Market Talk – June 22, 2020

ASIA:

China has suspended US poultry imports from a plant owned by a US-based meat processor, Tyson Inc, that has been hit by the coronavirus, as authorities struggle to bring an outbreak in Beijing under control. China’s general administration of customs said on its website it had decided on the suspension after the company confirmed a cluster of COVID-19 cases at the plant, which is located in the town of Springdale. The move came as the WHO reported a record increase in global coronavirus cases on Sunday, with the total rising by 183,020 in a 24-hour period.

China left its benchmark lending rate unchanged for the second straight month at its June fixing on Monday, matching market expectations, after the central bank kept borrowing costs on medium-term loans steady last week. The one-year loan prime rate (LPR) remained at 3.85% from last month’s fixing, while the five-year LPR was also steady at 4.65% from previously. The move in the LPR affects the price lenders charge corporates and households for loans, and the five-year rate influences the pricing of mortgages.

India will restart international flights only once its domestic traffic reaches 50-60% of pre-COVID-19 levels, and that other countries loosen travel restrictions, India’s civil aviation minister has said. The Indian government currently restricts airlines to operate at up to 30% of pre-pandemic capacity.

The United States has blocked Pakistan’s proposal at the UN to portray India as a terrorist promoter. The US had formally informed all members of the UN Security Council on Friday that it was officially blocking, and thus terminating, a proposal to proscribe an Indian national by the UNSC 1267 sanctions committee.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 decreased 41.52 points or -0.18% to 22,437.27
  • Shanghai decreased 2.36 points or -0.08% to 2,965.27
  • Hang Seng decreased 132.55 points or -0.54% to 24,511.34
  • ASX 200 increased 1.90 points or 0.03% to 5,944.50
  • Kospi decreased 14.59 points or -0.68% to 2,126.73
  • SENSEX increased 179.59 points or 0.52% to 34,911.32
  • Nifty50 increased 66.80 points or 0.65% to 10,311.20

The major Asian currency markets had a mixed day today:

  • AUDUSD increased 0.0078 or 1.14% to 0.69125
  • NZDUSD increased 0.0080 or 1.25% to 0.64879
  • USDJPY decreased 0.0070 or -0.01% to 106.87
  • USDCNY decreased 0.0220 or -0.31% to 7.05718

Precious Metals:

  • Gold increased 11.66 USD/t oz. or 0.67% to 1,754.50
  • Silver increased 0.17 USD/t. oz or 0.95% to 17.7670

Some economic news from last night:

China:

PBoC Loan Prime Rate remain the same at 3.85%

New Zealand:

Credit Card Spending (YoY) increased from -49.1% to -21.1%

Some economic news from today:

Hong Kong:

CPI (YoY) (May) decreased from 1.90% to 1.50%

EUROPE/EMEA:

The Advanced Propulsion Centre (APC), a collaboration between the government and the UK’s car making industry claims that a switch to electric vehicles could inject a much-needed £24bn into the nation’s economy over the next five years. The agency also said that the transition from petrol and diesel-powered vehicles to electrified powertrains could create a wealth of opportunities for British companies, the Times reported.

A Syrian doctor living in Germany has been arrested on suspicion of crimes against humanity in his country of origin, prosecutors have said, in the latest German move against suspected war crimes in Syria. The suspect, identified as Alaa M, is accused of having “tortured a detainee in at least two cases” at a prison run by the Syrian intelligence service in the city of Homs in 2011, according to German federal prosecutors.

The major Europe stock markets had a negative today:

  • CAC 40 decreased 30.75 points or -0.62% to 4,948.70
  • FTSE 100 decreased 47.98 points or -0.76% to 6,244.62
  • DAX 30 decreased 67.79 points or -0.55% to 12,262.97

The major Europe currency markets had a mixed day today:

  • EURUSD increased 0.0081 or 0.73% to 1.12579
  • GBPUSD increased 0.0109 or 0.88% to 1.24572
  • USDCHF decreased 0.0046 or -0.48% to 0.94776

Some economic news from Europe today:

UK:

CBI Industrial Trends Orders (Jun) increased from -62 to -58

Steel Production (Metric Ton) (May) increased from 629.20K to 700.00K

Euro Zone:

Consumer Confidence (Jun) increased from -18.8 to -14.7

US/AMERICAS:

The FDIC reported that a record amount of money is flowing into US bank accounts amid the coronavirus crisis. In addition to panic-induced hoarding and fewer opportunities for spending amid lockdown measures, government stimulus packages, and business loans all helped cash stream into US banks. The FDIC believes around $2 trillion was placed in US banks since the beginning of the coronavirus crisis, with $865 billion added in the month of April alone.

President Donald Trump announced today that he is in favor of providing Americans with a second round of stimulus checks. Anticipating bipartisan support, the president declared that the next round of payments could come within weeks.

Home sales in the US dropped -9.7% in May compared to the previous month and sank by -26.6% on an annual basis, according to the National Association of Realtors. This is the sharpest annual decline in home sales since 1982, according to a CNBC report. However, interest rates were at 18% in 1982, showing that historically low rates may not be influencing buyers during the coronavirus crisis.

Governor of the Bank of Canada Tiff Macklem expects the Canadian economy will undergo a “prolonged and bumpy” recovery. Macklem announced this Monday that Canadians can expect stimulus packages to remain in place for a long time, stating that removing the measures are not even of discussion. The bank will also continue repurchasing government bonds until a recovery is “well underway.” The head of the central bank also announced that he foresees an immediate uptick in data once the economy reopens, but warned that “it will be important not to assume that these growth rates will continue beyond the reopening phase.”

Another initial boost to the Canadian economy is expected this Friday when Toronto plans to reopen after a three-month lockdown.

US Market Closings:

  • Dow advanced 153.5 points or 0.59% to 26,024.96
  • S&P 500 advanced 20.12 points or 0.65% to 3,117.86
  • Nasdaq advanced 110.35 points or 1.11% to 10,056.47
  • Russell 2000 advanced 14.86 points or 1.05% to 1,433.50

Canada Market Closings:

  • TSX Composite advanced 42.7 points or 0.28% to 15,516.9
  • TSX 60 advanced 1.87 points or 0.2% to 935.25

Brazil Market Closing:

  • Bovespa declined 1,236.14 points or 1.28% to 95,335.96

ENERGY:

The UK’s biggest household energy supplier, British Gas, will soon face competition from a new, cheaper supplier from its own stable. Parent Centrica has been trialing a digital-only “challenger” brand under the name British Gas X amid the highly competitive world of energy supply.

The oil markets had a mixed day today:

  • Crude Oil increased 0.35 USD/BBL or 0.88% to 40.1000
  • Brent increased 0.59 USD/BBL or 1.40% to 42.7800
  • Natural gas decreased 0.012 USD/MMBtu or -0.72% to 1.6550
  • Gasoline increased 0.0274 USD/GAL or 2.18% to 1.2853
  • Heating oil increased 0.0146 USD/GAL or 1.21% to 1.2177

The above data was collected around 13.48 EST on Monday.

  • Top commodity gainers: Gasoline (2.18%), Platinum (2.27%), Coffee (2.13%), and Lumber (2.09%)
  • Top commodity losers: Lean Hogs (-3.71%), Corn (-1.28%), Cocoa (-1.76%), and Palm Oil (-1.24%)

 

The above data was collected around 13:55 EST on Monday.

BONDS:

Japan 0.01%(+1bp), US 2’s 0.18% (-0bps), US 10’s 0.68%(-2bps); US 30’s 1.45%(-2bps), Bunds -0.44% (-2bp), France -0.11% (-2bp), Italy 1.35% (+1bp), Turkey 11.59% (-8bp), Greece 1.30% (+1bp), Portugal 0.51% (-1bp); Spain 0.47% (-4bp) and UK Gilts 0.20% (-4bp).

 

  • US 3-Month Bill Auction decreased from 0.175% to 0.155%
  • US 6-Month Bill Auction decreased from 0.185% to 0.175%
  • French 3-Month BTF Auction decreased from -0.510% to -0.551%
  • French 6-Month BTF Auction decreased from -0.507% to -0.529%
  • French 12-month BTF Auction decreased from -0.496% to -0.526%