Market Talk – July 17, 2020

ASIA:

China has accused the Trump administration of being “very pathetic” amid reports that Washington is considering a sweeping visa ban on Communist party members. Donald Trump is reportedly reviewing a proposal to refuse entry for all members of China’s ruling party – which encompasses a who’s who of the political and business elite in the world’s most populous nation.

India and the United States on Thursday discussed the “possibility” of a free trade pact, India’s Commerce and Industry Ministry said in a statement. India’s Commerce and Industry Minister Piyush Goyal and U.S. Commerce Secretary Wilbur Ross exchanged views “on the ongoing India-U.S. trade discussions and appreciated the substantial progress made by both sides on most of the outstanding issues,” the statement said.

Former RBI governor Raghuram Rajan said non-performing assets of India’s banking sector are likely to witness an unprecedented increase in the next six months and the sooner the problem is recognized the better it would be. The outbreak of COVID-19 and subsequent lockdown to curb the spread of the disease has hit businesses hard and many of them are facing difficulty in servicing debt.

Singapore’s economy is still in a “dire” situation due to the coronavirus pandemic, with unemployment and corporate bankruptcies likely to increase in the coming months, the country’s central bank said Thursday. The Southeast Asian economy entered a technical recession after shrinking by 41.2% in the second quarter compared with the previous quarter, according to advance estimates released this week by the Ministry of Trade and Industry. Its official forecast is for the economy to contract between 4% and 7% this year — which would be the most severe downturn since the country’s independence in 1965.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 decreased 73.94 points or -0.32% to 22,696.42
  • Shanghai increased 4.03 points or 0.13% to 3,214.13
  • Hang Seng increased 118.48 points or 0.47% to 25,089.17
  • ASX 200 increased 22.70 points or 0.38% to 6,033.60
  • Kospi increased 17.43 points or 0.80% to 2,201.19
  • SENSEX increased 548.46 points or 1.50% to 37,020.14
  • Nifty50 increased 161.75 points or 1.51% to 10,901.70

The major Asian currency markets had a mixed day today:

  • AUDUSD increased 0.00219 or 0.31% to 0.69970
  • NZDUSD increased 0.00178 or 0.27% to 0.65572
  • USDJPY decreased 0.28 or -0.26% to 107.00
  • USDCNY decreased 0.00532 or -0.08% to 6.99043

Precious Metals:

  • Gold increased 13.37 USD/t oz. or 0.74% to 1,810.00
  • Silver increased 0.1955 USD/t. oz or 1.02% to 19.3655

Some economic news from last night:

New Zealand:

Business NZ PMI (Jun) increased from 39.7 to 56.3

Singapore:

Non-Oil Exports (YoY) (Jun) increased from -4.60% to 16.10%

Non-Oil Exports (MoM) (Jun) increased from -4.60% to 0.50%

Trade Balance increased from 4.520B to 4.800B

Some economic news from today:

India:

Bank Loan Growth decreased from 6.2% to 6.1%

Deposit Growth remain the same at 11.0%

FX Reserves, USD increased from 513.25B to 516.36

EUROPE/EMEA:

British Prime Minister Boris Johnson opened the door on Friday for more people to return to their offices in an effort to kick-start the UK’s flagging economy, which has shrunk by one quarter since March. He said that anyone will now be allowed to use public transport and that from August 1, employers will have more discretion on bringing staff back to the office.

France INSEE said the country’s economy has likely contracted -17% in Q2 over the quarter, unchanged from June’s forecast. Looking ahead, the economy is expected to rebound by 19% in Q3, and a further 3% in Q4. By December economic activity would be around 1-6% below pre-coronavirus levels. For 2020 as a whole, INSEE expected GDP to contract -9%, worst since record began in 1948.

German Economy Minister Peter Altmaier defended Berlin’s refusal to take a tougher line on China’s crackdown in Hong Kong, saying those in favor of a more strident response were ignoring the economic consequences of confronting Beijing. Critics argue that Berlin is following a cynical course by closing its eyes to human rights abuses in order to preserve German jobs and prosperity — especially in the auto industry, the core of the German economy.

The major Europe stock markets had a mixed day:

  • CAC 40 decreased 15.86 points or -0.31% to 5,069.42
  • FTSE 100 increased 39.61 points or 0.63% to 6,290.30
  • DAX 30 increased 44.64 points or 0.35% to 12,919.61

The major Europe currency markets had a mixed day today:

  • EURUSD increased 0.00499 or 0.44% to 1.14384
  • GBPUSD increased 0.00013 or 0.01% to 1.25605
  • USDCHF decreased 0.00657 or -0.69% to 0.93879

Some economic news from Europe today:

Italy:

Italian Industrial New Orders (MoM) (May) increased from -31.6% to 42.2%

Italian Industrial New Orders (YoY) (May) increased from -48.6% to -34.7%

Italian Industrial Sales (YoY) (May) increased from -47.20% to -25.90%

Italian Industrial Sales (MoM) (May) increased from -29.8% to 41.9%

Spain:

Spanish Trade Balance increased from -1.52B to 0.12B

Euro Zone:

Construction Output (MoM) (May) increased from -18.35% to 27.86%

Core CPI (YoY) (Jun) decreased from 0.9% to 0.8%

Core CPI (MoM) (Jun) increased from 0.0% to 0.3%

CPI (YoY) (Jun) increased from 0.1% to 0.3%

CPI (MoM) (Jun) increased from -0.1% to 0.3%

CPI ex Tobacco (MoM) (Jun) increased from -0.1% to 0.3%

CPI ex Tobacco (YoY) (Jun) increased from 0.0% to 0.1%

HICP ex Energy & Food (YoY) (Jun) remain the same at 1.1%

HICP ex Energy and Food (MoM) (Jun) increased from 0.0% to 0.3%

US/AMERICAS:

Secretary of State Mike Pompeo declared China “was aware of human-to-human transmission” of COVID-19 “before they shared this with the world.” Furthermore, Pompeo claims that the World Health Organization (WHO) was also aware of the risks, but protected China by shielding the world from early information. “The World Health Organization itself was co-opted into the same effort to deny the world the knowledge it needed to respond to this threat, to this threat from the virus that emanated from Wuhan, China,” Pompeo told reporters at Fox News. A long way from the amicable US-China trade pact, the secretary said that the Chinese Communist Party presents a threat to the world, and nations should reconsider conducting business with China.

Canadian Prime Minister Justin Trudeau published a joint statement in the Washington Post’s “Global Opinions,” calling for a worldwide collaborative effort to ensure all countries have access to the future coronavirus vaccine. The statement was backed by President Sahle-Work Zewde of Ethiopia, President Moon Jae-in of the Republic of Korea, Prime Minister Jacinda Ardern of New Zealand, President Cyril Ramaphosa of South Africa (also chairperson of the African Union), Prime Minister Pedro Sánchez Pérez-Castejón of Spain, Prime Minister Stefan Löfven of Sweden, and Prime Minister Elyes Fakhfakh of the Republic of Tunisia. “While global cooperation in terms of resources, expertise, and experiences is paramount for developing a vaccine, manufacturing and distributing it while leaving no one behind will truly put global cooperation to the test,” the message stated. “This cannot be a race with one winner,” they wrote. “When one or more vaccines are successful, it must be a win for all of us.”

According to a national survey by the Canadian Federation of Independent Business, nearly 25% of workers said they do not wish to return to work. The Canada Emergency Response Benefit (CERB) package, which provides individuals with around C$2,000 per month, seems to be playing a large role in the sentiment. Of those polled, 62% cited that they preferred to stay on the government’s payroll instead of returning to work; 47% voiced health concerns, and 27% noted childcare concerns.

US Market Closings:

  • Dow declined 62.76 points or -0.23% to 26,671.95
  • S&P 500 advanced 9.16 points or 0.28% to 3,224.73
  • Nasdaq advanced 29.36 points or 0.28% to 10,503.19
  • Russell 2000 advanced 5.76 points or 0.39% to 1,473.32

Canada Market Closings:

  • TSX Composite advanced 98.98 points or 0.62% to 16,123.48
  • TSX 60 advanced 5.2 points or 0.54% to 970.07

Brazil Market Closing:

  • Bovespa advanced 2,334.98 points or 2.32% to 102,888.25

ENERGY:

The oil markets had a negative day today:

  • Crude Oil decreased 0.07 USD/BBL or -0.17% to 40.6800
  • Brent decreased 0.2 USD/BBL or -0.46% to 43.1700
  • Natural gas decreased 0.015 USD/MMBtu or -0.87% to 1.7080
  • Gasoline decreased 0.01 USD/GAL or -0.81% to 1.2249
  • Heating oil decreased 0.0057 USD/GAL or -0.46% to 1.2233

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

  • Top commodity gainers: Palm Oil (2.41%), Coffee (2.42%), Lumber (3.89%), and Orange Juice (3.11%)
  • Top commodity losers: Cocoa (-4.91%), Lean Hogs (-1.87%), Bitumen (-1.17%), and Ethanol (-2.97%)

The above data was collected around 14:08 EST on Friday.

BONDS:

Japan 0.02%(+0bp), US 2’s 0.15% (-0bps), US 10’s 0.63%(+2bps); US 30’s 1.32%(+2bps), Bunds -0.45% (+5bp), France -0.14% (+2bp), Italy 1.25% (+1bp), Turkey 12.19% (-15bp), Greece 1.23% (-4bp), Portugal 0.45% (+2bp); Spain 0.44% (+10bp) and UK Gilts 0.17% (+3bp).