Market Talk – June 30, 2021

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ASIA:

 

China’s debt has grown dramatically over the past decade and is one of the biggest economic challenges confronting the ruling Chinese Communist Party, a major online news agency reported. The pandemic last year hit China’s economic growth and prompted authorities to make it easier for companies to get loans. As a result, China’s debt — measured against the size of its economy — soared to record levels in 2020. China’s debt reached an all-time high of nearly 290% of gross domestic product in the third quarter last year, data by the Bank of International Settlements (BIS) showed. The corporate sector in China accounted for a large proportion of total debt at more than 160% of GDP, according to BIS data.

 

S&P Global cut its growth forecasts for some of Asia’s top economies including India, the Philippines and Malaysia on Monday, offsetting upgrades to China and South Africa and much of Latin America. The estimates, which feed into S&P’s closely-followed sovereign ratings, saw India’s growth projection chopped to 9.5% from 11% due to its COVID-19 outbreak, the Philippines’ lowered to 6% from 7.9% and Malaysia’s downgraded to 4.1% from 6.2%. In contrast, China’s forecast was nudged up to 8.3% from 8%, Brazil’s was hoisted to 4.7% from 3.4%, Mexico’s to 5.8% from 4.9% while those of South Africa, Poland and Russia were lifted to 4.2%, 4.5% and 3.7%, respectively, from 3.6%, 3.4% and 3.3%.

 

Japanese retail sales beat expectations in May as households loosened their purse strings, but underlying trends in consumption remain hostage to COVID-19-linked pressures and suggest the economic recovery will take time to gather steam. Retail sales jumped 8.2% in May from a year earlier, the third straight month of growth, government data showed on Tuesday, a larger rise than the median market forecast for a 7.9% gain. Separate data showed the nationwide seasonally adjusted unemployment rate was up at 3.0%, above the previous month’s 2.8% and a median forecast of 2.9%.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 decreased 21.08 points or -0.07% to 28,791.53
  • Shanghai increased 18.02 points or 0.50% to 3,591.20
  • Hang Seng decreased 166.15 points or -0.57% to 28,827.95
  • ASX 200 increased 11.80 points or 0.16% to 7,313.00
  • Kospi increased 10.00 points or 0.30% to 3,296.68
  • SENSEX decreased 66.95 points or -0.13% to 52,482.71
  • Nifty50 decreased 26.95 points or -0.17% to 15,721.50

 

 

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.00131 or -0.17% to 0.74981
  • NZDUSD decreased 0.00041 or -0.06% to 0.69847
  • USDJPY increased 0.57 or 0.51% to 111.11
  • USDCNY increased 0.00172 or 0.03% to 6.46738

 

Precious Metals:

  • Gold increased 8.55 USD/t oz. or 0.49% to 1,769.64
  • Silver increased 0.38 USD/t. oz or 1.48% to 26.126

 

EUROPE/EMEA:

 

UK unemployment fell for the fourth month in a row in April as businesses took on more staff in response to the relaxation of Covid-19 restrictions. The unemployment rate fell to 4.7% in the three months to April, representing about 1.6 million people, in a modest improvement from 4.8% in the three months to March. The Office for National Statistics said the jobs market showed further signs of recovery as non-essential shops and hospitality venues were allowed to open outdoors across the UK. The latest figures come after Rishi Sunak rejected business demands to extend the furlough scheme despite the four-week delay for the easing of Covid-19 restrictions previously set for 21 June. Business leaders and Labour have warned failure to provide fresh economic support would risk thousands of job losses this summer, as the furlough scheme is wound down from the start of July.

 

French energy companies are in discussions to develop hydrogen projects in the UAE, as Opec’s third-largest producer looks to decarbonize its economy, according to the European country’s ambassador to the Emirates. French energy companies such as Total, which recently rebranded itself to TotalEnergies, as well as EDF and Engie are big players in developing conventional and renewable power infrastructure in the UAE. EDF Renewables is part of a consortium – with UAE entities Masdar and Taqa and China’s JinkoPower – that is developing a 2-gigawatt solar PV project in Abu Dhabi’s Al Dhafra region.

The major Europe stock markets had a negative day:

  • CAC 40 decreased 59.60 points or -0.91% to 6,507.83
  • FTSE 100 decreased 50.08 points or -0.71% to 7,037.47
  • DAX 30 decreased 159.55 points or -1.02% to 15,531.04

 

 

The major Europe currency markets had a mixed day today:

  • EURUSD decreased 0.00379 or -0.32% to 1.18600
  • GBPUSD decreased 0.00067 or -0.05% to 1.38334
  • USDCHF increased 0.00403 or 0.44% to 0.92510

 

US/AMERICAS:

Private payrolls in the US surpassed expectations after rising by 692,000 in June. The ADP reported that the hiring boom was boosted by the hospitality sector reopening and adding 332,000 positions. May’s job boom was revised down significantly from 978,000 to 886,000. The Federal Reserve expects the job recovery to continue.

Home sales in the US spiked in May after waning in recent months. Home sales rose 8% from April to May, marking the fastest pace of sales for May since 2005. On a yearly basis, home sales are up 13% from May of 2020 when certain states began to ease quarantine restrictions. According to the National Association of Realtors, analysts anticipated home sales declining 1% in May, but as mortgage rates remain low and remote work becomes common the housing boom may not be over yet.

Alberta, Canada, spent over C$5 billion to combat COVID-19. Finance Minister Travis Toews said the money went to testing, vaccinations, protective equipment, hospitals, and businesses in the form of grants. The fiscal year ended with a C$17 billion deficit, while taxpayer debt reached C$93 billion. Alberta’s GDP fell 8.2% due to COVID regulations and unemployment has reached 11.4%.

US Market Closings:

  • Dow advanced 210.22 points or 0.61% to 34,502.51
  • S&P 500 advanced 5.7 points or 0.13% to 4,297.5
  • Nasdaq declined 24.38 points or -0.17% to 14,503.95
  • Russell 2000 advanced 1.71 points or 0.07% to 2,310.55

 

Canada Market Closings:

  • TSX Composite declined 5.44 points or -0.03% to 20,165.58
  • TSX 60 declined 1.07 points or -0.09% 1,209.15

 

Brazil Market Closing:

  • Bovespa declined 525.78 points or -0.41% to 126,801.66

ENERGY:

 

The oil markets had a mixed day today:

 

  • Crude Oil increased 0.51 USD/BBL or 0.70% to 73.4900
  • Brent increased 0.28 USD/BBL or 0.37% to 75.0400
  • Natural gas increased 0.11 USD/MMBtu or 3.03% to 3.7400
  • Gasoline decreased 0.00 USD/GAL or -0.03% to 2.2384
  • Heating oil increased 0.01 USD/GAL or 0.33% to 2.1290

 

 

  • Top commodity gainers: Soybeans (6.64%), Corn (3.71%), Canola (3.71%) and Wheat (4.96%)
  • Top commodity losers: Rubber (-4.57%), Lumber (-4.35%), Live Cattle (-3.04%), and Feeder Cattle (-1.75%)

 

The above data was collected around 17:01 EST on Wednesday.

 

BONDS:

 

Japan 0.064%(+1bp), US 2’s 0.25%(+0%), US 10’s 1.4765%(+0bps); US 30’s 2.09%(+0.001%), Bunds -0.1720% (+0bp), France 0.172% (+1bp), Italy 0.8477% (-3bp), Turkey 16.69% (+5bp), Greece 0.8410% (+0bp), Portugal 0.451% (+1bp); Spain 0.458% (-0bp) and UK Gilts 0.742% (+0bp).