Market Talk – June 17, 2020

ASIA:

India has conveyed to China the fact that the deadly clash in eastern Ladakh on Monday night will have “a serious impact” on relations between the two countries. Foreign Minister S. Jaishankar shared this with his counterpart in Beijing in a phone conversation today. Both sides agreed not to take “any action to escalate matters,” a statement from the Foreign Ministry said.

Growing anti-China sentiment in India has led to calls for a boycott of Chinese products and services, while new rules on foreign investment could constrain China’s ability to cash in on India’s internet boom, CNN reported. India imports more goods from China than any other country. And over the past decade, India and China have enabled each other’s rise as emerging technology powerhouses. Chinese tech giants have invested billions of dollars into India’s biggest startups, while its smartphone makers dominate the country’s market and Indians have flocked to apps like TikTok.

The Indian government has asked domestic oil and gas companies to raise the share of domestically manufactured steel they use in future infrastructure projects worth billions of dollars to cut its dependence on imports, boost the economy and create jobs. Government is pushing for local manufacturing to resuscitate the economy, which is likely to contract by about 5% this fiscal year.

Samsung Electronics should get tax and other incentives from India’s northern state of Uttar Pradesh as the South Korean company looks to invest some $705.75 million in a smartphone display manufacturing plant in the state, India’s lead investment promotion body said in a letter. Samsung, one of the top smartphone sellers in India, signed a memorandum of understanding with Uttar Pradesh in 2019 on the project. A source familiar with the matter said this would relocate manufacturing previously done in China.

The government of Singapore has paused the mega project to build Terminal 5 at Changi Airport for at least two years while it assesses the future of aviation in a world with Covid-19. Transport Minister Khaw Boon Wan announced the decision on June 16 during an online meeting.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 decreased 126.45 points or -0.56% to 22,455.76
  • Shanghai increased 4.12 points or 0.14% to 2,935.87
  • Hang Seng increased 137.32 points or 0.56% to 24,481.41
  • ASX 200 increased 49.50 points or 0.83% to 5,991.80
  • Kospi increased 3.00 points or 0.14% to 2,141.05
  • SENSEX decreased 97.30 points or -0.29% to 33,507.92
  • Nifty50 decreased 32.85 points or -0.33% to 9,881.15

The major Asian currency markets had a mixed day today:

  • AUDUSD increased 0.0009 or 0.13% to 0.69009
  • NZDUSD increased 0.0012 or 0.19% to 0.64694
  • USDJPY decreased 0.2330 or -0.22% to 107.15
  • USDCNY decreased 0.0087 or -0.12% to 7.07136

Precious Metals:

  • Gold increased 0.20 USD/t oz. or 0.01% to 1,726.90
  • Silver increased 0.04 USD/t. oz or 0.24% to 17.5215

Some economic news from last night:

New Zealand:

Current Account (QoQ) (Q1) increased from -2.66B to 1.56B

Current Account (YoY) (Q1) increased from -9.23B to -8.51B

Current Account % of GDP (Q1) increased from -3.00% to -2.70%

RBNZ Offshore Holdings (May) decreased from 44.60% to 43.00%

Australia:

HIA New Home Sales (MoM) decreased from -1.1% to -4.2%

MI Leading Index (MoM) increased from -1.5% to 0.2%

Japan:

Reuters Tankan Index (Jun) decreased from -44 to -46

Adjusted Trade Balance increased from -1.04T to -0.60T

Exports (YoY) (May) decreased from -21.9% to -28.3%

Imports (YoY) (May) decreased from -7.1% to -26.2%

Trade Balance (May) increased from -931.9B to -833.4B

Singapore:

Non-Oil Exports (MoM) (May) increased from -5.10% to -4.50%

Non-Oil Exports (YoY) (May) decreased from 9.70% to -4.50%

Trade Balance increased from 2.630B to 4.040B

EUROPE/EMEA:

America’s top trade negotiator has said a deal with the UK is unlikely before the US presidential election in November. The two countries, which exchange £230bn worth of trade each year, started a second round of talks on Monday after opening formal negotiations last month. Ambassador Robert Lighthizer’s told Congress that the US is looking for a comprehensive deal instead of a more limited agreement of the kind it has settled for in other instances.

Australia and New Zealand are about to begin negotiations on a free trade agreement with the UK. Australian Trade Minister trade minister Simon Birmingham said this was “a strong signal of mutual support for free trade” to the UK in a post-Covid-19 world. He also said Australia was “ready to help the UK find new beginnings post-Brexit and in doing so, open up new doors for our farmers, businesses and investors.” The UK is Australia’s seventh-largest trading partner.

Germany has published a list of places it considers “coronavirus risk areas.” The German government has classified popular non-EU German holiday destination Turkey and 130 other countries, as well as several US states including California and New York, as coronavirus risk areas. Anyone entering Germany from a risk area would be ordered to self-quarantine for 14 days.

An uncle of Syrian President Bashar Assad was sentenced to four years in prison in France on Wednesday for illegally using Syrian state funds to build a French real estate empire. The anti-corruption groups that launched the legal proceedings against Rifaat Assad announced the decision by a Paris court, and hailed it as a new victory in long-running efforts to prosecute foreign leaders accused of hiding stolen money in France.

The Spanish government has banned cruise ships for an indefinite time from coming into any port to avoid any additional exposure to the coronavirus.

The major Europe stock markets had a green today:

  • CAC 40 increased 43.51 points or 0.88% to 4,995.97
  • FTSE 100 increased 10.46 points or 0.17% to 6,253.25
  • DAX 30 increased 66.48 points or 0.54% to 12,382.14

The major Europe currency markets had a negative day today:

  • EURUSD decreased 0.0030 or -0.26% to 1.12343
  • GBPUSD decreased 0.0029 or -0.23% to 1.25481
  • USDCHF decreased 0.0018 or -0.19% to 0.94939

Some economic news from Europe today:

UK:

Car Registration (YoY) (May) increased from -97.3% to -89.0%

Car Registration (MoM) (May) increased from -98.3% to 368.6%

Core CPI MoM (MoM) (May) decreased from 0.1% to 0.0%

Core CPI (YoY) (May) decreased from 1.4% to 1.2%

Core PPI Output (MoM) (May) increased from -0.1% to 0.0%

Core PPI Output (YoY) (May) decreased from 0.7% to 0.6%

Core RPI (MoM) (May) decreased from 0.2% to 0.0%

Core RPI (YoY) (May) decreased from 1.6% to 1.3%

CPI (YoY) (May) decreased from 0.8% to 0.5%

CPI (MoM) (May) increased from -0.2% to 0.0%

CPI, n.s.a (May) remain the same at 108.50

PPI Input (YoY) (May) increased from -10.2% to -10.0%

PPI Input (MoM) (May) increased from -5.5% to 0.3%

PPI Output (YoY) (May) decreased from -0.7% to -1.4%

PPI Output (MoM) (May) increased from -0.8% to -0.3%

RPI (MoM) (May) decreased from 0.2% to -0.1%

RPI (YoY) (May) decreased from 1.5% to 1.0%

Italy:

Italian Car Registration (MoM) (May) increased from -84.9% to 2,230.2%

Italian Car Registration (YoY) (May) increased from -97.6% to -49.6%

Italian Industrial New Orders (YoY) (Apr) decreased from -26.6% to -49.0%

Italian Industrial New Orders (MoM) (Apr) decreased from -26.4% to -32.2%

Italian Industrial Sales (YoY) (Apr) decreased from -25.30% to -46.90%

Italian Industrial Sales (MoM) (Apr) decreased from -25.80% to -29.40%

Germany:

German Car Registration (MoM) (May) increased from -43.8% to 39.1%

German Car Registration (YoY) (May) increased from -61.1% to -49.5%

France:

French Car Registration (MoM) (May) increased from -66.5% to 358.7%

French Car Registration (YoY) (May) increased from -88.8% to -50.3%

Euro Zone:

Construction Output (MoM) (Apr) increased from -15.72% to -14.58%

Core CPI (YoY) (May) remain the same at 0.9%

Core CPI (MoM) (May) decreased from 0.8% to 0.0%

CPI (MoM) (May) decreased from 0.3% to -0.1%

CPI (YoY) (May) remain the same at 0.1%

CPI ex Tobacco (YoY) (May) decreased from 0.2% to 0.0%

CPI ex Tobacco (MoM) (May) decreased from 0.3% to -0.1%

HICP ex Energy & Food (YoY) (May) increased from 1.1% to 1.2%

HICP ex Energy and Food (MoM) (May) decreased from 0.7% to 0.0%

US/AMERICAS:

Americans are hoarding physical currency, according to comments made on Wednesday by Federal Reserve Chairman Jerome Powell. Powell blamed the closure of brick and mortar locations during the coronavirus lockdown. “So, a whole system of flow has kind of come to a stop. We’re well aware of this: We’re working with the mint and we’re working with the Reserve banks. And as the economy reopens, we’re seeing coins begin to move around again,” Powell stated before Congress.

The Department of Justice is looking to reform Section 230 of the Communications Decency Act, which was originally established before the invention of social media. The law as it stands protects websites from being held liable for illegal content posted by other users. The move comes a month after President Trump signed an executive order to demand that the Federal Communications Commission bars social media platforms from silencing conservative voices, but did not involve Section 230 of the aforementioned law.

Canadian Prime Minister Justin Trudeau announced that a financial “snapshot” will be presented on July 8. The announcement comes a week after Trudeau stated it would be “simply an exercise in invention and imagination” to determine Canada’s fiscal projections. Although a full long-term economic forecast is unlikely, Trudeau stated that the “snapshot” will “give Canadians a picture of where our economy is right now, how our response compares to that of other countries, and what we can expect for the months to come.”

US Market Closings:

  • Dow declined 170.37 points or -0.65% to 26,119.61
  • S&P 500 declined 11.25 points or -0.36% to 3,113.49
  • Nasdaq advanced 14.66 points or 0.15% to 9,910.53
  • Russell 2000 declined 25.73 points or -1.77% to 1,426.53

Canada Market Closings:

  • TSX Composite declined 87.14 points or -0.56% to 15,428.69
  • TSX 60 declined 5.13 points or -0.55% to 930.87

Brazil Market Closing:

  • Bovespa advanced 2,016.12 points or 2.16% to 95,547.29

ENERGY:

The transition to renewable power from traditional fuels will create a $16 trillion investment opportunity through 2030 as spending shifts to new infrastructure. The bank projects green-energy spending to pass that of oil and gas for the first time next year and account for roughly 25% of all energy spending. The share stood at just 15% in 2014, but a dive in fossil-fuel investing over the past decade shifted more dollars to clean energy initiatives.

The oil markets had a mixed day today:

  • Crude Oil decreased 0.41 USD/BBL or -1.07% to 37.9700
  • Brent decreased 0.22 USD/BBL or -0.54% to 40.7400
  • Natural gas increased 0.02 USD/MMBtu or 1.17% to 1.6370
  • Gasoline increased 0.03 USD/GAL or 2.26% to 1.2159
  • Heating oil increased 0.01 USD/GAL or 0.77% to 1.1833

The above data was collected around 15.05 EST on Wednesday.

  • Top commodity gainers: Gasoline (2.26%), Coffee (2.78%), Ethanol (6.47%), and Orange Juice (3.97%)
  • Top commodity losers: Coal (-1.71%), Crude Oil (-1.07%), Wheat (-1.36%), and Rice (-7.95%)

The above data was collected around 15:10 EST on Wednesday.

BONDS:

Japan 0.02%(-0bp), US 2’s 0.20% (-0bps), US 10’s 0.74%(-2bps); US 30’s 1.54%(-0bps), Bunds -0.42% (+1bp), France -0.04% (+1bp), Italy 1.39% (+3bp), Turkey 11.75% (-4bp), Greece 1.29% (+15bp), Portugal 0.57% (+3bp); Spain 0.57% (+3bp) and UK Gilts 0.20% (-1bp).

  • German 10-Year Bund Auction increased from -0.470% to -0.380%