Market Talk – June 2, 2021

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ASIA:

Chinese and US senior trade officials held a virtual meeting to ramp up trade talks. Chinese Vice Premier Liu He held a virtual meeting with US Treasury Secretary Janet Yellen on Wednesday – his second discussion with top economic and trade officials under the Biden administration in less than a week, with both parties underscoring equality and mutual respect as well as the importance of economic ties in bilateral relations, sparking optimism over enhanced communication between the world’s two biggest economies. The increased frequency of talks between senior trade and economic officials signaled that ties are back to the normal trade and economic-talk track.

India’s factory activity growth slowed significantly in May as an escalation in coronavirus cases whacked new orders and output w

hile scarcity of raw materials drove up input costs, a private sector survey showed on Tuesday. The Nikkei Manufacturing Purchasing Managers’ Index, compiled by IHS Markit, fell to 50.8 in May from 55.5 in April, its lowest since July 2020. The output and new orders sub-indexes fell to their lowest levels since July last year.

Australia’s economy raced ahead last quarter as consumers and businesses spent with abandon, lifting output back above where it was last year when pandemic lockdowns tipped the country into its first recession in three decades. The economy expanded by a real 1.8% in the three months to March, data from the Australian Bureau of Statistics (ABS) showed on Wednesday. The solid back-to-back quarterly growth helped annual output climb 1.1% to A$525.7 billion ($408.05 billion), a major turnaround from last year’s recession low of $468.3 billion.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 increased 131.80 points or 0.46% to 28,946.14
  • Shanghai decreased 27.58 points or -0.76% to 3,597.14
  • Hang Seng decreased 170.38 points or -0.58% to 29,297.62
  • ASX 200 increased 75.20 points or 1.05% to 7,217.80
  • Kospi increased 2.36 points or 0.07% to 3,224.23
  • SENSEX decreased 85.40 points or -0.16% to 51,849.48
  • Nifty50 increased 1.35 points or 0.01% to 15,576.20

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.00019 or -0.02% to 0.77492
  • NZDUSD decreased 0.00141 or -0.19% to 0.72361
  • USDJPY increased 0.12 or 0.11% to 109.61
  • USDCNY decreased 0.00291 or -0.05% to 6.37933

Precious Metals:

  • Gold increased 6.51 USD/t oz. or 0.34% to 1,906.70
  • Silver increased 0.186 USD/t. oz or 0.67% to 28.087

Some economic news from last night:

Japan:

Monetary Base (YoY) decreased from 24.3% to 22.4%

South Korea:

CPI (MoM) (May) decreased from 0.2% to 0.1%

CPI (YoY) (May) increased from 2.3% to 2.6%

Australia:

GDP (YoY) (Q1) increased from -1.0% to 1.1%

GDP (QoQ) (Q1) decreased from 3.2% to 1.8%

GDP Capital Expenditure (Q1) increased from 3.4% to 4.7%

GDP Chain Price Index (Q1) increased from 1.7% to 3.1%

GDP Final Consumption (Q1) decreased from 3.2% to 0.7%

New Zealand:

Terms of Trade – Exports Prices (Q1) decreased from -0.4% to -0.8%

Terms of Trade – Exports Volume (QoQ) (Q1) decreased from 3.3% to -1.9%

Terms of Trade – Imports Prices (Q1) increased from -1.7% to -0.8%

Terms of Trade Index (QoQ) (Q1) decreased from 1.3% to 0.1%

Indonesia:

Nikkei Manufacturing PMI (May) increased from 54.6 to 55.3

Some economic news from today:

India:

Exports (USD) (May) increased from 30.63B to 32.21B

Imports (USD) (May) decreased from 45.72B to 38.53B

Trade Balance (May) increased from -15.09B to -6.32B

Singapore:

Manufacturing PMI (May) decreased from 50.9 to 50.7

Indonesia:

Inflation (MoM) (May) increased from 0.13% to 0.32%

Inflation (YoY) (May) increased from 1.42% to 1.68%

Core Inflation (YoY) (May) increased from 1.18% to 1.37%

EUROPE/EMEA:

The EU has agreed it will force large multinational companies to publish a breakdown of the tax they pay in each of the bloc’s member states and in tax havens such as Seychelles, piling pressure on the UK government to follow suit. Under the new rules, companies with global revenues of at least €750m (£645m) over two consecutive years must publicly disclose how much tax they pay in each of the EU member states and in 19 jurisdictions put on black and grey lists that are regarded to varying degrees as being “non-cooperative.” The data provided will need to be broken down into the nature of the company’s activities, the number of full-time employees, the amount of profit or loss before income tax, the amount of accumulated and paid income tax, and accumulated earnings.

After years of stalled talks, a deal was struck on Tuesday evening between EU governments and MEPs on public country by country reporting, a policy designed to expose how some of the world’s biggest companies – such as Apple, Facebook and Google – avoid paying an estimated $500bn (£358bn) a year in taxes through shifting their profits, an major online news agency reported. The chancellor, Rishi Sunak, can exercise powers under the Finance Act 2016 to make multinationals’ country by country reporting data public in the UK, but the government has said it will only do so if there is an international agreement on the issue.

The major Europe stock markets had a green day:

  • CAC 40 increased 32.12 points or 0.50% to 6,521.52
  • FTSE 100 increased 27.54 points or 0.39% to 7,108.00
  • DAX 30 increased 35.35 points or 0.23% to 15,602.71

The major Europe currency markets had a mixed day today:

  • EURUSD decreased 0.00038 or -0.03% to 1.22127
  • GBPUSD increased 0.0012 or 0.08% to 1.41671
  • USDCHF increased 0.00121 or 0.13% to 0.89830

 

Some economic news from Europe today:

Germany:

German Retail Sales (MoM) (Apr) decreased from 7.7% to -5.5%

German Retail Sales (YoY) (Apr) decreased from 11.0% to 4.4%

Norway:

Current Account (Q1) increased from 5.1B to 94.3B

France:

French Government Budget Balance (Apr) decreased from -60.1B to -91.4B

Spain:

Spanish Unemployment Change decreased from -39.0K to -129.4K

UK:

BoE Consumer Credit (Apr) increased from -0.388B to -0.377B

M4 Money Supply (MoM) (Apr) decreased from 0.7% to 0.1%

Mortgage Approvals (Apr) increased from 83.40K to 86.92K

Mortgage Lending (Apr) decreased from 11.52B to 3.30B

Euro Zone:

PPI (YoY) (Apr) increased from 4.3% to 7.6%

PPI (MoM) (Apr) decreased from 1.1% to 1.0%

US/AMERICAS:

The Federal Reserve’s latest Beige Book report released Wednesday shows that the US economy “expanded at a moderate pace from early April to late May, a somewhat faster rate than the prior reporting period.” Vaccinations and relaxed coronavirus measures spurred consumer spending. Factor output increased, despite “significant” supply chain disruptions. Both household and business lending increased modestly. The workforce has strengthened, but there is a shortage of workers to fill vacant positions. “Overall, expectations changed little, with contacts optimistic that economic growth will remain solid,” the thesis laid out.

According to the Mortgage Bankers Association, US home mortgage applications declined 4% last week, representing the lowest number of applications since February 2020. This could be a sign that the home-buying frenzy is beginning to stabilize. This is the second consecutive week where purchases fell, with numerous analysts citing a housing shortage. The average 30-year fixed mortgage fell to 3.17% last week from 3.18% the week prior.

Required minimum distribution (RMD) or monthly retirement account withdrawals are back in effect in the US after they were waived in 2020. Due to increased life expectancy, the age for those who must withdraw has changed from 70.5 to 72. The IRS issued their life expectancy factor, and older adults must divide the balance of each account by their number to determine their RMD.

US Market Closings:

  • Dow advanced 25.07 points or 0.07% to 34,600.38
  • S&P 500 advanced 6.08 points or 0.14% to 4,208.12
  • Nasdaq advanced 19.85 points or 0.14% to 13,756.33
  • Russell 2000 advanced 3.09 points or 0.13% to 2,297.83

Canada Market Closings:

  • TSX Composite declined 4.86 points or -0.02% to 19,971.15
  • TSX 60 declined 1.69 points or -0.14% to 1,194.77

Brazil Market Closing:

  • Bovespa advanced 1,316.39 points or 1.03% to 129,583.44

 

ENERGY:

The oil markets had a mixed day today:

 

  • Crude Oil increased 0.99 USD/BBL or 1.46% to 68.7000
  • Brent increased 0.92 USD/BBL or 1.31% to 71.1700
  • Natural gas decreased 0.047 USD/MMBtu or -1.51% to 3.0570
  • Gasoline increased 0.0189 USD/GAL or 0.87% to 2.1893
  • Heating oil increased 0.0338 USD/GAL or 1.63% to 2.1053

 

The above data was collected around 12:53 EST on Wednesday

 

  • Top commodity gainers: Heating Oil (1.63%), Crude Oil (1.46%), Live Cattle (2.55%) and Palm Oil (5.19%)
  • Top commodity losers: Corn (-2.98%), Lumber (-4.34%), Natural Gas (-1.51%), and Rubber (-1.56%)

The above data was collected around 12:56 EST on Wednesday.

BONDS:

Japan 0.0830%(+1bp), US 2’s 0.1466%(-0.00%), US 10’s 1.5977%(-1.73bps); US 30’s 2.2846%(-0.01%), Bunds -0.1940% (-1.9bp), France 0.166% (-1.3bp), Italy 0.8786% (-2.69bp), Turkey 17.81% (+0bp), Greece 0.8280% (-1bp), Portugal 0.453% (-1.5bp); Spain 0.464% (-1.43bp) and UK Gilts 0.802% (-2.7bp).

 

  • German 5-Year Bobl Auction increased from -0.610% to -0.570%
  • UK 10-Year Treasury Gilt Auction increased from 0.924% to 0.940%