Market Talk – July 22, 2020

ASIA:

The US has ordered China to close its consulate in Houston, Texas, by Friday — a move described as “political provocation” by Beijing. US Secretary of State Mike Pompeo said the decision was taken because China was “stealing” intellectual property. China’s foreign ministry condemned the move on Twitter, saying its embassy in Washington had received death threats.

Google will collaborate with India’s Reliance Industries under a $4.5 billion deal on a new smartphone, industry executives and analysts say. Reliance’s ambition to hand a smartphone to every Indian could also win subscribers from telecoms rivals Vodafone Idea and Bharti Airtel, who still have hundreds of millions of users with old-style feature phones on basic 2G networks.

The Indian rupee is expected to rise against the U.S. currency as the euro’s surge prompted the biggest decline on the dollar index in about two months.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 decreased 132.61 points or -0.58% to 22,751.61
  • Shanghai increased 12.27 points or 0.37% to 3,333.16
  • Hang Seng decreased 577.72 points or -2.25% to 25,057.94
  • ASX 200 decreased 81.20 points or -1.32% to 6,075.10
  • Kospi decreased 0.17 points or -0.01% to 2,228.66
  • SENSEX decreased 58.81 points or -0.16% to 37,871.52
  • Nifty50 decreased 29.65 points or -0.27% to 11,132.60

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.00009 or -0.01% to 0.71352
  • NZDUSD increased 0.00151 or 0.23% to 0.66590
  • USDJPY increased 0.45 or 0.42% to 107.28
  • USDCNY increased 0.04196 or 0.60% to 7.01270

Precious Metals:

  • Gold increased 20.60 USD/t oz. or 1.12% to 1,863.25
  • Silver increased 0.45 USD/t. oz or 2.02% to 22.7280

Some economic news from last night:

Japan:

Manufacturing PMI (Jul) increased from 40.1 to 42.6

Services PMI increased from 45.0 to 45.2

Australia:

MI Leading Index (MoM) increased from 0.2% to 0.4%

Retail Sales (MoM) decreased from 16.9% to 2.4%

New Zealand:

GlobalDairyTrade Price Index decreased from 8.3% to -0.7%

Some economic news from today:

Indonesia:

Foreign Direct Investment (YoY) (Q2) increased from -9.20% to -6.90%

EUROPE/EMEA:

After almost five days of fraught discussions, European leaders have agreed to create a €750 billion ($858 billion) recovery fund to rebuild EU economies ravaged by the coronavirus crisis. The European Commission will borrow the money on financial markets and distribute just under half of it — €390 billion euros ($446 billion) — as grants to the hardest-hit EU states, with the rest provided as loans. Leaders also agreed a new EU budget of nearly €1.1 trillion ($1.3 trillion) for 2021-2027, creating combined spending power of about €1.8 trillion ($2 trillion).

The US Secretary of State Mike Pompeo launched an attack on the World Health Organization during a private meeting in the UK, accusing it of being in the pocket of China and responsible for “dead Britons” who passed away during the pandemic.

The major Europe stock markets had a negative day:

  • CAC 40 decreased 67.16 points or -1.32% to 5,037.12
  • FTSE 100 decreased 62.63 points or -1.00% to 6,207.10
  • DAX 30 decreased 67.58 points or -0.51% to 13,104.25

The major Europe currency markets had a mixed day today:

  • EURUSD increased 0.00272 or 0.24% to 1.15642
  • GBPUSD increased 0.00036 or 0.03% to 1.27330
  • USDCHF decreased 0.00268 or -0.29% to 0.92991

US/AMERICAS:

Tensions are rapidly and continually rising between the US and China. On Wednesday, Washington demanded that China shut down its consulate in Houston, Texas, within 72 hours. Morgan Ortagus, US State Department spokeswoman, said that China’s consulate must be removed from Houston to protect US intellectual property in light of the recent hacking incident. China’s Foreign Ministry spokesperson Wang Wenbin told the Associated Press that the decision “is an unprecedented escalation of its recent actions against China.” Beijing is expected to implement retaliatory measures.

US President Donald Trump is now urging Americans to wear a mask when social distancing is not possible. The president did not issue a federal mandate, but did note that the virus “will get worse before it gets better.” America is currently the epicenter of the coronavirus outbreak with 3.97 million confirmed cases and 144,000 deaths reported at the time of this writing. President Trump did, however, say he anticipates that the virus will eventually “disappear.” He also noted that the US “conducted nearly three times as many tests as all of the other countries in the western hemisphere combined.”

US home sales are on the rise, the National Association of Realtors (NAR) reported this Wednesday. Existing home sales increased 20.7% in June (4.72 million homes on a seasonally adjusted rate). According to the NAR, the spike in home sales is the largest on record since the agency began collecting data in 1968. Last month marked the first month in three months that the real estate sector showed signs of improvement. In addition to quarantine restrictions that permitted home showings in most of the US, the 30-year fixed mortgage rate is around 2.98% which is the lowest rate offered since 1971.

Brazil’s Communications Ministry confirmed that President Bolsonaro is still recovering from the coronavirus. “President Bolsonaro is still in good condition, accompanied by the presidency’s medical team,” the office stated.

US Market Closings:

  • Dow advanced 165.44 points or 0.62% to 27,005.84
  • S&P 500 advanced 18.72 points or 0.57% to 3,276.02
  • Nasdaq advanced 25.76 points or 0.24% to 10,706.13
  • Russell 2000 advanced 2.63 points or 0.18% to 1,490.14

Canada Market Closings:

  • TSX Composite advanced 8.1 points or 0.05% to 16,171.06
  • TSX 60 declined 0.58 of a point or -0.06% to 970.92

Brazil Market Closing:

  • Bovespa declined 20.17 points or -0.02% to 104,289.57

ENERGY:

The oil markets had a mixed day today:

  • Crude Oil decreased 0.07 USD/BBL or -0.17% to 41.8900
  • Brent decreased 0.02 USD/BBL or -0.05% to 44.3000
  • Natural gas increased 0.026 USD/MMBtu or 1.56% to 1.6910
  • Gasoline increased 0.0028 USD/GAL or 0.22% to 1.2827
  • Heating oil decreased 0.0054 USD/GAL or -0.42% to 1.2708

The above data was collected around 14:45 EST on Wednesday.

  • Top commodity gainers: Rubber (3.33%), Ethanol (12.87%), Platinum (3.36%), and Coffee (7.21%)
  • Top commodity losers: Copper (-1.43%), Lumber (-5.65%), Palladium (-0.73%), and Aluminum (-0.62%)

The above data was collected around 14:53 EST on Wednesday.

BONDS:

Japan 0.02%(+1bp), US 2’s 0.15% (+0bps), US 10’s 0.59%(-2bps); US 30’s 1.28%(-3bps), Bunds -0.49% (+0bp), France -0.18% (-2bp), Italy 1.11% (-4bp), Turkey 12.01% (-3bp), Greece 1.17% (+1bp), Portugal 0.36% (-1bp); Spain 0.37% (+8bp) and UK Gilts 0.12% (-2bp).

 

  • German 30-Year Bund Auction increased from -0.130% to -0.060%
  • US 20-Year Bond Auction decreased from 1.314% to 1.059%