Market Talk – June 18, 2020

ASIA:

China’s Oppo canceled the live online launch of its flagship smartphone in India on Wednesday after a border clash between the two countries that has renewed calls from local Indian trader groups to boycott Chinese goods. The clashes risk souring sentiment for big Chinese investors who were eyeing the Indian market and already faced pressure as anti-China sentiment festered during the coronavirus outbreak.

China-backed Asian Infrastructure Investment Bank (AIIB) has approved a loan of $750 million to help India battle the impact of the coronavirus pandemic on vulnerable households, the bank said on Wednesday. The project, co-financed by the Asian Development Bank, aims to strengthen economic aid for businesses, expand social safety nets, and bolster healthcare. In May, AIIB approved a $500 million loan to assist India’s emergency response to the pandemic.

India’s recovery rate from COVID-19 infection has risen further to 52.96%, with a total of 1,94,324 patients getting cured so far, as per the data released by the health ministry on Thursday. The rise in recovery rate comes in the backdrop of Prime Minister Narendra Modi’s emphasis on maintaining a good recovery rate from the disease as India goes about the twin tasks of unlocking more economic activities and battling the coronavirus pandemic in the coming days.

The Supreme Court of India on Wednesday granted time to central government, the Reserve Bank of India (RBI) and the Indian Banks Association (IBA) to file affidavits along with relevant documents pertaining to the details of loan moratorium scheme in a petition seeking interest waiver during the moratorium period. During the hearing, the court verbally directed the Centre and RBI to rework the ongoing loan moratorium and create schemes tailored for different sectors such as agriculture and businesses.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 decreased 100.30 points or -0.45% to 22,355.46
  • Shanghai increased 3.44 points or 0.12% to 2,939.32
  • Hang Seng decreased 16.47 points or -0.07% to 24,464.94
  • ASX 200 decreased 55.30 points or -0.92% to 5,936.50
  • Kospi decreased 7.57 points or -0.35% to 2,133.48
  • SENSEX increased 700.13 points or 2.09% to 34,208.05
  • Nifty50 increased 210.50 points or 2.13% to 10,091.65

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.00249 or -0.36% to 0.68475
  • NZDUSD decreased 0.00134 or -0.21% to 0.64269
  • USDJPY increased 0.03 or 0.03% to 106.93
  • USDCNY increased 0.00591 or 0.08% to 7.08337

Precious Metals:

  • Gold decreased 5.2 USD/t oz. or -0.30% to 1,723.65
  • Silver decreased 0.0755 USD/t. oz or -0.43% to 17.4060

Some economic news from last night:

New Zealand:

GDP (QoQ) (Q1) decreased from 0.5% to -1.6%

GDP (YoY) (Q1) decreased from 1.8% to -0.2%

GDP Annual Average (Q1) decreased from 2.3% to 1.5%

GDP Expenditure (QoQ) (Q1) decreased from 0.2% to -1.3%

Australia:

Employment Change (May) increased from -594.3K to -227.7K

Full Employment Change (May) increased from -220.5K to -89.1K

Participation Rate (May) decreased from 63.5% to 62.9%

Unemployment Rate (May) increased from 6.2% to 7.1%

Japan:

Foreign Bonds Buying increased from 1,067.8B to 1,656.6B

Foreign Investments in Japanese Stocks decreased from 268.7B to -440.4B

Some economic news from today:

China:

FDI (May) increased from -6.10% to -3.80%

Indonesia:

Deposit Facility Rate (Jun) decreased from 3.75% to 3.50%

Lending Facility Rate (Jun) decreased from 5.25% to 5.00%

Interest Rate Decision decreased from 4.50% to 4.25%

India:

M3 Money Supply increased from 11.7% to 12.4%

EUROPE/EMEA:

More than 3.3 million EU and European Economic Area citizens have been granted the right to remain in the UK permanently after Brexit, the Home Office has said. No accurate data on the number of EU citizens living in the country exists, but previous estimates have suggested a range of between 3 million and 3.8 million.

The Bank of England has announced a new £100bn stimulus package for the UK economy amid fears of a surge in unemployment in Britain’s hotels, restaurants, and shops following the end of the government’s furlough scheme in the autumn. Threadneedle Street’s nine-member monetary policy committee (MPC) voted eight to one to boost the amount of money being pumped into the economy despite evidence that easing the lockdown had prompted a more rapid pickup in spending than the bank envisaged.

Russia warned Germany of taking action against Russia over the killing of a Georgian national in Berlin last year, the country’s ambassador to Germany said on Thursday, according to a Russian news agency. The report followed an announcement earlier in the day that German prosecutors would file murder charges against a Russian accused of the killing.

German Foreign Minister Heiko Maas on Wednesday called on both China and India to de-escalate tensions and peacefully resolve their Himalayan border dispute. “These are two large countries and I don’t want to begin to think about the conflict that could happen if this results in a real military escalation,” Maas told DW.

The French Ministry for Europe and Foreign Affairs has invited international students who need to travel to France for study purposes to do so as starting from July 1, pointing out that the consulates abroad will also start processing residence permit applications as a priority from the same date.

France’s economy should shrink less than expected in the second quarter as business activity began recovering in May after a nationwide lockdown was eased, the INSEE official statistics agency forecast on Wednesday. INSEE said the euro zone’s second-biggest economy should contract 17% in the second quarter after a previous forecast last month of a 20% contraction.

The major Europe stock markets had a negative today:

CAC 40 decreased 37.22 points or -0.75% to 4,958.75

FTSE 100 decreased 29.18 points or -0.47% to 6,224.07

DAX 30 decreased 100.61 points or -0.81% to 12,281.53

The major Europe currency markets had a mixed day today:

  • EURUSD decreased 0.00402 or -0.36% to 1.12035
  • GBPUSD decreased 0.01217 or -0.97% to 1.24252
  • USDCHF increased 0.00275 or 0.29% to 0.95156

Some economic news from Europe today:

Swiss:

Trade Balance (May) decreased from 3.990B to 2.801B

SNB Interest Rate Decision remain the same at -0.75%

Italy:

Italian Trade Balance (Apr) decreased from 5.684B to -1.157B

Italian Trade Balance EU (Apr) decreased from 0.60B to -1.00B

Spain:

Spanish Trade Balance increased from -2.04B to -1.52B

Norway:

Interest Rate Decision remain the same at 0.00%

UK:

BoE MPC vote cut (Jun) remain the same at 0

BoE MPC vote hike (Jun) remain the same at 0

BoE MPC vote unchanged (Jun) remain the same at 9

BoE QE Total (Jun) increased from 645B to 725B

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

Euro Zone:

ECB LTRO increased from 115.0B to 1,308.4B

US/AMERICAS:

Fourteen states across the US have seen a recent rise in coronavirus cases; however, the Trump administration adamantly will not shut down the American economy again. Treasury Secretary Steven Mnuchin previously admitted to CNBC that the lockdown was a lesson learned for the Trump administration, saying that the measures did more harm than good.

In a late night interview with Fox News on Wednesday, President Trump confirmed that a quarantine would not be implemented at the federal level. The president admitted that when the virus first reached the US, the impact was not widely understood, and he regrets shutting down schools as it is “unfair to the children.” President Trump said that the US is well-equipped to handle the virus to the extent that there is an excess of supplies. He fully expects schools to reopen in the fall and said that a vaccine would be forthcoming.

One in four Americans, 46 million in total, have lost their livelihoods over the past 13 weeks, according to new data released by the Labor Department this Thursday. The latest week’s jobless claims totaled 1.5 million, slightly exceeding analysts’ expectations of 1.3 million. The number of people filing continuing unemployment claims reached 20.5 million during the week ending on June 6,  which is a slight decrease from the prior week’s 20.9 million figure.

The Bank of Canada’s Deputy Governor Lawrence Schembri admitted today that it will likely take a long time for the Canadian economy to recover. “The uncertainty around this recuperation stage is extraordinary and points toward a recovery that will be gradual and long-lasting as this uncertainty slowly dissipates,” Schembri stated. He believed the recovery will take place in two phases, the first being a surge after reopening, followed by a lengthy period of stabilization to previous levels. However, he did not mention how the central bank would directly respond to this development.

US Market Closings:

  • Dow declined 39.51 points or -0.15% to 26,080.1
  • S&P 500 advanced 1.85 points or 0.06% to 3,115.34
  • Nasdaq advanced 32.52 points or 0.33% to 9,943.05
  • Russell 2000 advanced 0.54 of a point or 0.04% to 1,427.08

Canada Market Closings:

  • TSX Composite advanced 51.14 points or 0.33% to 15,479.83
  • TSX 60 advanced 4.05 points or 0.44% to 934.92

Brazil Market Closing:

  • Bovespa advanced 577.95 points or 0.6% to 96,125.24

ENERGY:

Global energy giants representing the world’s leading oil, gas, and petrochemical companies sounded cautious optimism on the state of the global economy and the uptick in demand for energy as they convened at a special virtual edition of the Abu Dhabi CEO Roundtable. The exclusive, invitation-only event marked the fifth edition of the Abu Dhabi CEO Roundtable and was hosted by Dr. Sultan Ahmed Al Jaber, UAE Minister of State and group CEO of the Abu Dhabi National Oil Company (Adnoc).

The oil markets had a green day today:

  • Crude Oil increased 0.64 USD/BBL or 1.69% to 38.6000
  • Brent increased 0.77 USD/BBL or 1.90% to 41.3000
  • Natural gas increased 0.012 USD/MMBtu or 0.74% to 1.6430
  • Gasoline increased 0.0347 USD/GAL or 2.87% to 1.2417
  • Heating oil increased 0.0203 USD/GAL or 1.73% to 1.1942

The above data was collected around 14.05 EST on Thursday.

  • Top commodity gainers: Gasoline (2.87%), Lumber (2.69%), Ethanol (6.89%), and Soda Ash (2.67%)
  • Top commodity losers: Platinum (-1.59%), Sugar (-2.06%), Cocoa (-3.28%), and Coffee (-1.87%)

The above data was collected around 14:10 EST on Thursday.

BONDS:

Japan 0.02%(+0bp), US 2’s 0.20% (-0bps), US 10’s 0.70%(-3bps); US 30’s 1.48%(-4bps), Bunds -0.44% (-2bp), France -0.07% (-2bp), Italy 1.36% (-2bp), Turkey 11.75% (+0bp), Greece 1.29% (+11bp), Portugal 0.52% (-5bp); Spain 0.54% (-3bp) and UK Gilts 0.23% (+4bp).

  • French 3-Year BTAN Auction decreased from -0.53% to -0.56%
  • French 5-Year BTAN Auction decreased from -0.33% to -0.48%
  • Spanish 10-Year Obligacion Auction decreased from 0.550% to 0.530%
  • Spanish 3-Year Bonos Auction decreased from -0.215% to -0.242%
  • Spanish 5-Year Bonos Auction decreased from -0.028% to -0.075%
  • US 4-Week Bill Auction decreased from 0.130% to 0.125%
  • US 8-Week Bill Auction decreased from 0.155% to 0.135%