growth, and we will continue to grind down the unemployment rate,” Kaplan told reporters. “The question is when you get to a normalized economy,” he continued, saying that controlling the spread of the virus will be key for a rebound. As it stands, the Dallas Fed president expects the US economy to contract by up to -5% this year.

The CDC will no longer control America’s coronavirus data, as the Trump administration has ordered hospitals to send their information to a federal centralized database. Health and Human Services (HHS) Assistant Secretary for Public Affairs Michael Caputo insists the move will lead to “faster” data processing.

Planned Parenthood is now backing Democratic presidential candidate Joe Biden. Planned Parenthood Votes is launching a $45 million campaign to promote the Biden’s campaign.

The Bank of Canada announced today that it will take two years for the economy to recover to pre-coronavirus levels. Although the central bank believes the aftermath of the pandemic will minimal by mid-2022, the risk of a second wave of the virus tilted risks to the downside. Canada’s oil sector has been hit hard by the pandemic due to lower demand. The central bank is now predicting that Canada’s GDP will decline by -7.8% this year before rising 5.1% in 2021. Canada’s central bank also predicts that the US GDP will decline -8.1% in 2020 before rising 3.4% the following year. Global GDP is expected to decline -5.2% in 2020 before rebounding by 5.2% in 2021.

US Market Closings:

  • Dow advanced 227.51 points or 0.85% to 26,870.1
  • S&P 500 advanced 29.04 points or 0.91% to 3,226.56
  • Nasdaq advanced 61.92 points or 0.59% to 10,550.49
  • Russell 2000 advanced 50.01 points or 3.5% to 1,478.27

Canada Market Closings:

  • TSX Composite advanced 154.88 points or 0.97% to 16,063.33
  • TSX 60 advanced 7.7 points or 0.8% to 966.01

Brazil Market Closing:

  • Bovespa advanced 1,350.31 points or 1.34% to 101,790.54

ENERGY:

The oil markets had a mixed day today:

  • Crude Oil increased 0.77 USD/BBL or 1.91% to 41.0600
  • Brent increased 0.79 USD/BBL or 1.84% to 43.6900
  • Natural gas increased 0.022 USD/MMBtu or 1.25% to 1.7760
  • Gasoline decreased 0.0011 USD/GAL or -0.09% to 1.2594
  • Heating oil increased 0.0229 USD/GAL or 1.88% to 1.2435

The above data was collected around 14:55 EST on Wednesday.

  • Top commodity gainers: Ethanol (21.72%), Live Cattle (3.14%), Sugar (5.04%), and Wheat (5.05%)
  • Top commodity losers: Rice (-25.53%), Lumber (-6.52%), Oat (-8.33%), and Corn (-2.69%)

The above data was collected around 15:00 EST on Wednesday.

BONDS:

Japan 0.03%(+1bp), US 2’s 0.15% (-0bps), US 10’s 0.62%(+1bps); US 30’s 1.32%(+2bps), Bunds -0.45% (+3bp), France -0.14% (-1bp), Italy 1.27% (-0bp), Turkey 12.34% (+3bp), Greece 1.30% (+1bp), Portugal 0.45% (+2bp); Spain 0.43% (+9bp) and UK Gilts 0.16% (+1bp).

 

  • German 10-Year Bund Auction decreased from -0.380% to -0.460%