Market Talk – June 25, 2020

 

ASIA:

Economists don’t see the US and China reaching phase two of the trade deal anytime soon, and have warned that continued tensions and tariff threats could stunt the much-needed economic recovery from the coronavirus shutdowns. Phase one of the deal was signed in January, pausing the trade war that had been raging for more than a year. But even that could fall apart if relations worsen in the coming months, experts have warned.

Israeli officials say that Israel is unlikely to buy Chinese telecommunication giant Huawei’s 5G offering because of security considerations of its own. The US has been campaigning against the integration of Huawei components into the networks of its allies. Within days of Pompeo’s visit, Israel awarded a tender for the world’s largest desalination company to an Israeli company rather than a competing Chinese firm.

Apple, Cisco, and Dell products are among the goods from US companies being caught up in India’s border tensions with China, as Indian ports hold up imports from China, two sources told Reuters on Wednesday. The US-India Strategic Partnership Forum (USISPF), a lobby group representing US firms, told India’s commerce ministry in a letter dated June 23 that lack of clarity and delays could disrupt business and manufacturing operations.

Google said on Thursday it plans to offer credit to millions of merchants in India through its Google Pay app starting later this year. The American technology group is looking to help small businesses in the country steer through the pandemic and also find a business model for its mobile payments service. The company said it is working with financial institutions to offer loans to merchants from within Google Pay for Business app, which already has approx. three million merchants using this platform.

The major Asian stock markets had a negative day today:

  • NIKKEI 225 decreased 274.53 points or -1.22% to 22,259.79
  • Shanghai closed
  • Hang Seng closed
  • ASX 200 decreased 148.00 points or -2.48% to 5,817.70
  • Kospi decreased 49.14 points or -2.27% to 2,112.37
  • SENSEX decreased 26.88 points or -0.08% to 34,842.10
  • Nifty50 decreased 16.40 points or -0.16% to 10,288.90

The major Asian currency markets had a green day today:

  • AUDUSD increased 0.00195 or 0.28% to 0.68770
  • NZDUSD increased 0.00309 or 0.48% to 0.64337
  • USDJPY increased 0.11 or 0.10% to 107.14
  • USDCNY increased 0.00174 or 0.02% to 7.08050

Precious Metals:

  • Gold increased 2.27 USD/t oz. or 0.13% to 1,763.70
  • Silver increased 0.25 USD/t. oz or 1.43% to 17.7700

Some economic news from last night:

Japan:

Foreign Bonds Buying decreased from 1,682.9B to 1,542.0B

Foreign Investments in Japanese Stocks increased from -440.4B to -421.9B

New Zealand:

Exports (May) increased from 5.29B to 5.39B

Imports (May) increased from 3.95B to 4.14B

Trade Balance (YoY) (May) increased from -2,410M to -1,330M

Trade Balance (MoM) (May) decreased from 1,339M to 1,253M

Some economic news from today:

Japan:

All Industries Activity Index (MoM) decreased from -3.4% to -6.4%

EUROPE/EMEA:

Officials in southern England have declared a “major incident” after thousands of people flocked to local beaches. Bournemouth and Sandbanks, in Dorset, were hit particularly hard as crowds came to enjoy the hottest day of the year so far, according to a statement released Thursday by local authority Bournemouth, Christchurch and Poole (BCP) Council. The UK is slowly easing its coronavirus restrictions and groups of up to six people are allowed to meet up outside in England. However, the sheer number of sunseekers caused huge problems.

UK holidaymakers could be able to travel to most of Western Europe this summer without having to quarantine. Ministers are finalizing plans for a series of “travel corridors” that will mean people arriving into the UK will not need to self-isolate. Participating countries could include France, Italy, Spain, Greece, Belgium, Germany, Norway, the Netherlands, Turkey and Finland – but not Portugal.

France and Germany expressed political and financial backing for the World Health Organization in its fight against the coronavirus on Thursday, with Germany saying it would give a record half-billion euros in funding and equipment this year, Reuters reported. WHO chief Tedros Adhanom Ghebreyesus said that the agency, criticized by the United States for being slow off the mark in tackling the pandemic, was getting the support it needed and that the talks had been “very productive.” He announced additional donations of funds and medical equipment to WHO that would bring Germany’s total support to 500 million euros ($561 million) this year, the “highest amount ever”, as it assumes the EU presidency.

The UAE’s Minister of State for Foreign Affairs, Anwar Gargash, told CNBC that the present conflict of hostile confrontation between US and China is a global concern. He said, “We will have to balance and manage, and it is very difficult. I would say right now, perhaps we are managing — like many other countries, but more and more, we look at that and see this will be a major, major issue.” The precarious state of US-China relations remains a point of concern for the UAE, which has strong ties with both countries. The UAE has a long-held military and diplomatic alliance with the US, as well as a growing economic relationship with China, which in 2016 became the world’s top investor in the Middle East.

The major Europe stock markets had a green day:

  • CAC 40 increased 47.22 points or 0.97% to 4,918.58
  • FTSE 100 increased 23.45 points or 0.38% to 6,147.14
  • DAX 30 increased 83.93 points or 0.69% to 12,177.87

The major Europe currency markets had a mixed day today:

  • EURUSD decreased 0.00229 or -0.20% to 1.12277
  • GBPUSD increased 0.00044 or 0.04% to 1.24165
  • USDCHF decreased 0.00009 or -0.01% to 0.94812

Some economic news from Europe today:

France:

France Jobseekers Total decreased from 4,315.7K to 4,167.4K

Germany:

GfK German Consumer Climate (Jul) increased from -18.6 to -9.6

Spain:

Spanish PPI (YoY) decreased from -8.4% to -8.7%

Italy:

Italian Trade Balance Non-EU (May) increased from -0.15B to 4.15B

UK:

CBI Distributive Trades Survey (Jun) increased from -50 to -37

US/AMERICAS:

After a volatile day of trading, Wall Street closed in the green after experiencing an uptick in trading later in the afternoon. The Nasdaq surpassed the 10,000 level once again, led by Workda a (3.44%), Dollar Tree (3.34%), and Cognizant (3.33%). The Dow rose nearly 300 points after strong performances from Goldman (4.59%), Dow (3.98%), and JPMorgan Chase (3.49%).

Treasury Secretary Steven Mnuchin backed the government’s decision not to fully disclose the list of Paycheck Protection Program (PPP) loan recipients. As part of the $2.2 trillion relief package presented in March, the PPP loan program has been a controversial topic, with many questioning which companies were deserving of the government loan. According to Time Magazine, as of June 19, 80% of the $649 billion worth of PPP funds had been distributed. Mnuchin said that he will release the names of businesses who received over $150,000 in funding, but will not disclose the exact amount they received. “This was a program we never agreed to full transparency, and the reason for that is the loan amount is based upon the amount of salary,” Mnuchin told Time, saying that it would be unfair to disclose people’s compensation.

Texas is backtracking on plans to reopen their state’s economy after new coronavirus cases nearly doubled over the past week. Texas Gov. Greg Abbott will allow businesses to remain open while following stricter social distancing guidelines. However, elective procedures will now be postponed in certain counties where cases are increasing. Abbott warned that more stringent measures may  be implemented if cases continue to rise.

Disney shares fell during early trading after it was announced that Disneyland California will delay opening. The news comes after California reported its largest rise in cases this week. Disney’s Florida theme parks are still scheduled to resume operations in July.

Moderna, one of the first pharmaceutical companies to begin human testing, is partnering with Catalent Inc to develop a coronavirus vaccine. Although the vaccine is still in the experimental stage, Catalent is set to manufacture 100 million vials during Q3.

US Market Closings:

  • Dow advanced 299.66 points or 1.18% to 25,745.60
  • S&P 500 advanced 33.43 points or 1.1% to 3,083.76
  • Nasdaq advanced 107.84 points or 1.09% to 10,017
  • Russell 2000 advanced 23.57 points or 1.7% to 1,413.31

Canada Market Closings:

  • TSX Composite advanced 151.76 points or 0.99% to 15,446.14
  • TSX 60 advanced 10.48 points or 1.14% to 932.27

Brazil Market Closing:

  • Bovespa advanced 1,605.73 points or 1.7% to 95,983.09

ENERGY:

The oil markets had a mixed day today:

  • Crude Oil increased 0.81 USD/BBL or 2.13% to 38.8200
  • Brent increased 0.95 USD/BBL or 2.36% to 41.2100
  • Natural gas decreased 0.11 USD/MMBtu or -6.89% to 1.4730
  • Gasoline increased 0.01 USD/GAL or 0.80% to 1.1921
  • Heating oil increased 0.01 USD/GAL or 0.87% to 1.1564

The above data was collected around 12.55 EST on Thursday.

  • Top commodity gainers: Brent (2.36%), Ethanol (9.27%), Rubber (4.89%), and Oat (2.70%)
  • Top commodity losers: Coffee (-2.53%), Corn (-2.39%), Coal (-2.20%), and Natural Gas (6.89%)

The above data was collected around 13:00 EST on Thursday.

BONDS:

Japan 0.02%(+1bp), US 2’s 0.18% (-0bps), US 10’s 0.67%(-2bps); US 30’s 1.41%(-3bps), Bunds -0.47% (-3bp), France -0.12% (-2bp), Italy 1.39% (+5bp), Turkey 11.33% (-22bp), Greece 1.32% (+5bp), Portugal 0.48% (+1bp); Spain 0.46% (-1bp) and UK Gilts 0.16% (-3bp).

  • US 4-Week Bill Auction decreased from 0.125% to 0.110%
  • US 8-Week Bill Auction increased from 0.135% to 0.140%
  • US 7-Year Note Auction decreased from 0.553% to 0.511%