Market Talk – June 1, 2021

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ASIA:

China has announced that it will allow couples to have up to three children after census data showed a steep decline in birth rates. The cost of raising children in cities has deterred many Chinese couples. The latest move was approved by President Xi Jinping at a meeting of top Communist Party officials.

Chinese businesses are letting go of more workers than they are hiring, even though the economy is seeing some recovery from the pandemic, official data showed on Monday. That is based on a survey from the National Bureau of Statistics, which polls businesses on how their operations have changed from the prior month, and compiles the responses into two Purchasing Managers’ Indexes — one for manufacturing and one for services. For both manufacturing and services, the employment index remained below 50 in May, the statistics bureau said. That indicates businesses were laying off more workers than they were hiring.

India’s annual economic growth rate picked up in January-March compared with the previous three months, but economists are increasingly pessimistic about this quarter after a huge second wave of COVID-19 infections hit the country last month. Gross domestic product grew 1.6% in January-March compared with the same period a year earlier, mainly driven by state spending and manufacturing sector growth, data from the statistics ministry showed on Monday. Economists said the country faces a slowdown in consumer demand as household incomes and jobs have declined, with limited scope for the government to offer growth stimulus due to its rising debt.

 

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 decreased 45.74 points or -0.16% to 28,814.34
  • Shanghai increased 9.24 points or 0.26% to 3,624.71
  • Hang Seng increased 316.20 points or 1.08% to 29,468.00
  • ASX 200 decreased 19.00 points or -0.27% to 7,142.60
  • Kospi increased 17.95 points or 0.56% to 3,221.87
  • SENSEX decreased 2.56 points or -0.03% to 51,934.88
  • Nifty50 decreased 7.95 points or -0.05% to 15,574.85

The major Asian currency markets had a mixed day today:

  • AUDUSD increased 0.00084 or 0.11% to 0.77543
  • NZDUSD decreased 0.00249 or -0.34% to 0.72535
  • USDJPY decreased 0.05 or -0.05% to 109.44
  • USDCNY increased 0.01496 or 0.23% to 6.38458

 

Precious Metals:

  • Gold decreased 3.56 USD/t oz. or -0.19% to 1,902.80
  • Silver decreased 0.049 USD/t. oz or -0.17% to 28.003

 

Some economic news from last night:

China:

Caixin Manufacturing PMI (May) increased from 51.9 to 52.0

Japan:

Capital Spending (YoY) (Q1) decreased from -4.8% to -7.8%

Manufacturing PMI (May) increased from 52.5 to 53.0

South Korea:

Exports (YoY) (May) increased from 41.1% to 45.6%

Imports (YoY) (May) increased from 33.9% to 37.9%

Trade Balance (May) increased from 0.43B to 2.93B

Nikkei Manufacturing PMI (May) decreased from 54.6 to 53.7

Australia:

AIG Manufacturing Index (May) increased from 61.7 to 61.8

Manufacturing PMI increased from 59.7 to 60.4

Building Approvals (MoM) (Apr) decreased from 18.9% to -8.6%

Business inventories (MoM) (Q1) increased from -0.1% to 2.1%

Company Gross Operating Profits (QoQ) (Q1) increased from -4.8% to -0.3%

Company Profits Pre-Tax (QoQ) (Q1) decreased from 2.4% to -6.0%

Current Account (Q1) increased from 14.5B to 18.3B

Net Exports Contribution (Q1) decreased from -0.1% to -0.6%

Private House Approvals (Apr) increased from 0.1% to 4.6%

New Zealand:

Building Consents (MoM) (Apr) decreased from 19.2% to 4.8%

 

Some economic news from today:

India:

Nikkei Markit Manufacturing PMI (May) decreased from 55.5 to 50.8

Hong Kong:

Retail Sales (YoY) (Apr) decreased from 20.1% to 12.1%

Australia:

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

New Zealand:

GlobalDairyTrade Price Index decreased from -0.2% to -0.9%

 

EUROPE/EMEA:

The UK economy faces deeper economic scarring than other G7 economies because of the impact of Covid-19 and Brexit despite being on track for its fastest growth since the Second World War, the Organization for Economic Co-operation and Development (OECD) has predicted. In its latest economic outlook, the Paris-based thinktank sharply upgraded its view for UK growth, resulting from the success of the Covid-19 vaccination program. In its forecast, OECD predicted that UK GDP will rise by 7.2% in 2021, the fastest growth since 1941, after a 9.8% contraction in 2020 – the worst in almost 300 years. For 2022, growth has been revised significantly higher, too – to 5.5%, from 4.7% three months ago.

The German economy, Europe’s largest, should grow by between 3.4% and 3.7% this year, Economy Minister Peter Altmaier said on Tuesday, offering a more upbeat outlook than when the government raised its forecast at the end of April. At the end of April, the government raised its growth forecast to 3.5% from a previous estimate of 3%. Last year, the economy slumped some 5%, hit by restrictions to contain the COVID-19 pandemic. Germany’s annual consumer price inflation accelerated in May, advancing further above the European Central Bank’s target of close to but below 2%, the Federal Statistics Office said on Monday.

The major Europe stock markets had a green day:

  • CAC 40 increased 42.23 points or 0.66% to 6,489.40
  • FTSE 100 increased 57.85 points or 0.82% to 7,080.46
  • DAX 30 increased 146.23 points or 0.95% to 15,567.36

 

The major Europe currency markets had a negative day today:

  • EURUSD decreased 0.00048 or -0.04% to 1.22296
  • GBPUSD decreased 0.00638 or -0.45% to 1.41602
  • USDCHF decreased 0.00176 or -0.20% to 0.89647

 

Some economic news from Europe today:

UK:

Nationwide HPI (YoY) (May) increased from 7.1% to 10.9%

Nationwide HPI (MoM) (May) decreased from 2.3% to 1.8%

Manufacturing PMI (May) decreased from 66.1 to 65.6

Swiss:

Retail Sales (YoY) (Apr) increased from 23.1% to 35.7%

GDP (QoQ) (Q1) decreased from 0.1% to -0.5%

GDP (YoY) (Q1) increased from -1.6% to -0.5%

procure.ch PMI (May) increased from 69.5 to 69.9

Spain:

Spanish Manufacturing PMI (May) increased from 57.7 to 59.4

Italy:

Italian Manufacturing PMI (May) increased from 60.7 to 62.3

Italian Monthly Unemployment Rate (Apr) increased from 10.4% to 10.7%

Italian GDP (QoQ) (Q1) increased from -0.4% to 0.1%

Italian GDP (YoY) (Q1) increased from -1.4% to -0.8%

France:

French Manufacturing PMI (May) increased from 59.2 to 59.4

French Car Registration (YoY) decreased from 568.8% to 46.4%

Germany:

German Manufacturing PMI (May) decreased from 66.2 to 64.4

German Unemployment Change (May) decreased from 8K to -15K

German Unemployment Rate (May) remain the same at 6.0%

German Unemployment (May) decreased from 2.754M to 2.739M

German Unemployment n.s.a. (May) decreased from 2.771M to 2.687M

Norway:

Manufacturing PMI (May) decreased from 58.9 to 58.5

Euro Zone:

Manufacturing PMI (May) increased from 62.8 to 63.1

Core CPI (MoM) decreased from 0.5% to 0.2%

Core CPI (YoY) (May) increased from 0.7% to 0.9%

CPI (YoY) (May) increased from 1.6% to 2.0%

CPI (MoM) decreased from 0.6% to 0.3%

CPI, n.s.a (May) increased from 107.14 to 107.43

HICP ex Energy & Food (YoY) (May) increased from 0.8% to 0.9%

HICP ex Energy and Food (MoM) (May) decreased from 0.5% to 0.2%

Unemployment Rate (Apr) decreased from 8.1% to 8.0%

US/AMERICAS:

The US economy added 600,000 positions in March. However, 8.1 million jobs remain vacant, according to a report released today by the US Chamber of Commerce. “More than 90 percent of state and local chambers of commerce say worker shortages are holding back their economies, and more than 90 percent of industry association economists say employers in their sectors are struggling to find qualified workers for open jobs,” the Chamber stated on Tuesday. Chamber President and CEO Suzanne Clark said there is an official labor shortage that is worsening each day. A poll found that nearly 70% of businesses reported it “very difficult” to fill positions.

The worker-to-job ratio sits at 1.4 workers per vacant position. Historically, the ratio has been 2.8 workers per vacant job. The first states hit the hardest, according to today’s report, were South Dakota (0.6), Nebraska (0.8), Vermont (0.8), Kansas (1), and Indiana (1). The Chamber is urging Washington to “remove barriers that prevent people from entering the workforce, get individuals the skills they need for the open positions, and enact sensible immigration policy.”

The Supreme Court rejected Johnson & Johnson’s appeal to overturn its asbestos baby powder lawsuit. The suit was filed after it was found that talc products such as Johnson and Johnson’s popular baby powder contained cancer-causing asbestos. Worse, women reported the powder has led them to develop ovarian cancer. The company is facing nearly 22,000 lawsuits for it’s asbestos-containing products. Former Solicitor General of the United States Ken Starr said that the company knew of the issue decades ago but decided not to change their formula due to the costs involved. “They could have protected customers by switching from talc to cornstarch, as their own scientists proposed as early as 1973. But talc was cheaper and petitioners were unwilling to sacrifice profits for a safer product,” Starr said.

US Market Closings:

  • Dow advanced 45.86 points or 0.13% to 34,575.31
  • S&P 500 declined 2.07 points or -0.05% to 4,202.04
  • Nasdaq declined 12.26 points or -0.09% to 13,736.48
  • Russell 2000 advanced 25.77 points or 1.14% to 2,294.74

Canada Market Closings:

  • TSX Composite advanced 245.02 points or 1.24% to 19,976.01
  • TSX 60 advanced 16.32 points or 1.38% to 1,196.46

 

Brazil Market Closing:

  • Bovespa advanced 2,051.32 points or 1.63% to 128,267.05

 

ENERGY:

The oil markets had a green day today:

 

  • Crude Oil increased 0.78 USD/BBL or 1.17% to 67.7100
  • Brent increased 0.91 USD/BBL or 1.31% to 70.2300
  • Natural gas increased 0.065 USD/MMBtu or 2.13% to 3.1180
  • Gasoline increased 0.0236 USD/GAL or 1.10% to 2.1699
  • Heating oil increased 0.019 USD/GAL or 0.93% to 2.0708

 

  • Top commodity gainers: Ethanol (4.64%), Wheat (4.33%), Corn (4.48%) and Bitumen (3.26%)
  • Top commodity losers: Steel (-2.93%), Lumber (-3.21%), Live Cattle (-1.49%), and Rubber (-1.90%)

 

The above data was collected around 13:38 EST on Tuesday.

 

BONDS:

 

Japan 0.0830%(+0bp), US 2’s 0.14%(-0.002%), US 10’s 1.6130%(+0.51bps); US 30’s 2.2982%(+0.01%), Bunds -0.1840% (-0bp), France 0.173% (-0.1bp), Italy 0.9056% (-1bp), Turkey 17.84% (+2bp), Greece 0.8370% (+0bp), Portugal 0.477% (+1.1bp); Spain 0.470% (-0.35bp) and UK Gilts 0.822% (+2bp).

 

  • US 3-Month Bill Auction increased from 0.015% to 0.020%
  • US 6-Month Bill Auction increased from 0.030% to 0.035%