Market Talk – June 30, 2020

ASIA:

China has passed a wide-reaching national security law for Hong Kong, which many fear could be used to override existing legal processes and further erode the city’s civil and political freedoms. Beijing’s top lawmaking body, the National People’s Congress (NPC), passed the law unanimously on Tuesday morning local time, bypassing Hong Kong’s legislature, Chinese state-run Xinhua news agency reported. China says the law is needed to tackle unrest and instability linked to a broadening pro-democracy movement.

India’s first COVID-19 vaccine candidate COVAXIN has been granted permission for advancing to human trials. Bharat Biotech developed this medicine in collaboration with the Indian Council of Medical Research (ICMR) and National Institute of Virology (NIV). There are no details on how long the next steps are likely to take and when the vaccine is likely to be launched in the market.

India’s federal fiscal deficit in the first two months through May stood at $61.67 billion, or 58.6% of the budgeted target for the current fiscal year, government data showed on Tuesday. Net tax receipts during April-May period were USD 4.48 billion, while total expenditure was approx. 66.5 billion USD, the data showed, indicating the government was front-loading its budgeted spending to combat the impact of the pandemic.

The European Union’s aviation safety agency announced on Tuesday that Pakistan’s national airline would not be allowed to fly into Europe for at least six months after the country’s aviation minister revealed that nearly a third of Pakistani pilots had cheated during their pilot’s exams. An inquiry into a 22 May Airbus A320 crash that killed 97 people at the southern port city of Karachi resulted in the revelation that 260 of 860 pilots in Pakistan had cheated during their exams, but were still given licenses by the Civil Aviation Authority.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 increased 293.10 points or 1.33% to 22,288.14
  • Shanghai increased 23.16 points or 0.78% to 2,984.67
  • Hang Seng increased 125.91 points or 0.52% to 24,427.19
  • ASX 200 increased 82.90 points or 1.43% to 5,897.90
  • Kospi increased 14.85 points or 0.71% to 2,108.33
  • SENSEX decreased 45.72 points or -0.13% to 34,915.80
  • Nifty50 decreased 10.3 points or -0.10% to 10,302.10

The major Asian currency markets had a mixed day today:

  • AUDUSD increased 0.0020 or 0.29% to 0.68961
  • NZDUSD increased 0.0018 or 0.28% to 0.64479
  • USDJPY increased 0.1830 or 0.17% to 107.80
  • USDCNY decreased 0.0059 or -0.08% to 7.06857

Precious Metals:

  • Gold increased 9.1 USD/t oz. or 0.51% to 1,782.30
  • Silver increased 0.338 USD/t. oz or 1.89% to 18.1900

Some economic news from last night:

China:

Chinese Composite PMI (Jun) increased from 53.4 to 54.2

Manufacturing PMI (Jun) increased from 50.6 to 50.9

Non-Manufacturing PMI (Jun) increased from 53.6 to 54.4

Japan:

Jobs/applications ratio (May) decreased from 1.32 to 1.20

Unemployment Rate (May) increased from 2.6% to 2.9%

Industrial Production (MoM) (May) increased from -9.8% to -8.4%

Industrial Production forecast 1m ahead (MoM) (Jun) increased from -4.1% to 5.7%

Industrial Production forecast 2m ahead (MoM) (Jul) increased from 3.9% to 9.2%

South Korea:

Manufacturing BSI Index (Jul) increased from 45 to 51

Industrial Production (YoY) (May) decreased from -5.1% to -9.6%

Industrial Production (MoM) (May) remain the same at -6.7%

Retail Sales (MoM) decreased from 5.3% to 4.6%

Service Sector Output (MoM) (May) increased from 0.5% to 2.3%

Australia:

Housing Credit (May) reman the same at 0.2%

Private Sector Credit (MoM) (May) decreased from 0.0% to -0.1%

New Zealand:

ANZ Business Confidence (Jun) increase from -41.8 to -34.4

NBNZ Own Activity (Jun) increased from -38.7% to -25.9%

Singapore:

Bank Lending (May) decrease from 689.7B to 685.3B

Indonesia:

M2 Money Supply (YoY) (May) increased from 8.60% to 10.40%

 

Some economic news from today:

Hong Kong:

M3 Money Supply (May) increased from -1.0% to 0.1%

Retail Sales (YoY) (May) increased from -36.1% to -32.8%

Japan:

Housing Starts (YoY) (May) increased from -12.9% to -12.3%

Construction Orders (YoY) (May) increased from -14.2% to -6.1%

India:

Federal Fiscal Deficit (May) increased from 2,795.12B to 4,663.43B

Balance of Payments (USD) (Q1) decreased from 21.600B to 18.800B

Current Account % of GDP (QoQ) (Q1) increased from -0.20% to 0.10%

Current Account (USD) (Q1) increased from -2.60B to 0.60B

Infrastructure Output (YoY) (May) increased from -37.0% to -23.4%

Trade Balance (USD) (Q1) decreased from -34.600B to -35.000B

Current Account % of GDP (YoY) decreased from -0.70% to -0.90%

Current Account (USD) increased from -57.100B to -24.600B

Foreign Debt (USD) (Q1) decreased from 563.9B to 558.5B

EUROPE/EMEA:

The UK economy shrank more than first thought between January and March, contracting 2.2% in the joint largest fall since 1979, official figures show. The Office for National Statistics (ONS) revised down its previous estimate of a -2% contraction, with all the main economic sectors dropping. The data comes as the prime minister set out a post-lockdown recovery plan. Boris Johnson said in a speech in Dudley, in the West Midlands, that there would be investment in infrastructure and schools.

The UK, EU, and Nato have expressed concern and anger after China passed a controversial security law giving it new powers over Hong Kong. UK Foreign Secretary Dominic Raab urged China to “step back from the brink” and respect the rights of the people of Hong Kong. He said: “The success of Hong Kong, the entrepreneurial spirit, the vibrancy, the economic success, has been built on its autonomy in ‘one country, two systems’… That clearly is at threat.” The president of the European Council, Charles Michel also called this decision by China a risk seriously undermining the autonomy of Hong Kong.

The major Europe stock markets had a mixed day:

  • CAC 40 decreased 9.47 points or -0.19% to 4,935.99
  • FTSE 100 decreased 56.03 points or -0.90% to 6,169.74
  • DAX 30 increased 78.81 points or 0.64% to 12,310.93

The major Europe currency markets had a mixed day today:

  • EURUSD decreased 0.00097 or -0.09% to 1.12415
  • GBPUSD increased 0.00445 or 0.36% to 1.23596
  • USDCHF decreased 0.0041 or 0.43% to 0.9468

Some economic news from Europe today:

UK:

Business Investment (QoQ) (Q1) increased from -0.5% to -0.3%

Business Investment (YoY) (Q1) decreased from 1.8% to 0.8%

Current Account (Q1) decreased from -9.2B to -21.1B

GDP (YoY) (Q1) decreased from 1.1% to -1.7%

GDP (QoQ) (Q1) decreased from 0.0% to -2.2%

Norway:

Credit Indicator (YoY) (May) remain the same at 4.6%

Central Bank Currency Purchase (Jul) decreased from -2,300.0M to -2,500.0M

Swiss:

Retail Sales (YoY) (May) increased from -18.8% to 6.6%

KOF Leading Indicators (Jun) increased from 49.6 to 59.4

France:

French Consumer Spending (MoM) (May) increased from -19.1% to 36.6%

French CPI (MoM) decreased from 0.1% to -0.1%

French CPI (YoY) decreased from 0.4% to 0.1%

French HICP (YoY) decreased from 0.4% to 0.1%

French HICP (MoM) decreased from 0.2% to -0.1%

French PPI (MoM) (May) increased from -2.9% to -0.1%

Spain:

Spanish GDP (YoY) (Q1) decreased from 1.8% to -4.1%

Spanish GDP (QoQ) (Q1) decreased from 0.4% to -5.2%

Spanish Current account (Apr) decreased from -0.33B to -1.53B

Italy:

Italian CPI (YoY) (Jun) remain the same at -0.2%

Italian CPI (MoM) (Jun) increased from -0.2% to 0.1%

Italian HICP (YoY) (Jun) decreased from -0.3% to -0.4%

Italian HICP (MoM) (Jun) increased from -0.3% to 0.0%

Italian PPI (MoM) (May) increased from -2.6% to -0.1%

Italian PPI (YoY) (May) decreased from -5.1% to -5.3%

Euro Zone:

Core CPI (MoM) increased from 0.0% to 0.3%

Core CPI (YoY) decreased from 0.9% to 0.8%

CPI (YoY) (Jun) increased from 0.1% to 0.3%

CPI (MoM) increased from -0.1% to 0.3%

CPI, n.s.a (Jun) increased from 105.33 to 105.68

HICP ex Energy & Food (YoY) (Jun) decreased from 1.2% to 1.1%

US/AMERICAS:

Gilead Sciences Inc. announced plans to capitalize on a coronavirus treatment called remdesivir. Average consumers will need to pocket up at least $2,340 for a five-day treatment, while many US patients will be forced to pay $3,120 through private insurance. However, US taxpayers provided the pharmaceutical giant with nearly $70 million in funds to develop the drug, and many are calling the high-cost predatory and designed to profit off US consumers. Gilead will permit generic drug manufacturers in developing countries to create the drug for around $600 per five-day treatment.

Despite rising unemployment and an ongoing quarantine, home prices in the US rose in April, according to S&P CoreLogic Case-Shiller National Home Price Index. Home prices rose 4.6% in April, up from 4.5% in March. Phoenix, Seattle and Minneapolis reported the largest home price increases after rising  8.8%, 7.3% and 6.4% respectively. Although home values are on the rise, the number of  existing home sales declines to a 10-year low in April, according to the National Association of Realtors. However, the downtick may be due to the pandemic preventing home showings and open houses. The association saw a strong rebound in May in terms of existing home sales, showing that there is still a high demand for housing in the US.

On Monday, the US Supreme Court Ruled that the Consumer Financial Protection Bureau’s (CFPB) leader may be dismissed at the president’s discretion. The Trump administration had challenged the CFPB in recent years for allegedly misleading consumers and unethical lending practices. The Supreme Court will grant the president the power to dismiss the head of the CFPB “only for inefficiency, neglect, or malfeasance violates the separation of powers,” Chief Justice John Roberts stated. The National Association of Realtors issued the following message in regards to the ruling: “Monday’s U.S. Supreme Court ruling will result in minimal disruption to housing markets, while ensuring bureau’s director serves at president’s will.”

Arizona’s Gov. Doug Ducey (R) announced extreme precautions amid a ride in COVID-19 cases and effectively shutdown all movie theaters, bars, gyms, and water parks for the next 30 days. Children in Arizona must wait until August 17 to attend public schools. Vice President Pence plans to meet Ducey in Phoenix this Wednesday to discuss reopening efforts.

China’s General Administration of Customs placed a temporary ban on meat exported from four Brazilian factories amid the coronavirus crisis. Brazil has the second-highest level of positive COVID-19 cases, second only to the US.

US Market Closings:

  • Dow advanced 217.08 points or 0.85% to 25,812.88
  • S&P 500 advanced 47.05 points or 1.54% to 3,100.29
  • Nasdaq advanced 184.61 points or 1.87% to 10,058.76
  • Russell 2000 advanced 20.16 points or 1.42% to 1,441.37

Canada Market Closings:

  • TSX Composite advanced 125.5 points or 0.82% to 15,515.22
  • TSX 60 advanced 5.61 points or 0.6% to 934.21

Brazil Market Closing:

  • Bovespa declined 678.53 points or -0.71% to 95,055.82

ENERGY:

The oil markets had a mixed day today:

  • Crude Oil increased 0.05 USD/BBL or 0.13% to 39.7500
  • Brent decreased 0.53 USD/BBL or -1.27% to 41.1800
  • Natural gas increased 0.006 USD/MMBtu or 0.35% to 1.7220
  • Gasoline increased 0.0259 USD/GAL or 2.17% to 1.2191
  • Heating oil increased 0.0141 USD/GAL or 1.20% to 1.1843

The above data was collected around 12.50 EST on Tuesday.

  • Top commodity gainers: Corn (4.46%), Orange Juice (3.68%), Bitumen (3.85%), and Steel (3.21%)
  • Top commodity losers: Brent (-1.27%), Live Cattle (-3.53%), Cocoa (-5.88%), and Coal (-0.93%)

The above data was collected around 12:57 EST on Tuesday.

BONDS:

Japan 0.03%(+2bp), US 2’s 0.15% (-1bps), US 10’s 0.64%(+1bps); US 30’s 1.39%(+0bps), Bunds -0.46% (+4bp), France -0.11% (+1bp), Italy 1.33% (-4bp), Turkey 11.50% (+4bp), Greece 1.23% (-6bp), Portugal 0.49% (-0bp); Spain 0.47% (+7bp) and UK Gilts 0.17% (+1bp).

 

  • Italian 10-Year BTP Auction decreased from 1.42% to 1.20%
  • Italian 5-Year BTP Auction decreased from 0.91% to 0.68%