Market Talk – July 6, 2020

ASIA:

China has warned the UK not to interfere with Hong Kong following Beijing’s imposition of a sweeping new national security law. Ambassador Liu Xiaoming said the UK’s offer of a path to citizenship for up to three million Hong Kongers amounted to “gross interference.” British Foreign Secretary Dominic Raab rejected the accusation. Earlier, a spokesman for Prime Minister Boris Johnson urged China not to interfere if Hong Kongers sought to come to the UK.

The Indian government is reviewing around 50 investment proposals involving Chinese companies under a new screening policy, Reuters reported. Under new rules announced by India in April, all investments by entities based in neighboring countries need to be approved by the Indian government, whether for new or additional funding. China is the biggest of these investors and the rules drew criticism from Chinese investors and Beijing, which called the policy discriminatory.

Indian bank loans rose 6.2% in the two weeks to June 19 from a year earlier, while deposits rose 11%, according to India’s central bank, The Reserve Bank of India’s weekly statistical supplement showed on Friday. Outstanding loans rose 16.79 billion rupees ($224.95 million) to 102.45 trillion rupees in the two weeks to June 19. Bank deposits fell 732.67 billion rupees to 138.67 trillion rupees in the two weeks to June 19.

India has withdrawn a planned reopening of the Taj Mahal, citing the risk of new coronavirus infections spreading in the northern city of Agra from visitors flocking to see the 17th century monument of love.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 increased 407.96 points or 1.83% to 22,714.44
  • Shanghai increased 180.07 points or 5.71% to 3,332.88
  • Hang Seng increased 966.04 points or 3.81% to 26,339.16
  • ASX 200 decreased 43.30 points or -0.71% to 6,014.60
  • Kospi increased 35.52 points or 1.65% to 2,187.93
  • SENSEX increased 465.86 points or 1.29% to 36,487.28
  • Nifty50 increased 156.30 points or 1.47% to 10,763.65

The major Asian currency markets had a mixed day today:

  • AUDUSD increased 0.00358 or 0.52% to 0.69715
  • NZDUSD increased 0.00471 or 0.72% to 0.65638
  • USDJPY decreased 0.19 or -0.18% to 107.31
  • USDCNY decreased 0.05279 or -0.75% to 7.01446

Precious Metals:

  • Gold increased 10.27 USD/t oz. or 0.58% to 1,785.40
  • Silver increased 0.24 USD/t. oz or 1.31% to 18.2765

Some economic news from last night:

Hong Kong:

Manufacturing PMI (Jun) increased from 43.9 to 49.6

Australia:

MI Inflation Gauge (MoM) increased from -1.2% to 0.6%

ANZ Job Advertisements (MoM) increased from -0.3% to 42.0%

New Zealand:

ANZ Commodity Price Index (MoM) decrease from 1.1% to -0.7%

Some economic news from today:

Indonesia:

Consumer Confidence (Jun) increased from 77.8 to 83.8

EUROPE/EMEA:

The UK on Monday announced economic sanctions against individuals and organizations from Russia, Saudi Arabia, Myanmar, and North Korea under new UK powers to punish human rights offenders. Foreign Secretary Dominic Raab said the sanctions targeted those behind “some of the notorious human rights violations in recent years.”

The UK announced USD 2 billion rescue package for cultural and heritage institutions. Boris Johnson described this as a “world-leading” rescue package that will give a lifeline to Britain’s arts sector, which largely shuttered since March because of the pandemic and was on the verge of an imminent collapse. The organizations will be handed 1.57 billion pounds, about $2 billion, the culture ministry said on Sunday evening.

Despite the efforts, Germany’s hospitality sector has struggled to pick up speed, highlighting the difficulties facing Europe’s top economy as it confronts the steepest recession since World War II. Two months after Germany lifted its lockdowns, the small Asian restaurant, like so many others, is struggling to attract customers as coronavirus fears linger. Chancellor Angela Merkel’s government, which has pledged over a trillion euros in stimulus spending to cushion the coronavirus blow, and is hoping for an economic rebound in the second half of 2020.

France’s new prime minister, Jean Castex, has made few major changes to the cabinet after President Emmanuel Macron gambled on a reshuffle to reboot his presidency and tighten his grip on government before seeking re-election in 2022. Health minister Olivier Véran, who helped lead France’s response to the pandemic, also kept his job, as did Florence Parly at defense.

The major Europe stock markets had a green day:

  • CAC 40 increased 74.37 points or 1.49% to 5,081.51
  • FTSE 100 increased 128.64 points or 2.09% to 6,285.94
  • DAX 30 increased 205.27 points or 1.64% to 12,733.45

The major Europe currency markets had a mixed day today:

  • EURUSD increased 0.00665 or 0.59% to 1.13113
  • GBPUSD increased 0.00094 or 0.08% to 1.24927
  • USDCHF decreased 0.00184 or -0.19% to 0.94185

Some economic news from Europe today:

Germany:

German Factory Orders (MoM) (May) increased from -26.2% to 10.4%

IHS Markit Construction PMI (Jun) increased from 40.1 to 41.3

Spain:

Spanish Industrial Production (YoY) (May) increased from -34.1% to -24.5%

Spanish Consumer Confidence increased from 52.9 to 60.7

UK:

Construction PMI (Jun) increased from 28.9 to 55.3

Housing Equity Withdrawal (QoQ) decreased from -5.0B to -5.1B

Euro Zone:

Sentix Investor Confidence (Jul) increased from -24.8 to -18.2

Retail Sales (MoM) (May) increased from -12.1% to 17.8%

Retail Sales (YoY) (May) increased from -19.6% to -5.1%

US/AMERICAS:

Nonmanufacturing companies made their biggest one-month increase this June after advancing 11.7% to 57.1%. Fourteen of the 18 service industries rose in June due to restrictions lifted and state economies beginning to reopen. Although encouraging, states are beginning to reimplement restrictions slowly and ongoing growth is not expected to continue in a linear fashion.

Florida Governor Ron DeSantis signed House Bill 1189 last week, making Florida the first US state to enact DNA privacy laws. Disability, life and long-term care insurance companies are now prohibited from using personal DNA information, such as what is derived from services like 23andMe or AncestryDNA, and sharing that data with other service providers. Prior to this law, insurers could legally access health-related DNA information provided by third parties and use that information to limit coverage.

The UK will begin to ease restrictions for travelers from around 50 countries this Friday; however, the US is not on that list. The European Union also banned travels from the US from entering Europe. Mexico ramped up efforts to prevent Americans from crossing the border over the Fourth of July weekend. At the time of this writing, the US has experienced 2.93 million confirmed COVID-19 cases, with 879,000 people making full recoveries and 132,000 deaths.

Prime Minister Justin Trudeau said Canada stands in solidarity with Hong Kong, and has suspended its extradition treaty with Hong Kong over China’s new national security laws. Over 300,000 Canadians currently live in Hong Kong. The Canadian government is hoping the new measures will encourage Hong Kong residents to relocate to Canada to boost the economy.

US Market Closings:

  • Dow advanced 459.67 points or 1.78% to 26,287.03
  • S&P 500 advanced 49.71 points or 1.59% to 3,179.72
  • Nasdaq advanced 226.02 points or 2.21% to 10,433.65
  • Russell 2000 advanced 11.02 points or 0.77% to 1,442.88

Canada Market Closings:

  • TSX Composite advanced 79.92 points or 0.47% to 15,669.67
  • TSX 60 advanced 2.89 points or 0.31% to 942.24

Brazil Market Closing:

  • Bovespa advanced 2,172.31 points or 2.24% to 98,937.16

ENERGY:

The oil markets had a mixed day today:

  • Crude Oil increased 0.31 USD/BBL or 0.77% to 40.6300
  • Brent increased 0.28 USD/BBL or 0.65% to 43.0800
  • Natural gas increased 0.10 USD/MMBtu or 5.92% to 1.8240
  • Gasoline decreased 0.00 USD/GAL or -0.11% to 1.2416
  • Heating oil increased 0.02 USD/GAL or 1.67% to 1.2452

The above data was collected around 15.18 EST on Monday.

  • Top commodity gainers: Natural Gas (5.92%), Lumber (2.68%), Canola (4.29%), and Orange Juice (2.06%)
  • Top commodity losers: Coffee (-6.16%), Cotton (-1.59%), Cocoa (-1.22%), and Sugar (-2.37%)

The above data was collected around 15:25 EST on Monday.

BONDS:

Japan 0.05%(+2bp), US 2’s 0.16% (+1bps), US 10’s 0.69%(+2bps); US 30’s 1.45%(+2bps), Bunds -0.43% (+4bp), France -0.12% (-1bp), Italy 1.31% (-2bp), Turkey 11.93% (+9bp), Greece 1.19% (+4bp), Portugal 0.44% (-1bp); Spain 0.45% (+7bp) and UK Gilts 0.20% (+1bp).

  • US 3-Month Bill Auction remain the same at 0.150%
  • US 6-Month Bill Auction remain the same at 0.165%
  • French 3-Month BTF Auction decreased from -0.523% to -0.551%
  • French 6-Month BTF Auction decreased from -0.531% to -0.557%
  • French 12-Month BTF Auction decreased from -0.530% to -0.559%