Market Talk – July 6, 2021

Posted Jul 6, 2021 by Martin Armstrong |

Spread the love

ASIA:

Didi Global Inc shares fell as much as 25% in early U.S. trading on Tuesday in the first session since Chinese regulators ordered the company’s app to be taken down days after its $4.4 billion listing on the New York Stock Exchange. The ride-hailing giant’s app was ordered to be removed from mobile app stores in China on Sunday by the Cyberspace Administration of China (CAC), which had said it was investigating Didi’s handling of customer data. The CAC on Monday also announced cybersecurity investigations into other Chinese companies whose parents have listed in the United States, and those parents’ shares also slid.

The Indian economy has picked up pace after a lockdown-induced collapse in May, and that the economic damage has been less severe than during the 2020 lockdown. The regional impact has also been different from 2020. As states relaxed lockdown restrictions, mobility levels picked up pace across states leading to an improvement in high-frequency indicators such as power consumption and vehicle sales.

India’s central bank, The Reserve Bank of India (RBI) has tweaked the norms for interest on the amount left unclaimed with the bank after a fixed deposit (FD), also called a term deposit, matures. As per the new rule, if a term deposit matures and proceeds are unpaid, the unclaimed amount will earn lesser of the interest between the prevailing interest rate on the FD and the saving account rate.

The major Asian stock markets had a mixed day today:

NIKKEI 225 increased 45.02 points or 0.16% to 28,643.21
Shanghai decreased 4.06 points or -0.11% to 3,530.26
Hang Seng decreased 70.64 or -0.25% to 28,072.86
ASX 200 decreased 53.20 points or -0.73% to 7,261.80
Kospi increased 12.00 points or 0.36% to 3,305.21
SENSEX decreased 18.82 points or -0.04% to 52,861.18
Nifty50 decreased 16.10 points or -0.10% to 15,818.25

The major Asian currency markets had a mixed day today:

AUDUSD decreased 0.00525 or -0.70% to 0.74903
NZDUSD decreased 0.00445 or -0.63% to 0.70108
USDJPY decreased 0.26 or -0.23% to 110.68
USDCNY increased 0.01744 or 0.27% to 6.48022

Precious Metals:

Gold increased 1.84 USD/t oz. or 0.10% to 1,793.45
Silver decreased 0.37 USD/t. oz or -1.40% to 26.084

Some economic news from last night:

Japan:

Average Cash Earnings (YoY) increased from 1.4% to 1.9%

Household Spending (YoY) (May) decreased from 13.0% to 11.6%

Household Spending (MoM) (May) decreased from 0.1% to -2.1%

Overall wage income of employees (May) increased from 1.4% to 1.9%

Overtime Pay (YoY) (May) increased from 5.40% to 20.70%

Hong Kong:

Manufacturing PMI (Jun) decreased from 52.5 to 51.4

Australia:

MI Inflation Gauge (MoM) increased from -0.2% to 0.4%

New Zealand:

NZIER Business Confidence (Q2) increased from -13% to 7%

NZIER QSBO Capacity Utilization (Q2) increased from 93.3% to 94.9%

Some economic news from today:

Australia:

RBA Interest Rate Decision (Jul) remain the same at 0.10%

New Zealand:

GlobalDairyTrade Price Index decreased from -1.3% to -3.6%

EUROPE/EMEA:

The UK economy is bouncing back at a record rate but the main problem facing businesses is a shortage of staff, experts have warned. The latest data showed the service sector grew rapidly in June with PMI output coming in at 62.4, marginally below the 62.9 reading in May. Nevertheless, anything above 50 represents growth. The sector covers restaurants and bars as well as the financial industry and is the largest part of the British economy. Tim Moore, economics director at data gathering business IHS Markit, said: ‘The service sector recovery remained in full swing during June as looser pandemic restrictions released pent-up demand for business and consumer services.’ Prime Minister Boris Johnson confirmed he expects to lift the last remaining lockdown restrictions later this month with social distancing rules, mask laws, and the work-from-home order set to go.

France might still be in the throes of the coronavirus pandemic as the delta variant spreads rapidly, but officials and business leaders are looking ahead to a period of recovery and reflecting on the wider outlook for France’s political and economic future, a major online news agency reported. Agnès Bénassy-Quéré, chief economist at the French Treasury told CNBC on Sunday that the official forecast is still at 5% for 2021 because we are still cautious about the fall. France’s National statistics office raised its growth forecast for France in 2021 to 6%. Like other countries, France introduced emergency measures to support the economy, businesses, and employment during the pandemic and there are now some concerns that the tapering of that support could cause job losses and some firms to shut down.

The major Europe stock markets had a negative day:

CAC 40 decreased 60.06 points or -0.91% to 6,507.48
FTSE 100 decreased 64.03 points or -0.89% to 7,100.88
DAX 30 decreased 150.59 points or -0.96% to 15,511.38

The major Europe currency markets had a mixed day today:

EURUSD decreased 0.00476 or -0.40% to 1.18168
GBPUSD decreased 0.00647 or -0.47% to 1.37899
USDCHF increased 0.00262 or 0.28% to 0.92475

Some economic news from Europe today:

Germany:

German Factory Orders (MoM) (May) decreased from 1.2% to -3.7%

IHS Markit Construction PMI (Jun) increased from 44.5 to 47.0

German ZEW Current Conditions (Jul) increased from -9.1 to 21.9

German ZEW Economic Sentiment (Jul) decreased from 79.8 to 63.3

Spain:

Spanish Industrial Production (YoY) (May) decreased from 48.2% to 26.0%

UK:

Construction PMI (Jun) increased from 64.2 to 66.3

Housing Equity Withdrawal (QoQ) increased from 0.0B to 4.0B

Euro Zone:

Retail Sales (YoY) (May) decreased from 23.3% to 9.0%

Retail Sales (MoM) (May) increased from -3.9% to 4.6%

ZEW Economic Sentiment (Jul) decreased from 81.3 to 61.2

US/AMERICAS:

Service in the US expanded in June, albeit at a slower than anticipated pace. The Institute for Supply Management’s (ISM) service index declined from 64 in May to 60.1 in June. Although readings above 50 indicate an expansion and therefore demand, there are two main issues at play – supply chain delays and finding employees. The ISM’s service backlog is at its highest level since 1997, highlighting the importance of stabilizing the supply chain. As for employment, the ISM’s index of employment in the service sector indicated a slight contraction in June with a reading of 49.3 compared to 55.3 in May.

The US Department of Defense (DOD) announced plans to cancel a $10 billion cloud contract with Joint Enterprise Defense Infrastructure (JEDI). The Pentagon released a statement that JEDI could no longer meet their contractual obligations due to “evolving requirements.” Microsoft was first awarded the contract in 2019 after outbidding Amazon’s AWS cloud service, resulting in Amazon filing, and losing, a lawsuit against the DOD. Both Amazon and Microsoft are now ready to compete for the contract once again.

Canada saw a trade deficit of C$1.4 billion in May as imports advanced while exports declined. Statistics Canada also revised April’s figure to show a C$462 million surplus as opposed to their original report of C$594 million. Total imports rose 2.1% in May to C$50.9 billion, while imports of metals and non-metallic minerals rose 17.7%. However, total exports decreased 1.6% in May, reaching C$49.5 billion. Consumer good exports decreased 8.8%, and automotives fell 5.8%.

US Market Closings:

Dow declined 208.98 points or -0.65 to 34,577.37
S&P 500 declined 8.8 points or -0.2% to 4,343.54
Nasdaq advanced 24.52 points or 0.17% to 14,663.64
Russell 2000 declined 31.26 points or -1.36% to 2,274.5

Canada Market Closings:

TSX Composite advanced 18.57 points or 0.09% to 20,300.03
TSX 60 advanced 2.3 points or 0.19% to 1,217.8

Brazil Market Closing:

Bovespa declined 1,825.17 points or -1.44% to 125,094.88

ENERGY:

The oil markets had a negative day today:

Crude Oil decreased 1.68 USD/BBL or -2.24% to 73.4800
Brent decreased 2.5 USD/BBL or -3.24% to 74.6600
Natural gas decreased 0.143 USD/MMBtu or -3.77% to 3.6450
Gasoline decreased 0.0715 USD/GAL or -3.09% to 2.2425
Heating oil decreased 0.0841 USD/GAL or-3.83% to 2.1119

The above data was collected around 13:52 EST on Tuesday

Top commodity gainers: Lumber (3.37%), Feeder Cattle (2.40%), Lean Hogs (1.17%) and Bitumen (1.21%)
Top commodity losers: Corn (-6.38%), Heating Oil (-3.83%), Wheat (-4.30%), and Soybeans (-5.99%)

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

BONDS:

Japan 0.042%(+1bp), US 2’s 0.22%(-0.010%), US 10’s 1.3733%(-6.23bps); US 30’s 2.0070%(-0.05%), Bunds -0.2630% (-5.5bp), France 0.0630% (-6bp), Italy 0.7533% (-5bp), Turkey 16.99% (+0bp), Greece 0.7800% (-3bp), Portugal 0.352% (-3bp); Spain 0.348% (-5bp) and UK Gilts 0.637% (-8bp).