Market Talk – July 9, 2020

ASIA:

The Chinese and Indian border defense forces have taken effective measures to disengage from front-line contact in the Gallevan Valley on the Sino-Indian border, based on the consensus reached at the recent commander-level military talks, Chinese Foreign Ministry Spokesperson Zhao Lijian told reporters on Thursday at a regular press conference.

US President Donald Trump repeated his complaints on Tuesday that India’s tariffs on US products were unacceptable but he did not indicate whether he would take any further action in the trade row between the two nations. “India has long had a field day putting Tariffs on American products. No longer acceptable!” Trump tweeted. There was no immediate comment from India’s foreign and trade ministries.

Prime Minister Narendra Modi invited global companies to set up businesses in India, listing various reforms and ‘green shoots’ of recovery that provides attractive investment avenues and highlighting defense and space among the sectors that offer new economic opportunities. He emphasized that foreign direct investment rules in India’s defense and space sectors had been relaxed. “One of the world’s biggest militaries invites you to come and make products for it,” Modi said.

The major Asian stock markets had a green day today:

  • NIKKEI 225 increased 90.64 points or 0.40% to 22,529.29
  • Shanghai increased 47.15 points or 1.39% to 3,450.59
  • Hang Seng increased 80.98 points or 0.31% to 26,210.16
  • ASX 200 increased 35.20 points or 0.59% to 5,955.50
  • Kospi increased 9.02 points or 0.42% to 2,167.90
  • SENSEX increased 408.68 points or 1.12% to 36,737.69
  • Nifty50 increased 107.70 points or 1.01% to 10,813.45

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.0029 or -0.42% to 0.69586
  • NZDUSD decreased 0.00103 or -0.16% to 0.65653
  • USDJPY decreased 0.03 or -0.03% to 107.27
  • USDCNY increased 0.0014 or 0.02% to 6.99749

Precious Metals:

  • Gold decreased 6.75 USD/t oz. or -0.37% to 1,802.25
  • Silver decreased 0.06 USD/t. oz or -0.32% to 18.6400

Some economic news from last night:

China:

CPI (YoY) (Jun) increased from 2.4% to 2.5%

CPI (MoM) (Jun) increased from -0.8% to -0.1%

PPI (YoY) (Jun) increased from -3.7% to -3.0%

Japan:

Core Machinery Orders (YoY) (May) increased from -17.7% to -16.3%

Core Machinery Orders (MoM) (May) increased from -12.0% to 1.7%

Foreign Bonds Buying decreased from 196.2B to -522.8B

Foreign Investments in Japanese Stocks increased from -494.3B to -77.0B

M3 Money Supply (Jun) increased from 1,857.7T to 1,883.7T

Australia:

Home Loans (MoM) decreased from -5.0% to -10.2%

Invest Housing Finance (MoM) decreased from -4.2% to -15.6%

New Zealand:

ANZ Business Confidence increased from -34.4 to -29.8

Some economic news from today:

Japan:

Machine Tool Orders (YoY) increased from -52.8% to -32.0%

EUROPE/EMEA:

Europeans want British tourists to stay away this summer, according to a new poll that found the UK at the bottom of a list of countries that were welcome on the continent. People in Spain, Germany, France, and Italy were all less receptive to unrestricted travel from the UK than they were for the other European countries they were asked about, perhaps reflecting the fact that the UK has recorded the highest coronavirus death toll in Europe.

The investable hotel market in Germany has grown to 61.1 billion Euros over the last 12 years. The latest calculations by Union Investment and Bulwiengesa show that the investable hotel market in Germany increased in value by around 6.3 percent compared to 2018.

The major Europe stock markets had a negative day:

  • CAC 40 decreased 60.12 points or -1.21% to 4,921.01
  • FTSE 100 decreased 106.54 points or -1.73% to 6,049.62
  • DAX 30 decreased 5.35 points or -0.04% to 12,489.46

The major Europe currency markets had a mixed day today:

  • EURUSD decreased 0.00438 or -0.39% to 1.12937
  • GBPUSD increased 0.00035 or 0.03% to 1.26180
  • USDCHF increased 0.00203 or 0.22% to 0.94036

Some economic news from Europe today:

Germany:

German Current Account Balance n.s.a (May) decreased from 9.1B to 6.5B

German Exports (MoM) (May) increased from -24.0% to 9.0%

German Imports (MoM) (May) increased from -16.6% to 3.5%

German Trade Balance (May) increased from 3.4B to 7.6B

Germany Thomson Reuters IPSOS PCSI (Jul) increased from 47.40 to 49.23

UK:

Thomson Reuters IPSOS PCSI (Jul) increased from 40.7 to 43.7

RICS House Price Balance (Jun) increased from -32% to -15%

Italy:

Italy Thomson Reuters IPSOS PCSI (Jul) increased from 35.77 to 36.74

France:

France Thomson Reuters IPSOS PCSI (Jul) increased from 40.35 to 40.62

US/AMERICAS:

Around 6.7 million families may face eviction this summer, according to a report by UrbanFootprint. The enhanced federal unemployment insurance is set to expire at the end of the month, which may leave many families unable to survive a prolonged period of unemployment due to the ongoing coronavirus shutdown and restrictions. According to the report, families in California, New York, Florida, Georgia, and Texas will face the highest levels of eviction.

Nearly one-third of US households missed or underpaid their housing obligations for July. According to a survey by Apartment List, 19% of Americans could not make a payment on their housing during the first week of this month, and only 13% paid a portion of their mortgage or rent. This marks the fourth consecutive month of Americans unable to meet their housing payments. Despite the economy gradually reopening, the number of missed or partial payments has remained somewhat steady: 32% in July, 30% in June, and 31% in May.

Numerous grocers in the UK are refusing to sell chicken imported from the US due to alleged animal cruelty and safety concerns. Many US meatpackers wash their chicken with chlorine, a practice that has been banned in the European Union since 1997. As the UK is no longer part of the EU, they may still import chlorinated chicken; however, grocers including Aldi’s, Tesco, Asda, and Sainsburys are now saying they will not put the product on their shelves regardless of the outcome of trade talks.

Weekly jobless claims in the US decreased last week to 1.314 million, compared to 1.39 the week prior. Continuing claims fell noticeably after dropping by 698,000 from the prior week to 18.06 million. Although the figures are improving, this is the fifteenth consecutive week of claims exceeding 1 million.

US Market Closings:

  • Dow declined 361.19 points or -1.39% to 25,706.09
  • S&P 500 declined 17.89 points or -0.56% to 3,152.05
  • Nasdaq advanced 55.25 points or 0.53% to 10,547.75
  • Russell 2000 declined 28.48 points or -2% to 1,398.92

Canada Market Closings:

  • TSX Composite declined 60.55 points or -0.39% to 15,568.64
  • TSX 60 declined 3.51 points or -0.37% to 935.68

Brazil Market Closings:

  • Bovespa declined 609.55 points or -0.61% to 99,160.33

ENERGY:

The oil markets had a negative day today:

  • Crude Oil decreased 1.36 USD/BBL or -3.33% to 39.5400
  • Brent decreased 0.99 USD/BBL or -2.29% to 42.3000
  • Natural gas decreased 0.043 USD/MMBtu or -2.35% to 1.7860
  • Gasoline decreased 0.0355 USD/GAL or -2.76% to 1.2518
  • Heating oil decreased 0.0118 USD/GAL or -0.96% to 1.2233

The above data was collected around 14.42 EST on Thursday.

  • Top commodity gainers: Ethanol (4.18%), Rice (9.10%), Lean Hogs (4.71%), and Canola (4.26%)
  • Top commodity losers: Cotton (-4.96%), Gasoline (-2.76%), Crude Oil (-3.33%), and Coffee (-2.43%)

The above data was collected around 14:48 EST on Thursday.

BONDS:

Japan 0.02%(+0bp), US 2’s 0.15% (-0bps), US 10’s 0.62%(-3bps); US 30’s 1.35%(-4bps), Bunds -0.46% (+2bp), France -0.14% (-1bp), Italy 1.27% (-0bp), Turkey 12.37% (+3bp), Greece 1.12% (-0bp), Portugal 0.42% (+1bp); Spain 0.41% (+7bp) and UK Gilts 0.16% (-3bp).

  • US 30-Year Bond Auction decreased from 1.450% to 1.330%
  • US 4-Week Bill Auction decreased from 0.115% to 0.100%
  • US 8-Week Bill Auction decreased from 0.135% to 0.120%