Market Talk – March 18, 2020

ASIA:

The Indian Bank Association had an emergency meeting on Monday evening to explore ways to lend a helping hand to businesses hit by the COVID-19 outbreak. During the video conference meeting called on short notice, they discussed possible credit lines and special benefits that could be given to certain sectors such as transportation, travel and tourism, exports and MSMEs.

India dropped its crucial initiative by lowering import taxes on crude and refined vegetable oils as the outbreak of the coronavirus hits government revenue collection, two sources said on Tuesday. India’s income tax revenues contracted 3.5% in the first 11 months of the current fiscal year, which began in April 2019, and income from other taxes grew by a meager 3.8%, the finance ministry told Parliament on Monday.

Salesforce, the global giant in CRM, said on Wednesday that former banker Arundhati Bhattacharya will be joining the company on April 20 as chairperson and chief executive of its India division.

Some economists have said that China may launch a stimulus program that will spur a new wave of demand in countries devastated by the coronavirus and help save them from a global recession. However, the People’s Bank of China (PBoC) has taken a more measured approach. The PBoC has lowered lending rates slightly and this week opened about $78bn in new lending capacity at banks.

The major Asian stock markets had a negative day today:

  • NIKKEI 225 decreased 284.98 points or -1.68% to 16,726.55
  • Shanghai decreased 50.88 points or -1.83% to 2,728.76
  • Hang Seng decreased 971.91 points or -4.18% to 22,291.82
  • ASX 200 decreased 340.20 points or -6.43% to 4,953.20
  • Kospi decreased 81.24 points or -4.86% to 1,591.20
  • SENSEX decreased 1,709.58 points or -5.59% to 28,869.51

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.01671 or -2.79% to 0.58259
  • NZDUSD decreased 0.01674 or -2.81% to 0.57846
  • USDJPY increased 1.01 or 0.94% to 108.33
  • USDCNY increased 0.05026 or 0.71% to 7.08006

Precious Metals:

  • Gold decreased 57.9 USD/t oz. or -3.76% to 1,484.00
  • Silver decreased 0.9825 USD/t. oz or -7.66% to 11.8410

Some economic news from last night:

Australia:

MI Leading Index (MoM) decreased from 0.0% to -0.4%

New Zealand:

Current Account (YoY) (Q4) increased from -10.28B to -9.23B

Current Account (QoQ) (Q4) increased from -6.35B to -2.66B

Current Account % of GDP (Q4) increased from -3.30% to -3.00%

Japan:

Exports (YoY) (Feb) increased from -2.6% to -1.0%

Imports (YoY) (Feb) decreased from -3.5% to -14.0%

Trade Balance (Feb) increased from -1,313.2B to 1,109.8B

EUROPE/EMEA:

Global markets continued to slump today, with European markets such as FTSE and DAX moving down 4% and 5.5% respectively. Not only were the equity markets hit, but the GBPUSD hit 1.15 a figure not seen in 30 years. The 10-year gilts also saw its biggest daily rise since the financial crisis, with yields moving up 24bp to 0.79%.

The EU has officially closed its borders to anyone outside of the EU for a period of 30 days. Germany will take it a step further and ban people within the EU from entering the country. France in on a total lockdown, meaning citizens must have a specific form filled with permission to leave homes. This came into act at midday today. Switzerland has banned all public events.

Foreign tourists were told they must leave Spain as hotels have been ordered to close as more than 100 deaths were registered in the last 24 hours.

As the coronavirus pandemic’s global death toll approaches 8,000, rich countries are preparing to shovel out billions of dollars in emergency relief to their banks, businesses, and consumers. Countries are certainly reacting, as Spain has promised to pump 200 billion euros into the economy to tackle the virus. The BOE governor said that “helicopter” money will be up to the government to decide.

The major Europe stock markets had a negative day today:

  • CAC 40 decreased 236.94 points or -5.94% to 3,754.84
  • FTSE 100 decreased 214,32 points, or -4.05% to 5,080.58
  • DAX 30 decreased 497.39 points or -5.56% to 8,441.71

The major Europe currency markets had a mixed day today:

  • EURUSD decreased 0.01975 or -1.79% to 1.08185
  • GBPUSD decreased 0.05792 or -4.78% to 1.15378
  • USDCHF increased 0.01442 or 1.50% to 0.97382

Some economic news from Europe today:

UK:

Car Registration (YoY) (Feb) increased from -7.3% to -2.9%

Car Registration (MoM) (Feb) decreased from 0.2% to -46.7%

Thomson Reuters IPSOS PCSI (Mar) increased from 51.6 to 53.5

Italy:

Italian Car Registration (MoM) (Feb) decreased from 11.0% to 4.7%

Italian Car Registration (YoY) (Feb) decreased from -5.9% to -8.8%

Italy Thomson Reuters IPSOS PCSI (Mar) increased from 38.40 to 39.00

Italian Industrial New Orders (YoY) (Jan) decreased from 5.7% to -1.8%

Italian Industrial New Orders (MoM) (Jan) decreased from 1.3% to 1.2%

Italian Industrial Sales (MoM) (Jan) increased from -2.80% to 5.30%

Italian Industrial Sales (YoY) (Jan) increased from -1.50% to 3.80%

Italian Trade Balance (Jan) decreased from 5.007B to 0.542B

Italian Trade Balance EU (Jan) increased from -0.75B to 0.83B

Euro Zone:

Core CPI (MoM) (Feb) remain the same at 0.4%

Core CPI (YoY) (Feb) remain the same at 1.2%

CPI (YoY) (Feb) remain the same at 1.2%

CPI (MoM) (Feb) increased from -1.0% to 0.2%

CPI ex Tobacco (YoY) (Feb) decreased from 1.3% to 1.1%

CPI ex Tobacco (MoM) (Feb) increased from -1.0% to 0.2%

HICP ex Energy & Food (YoY) (Feb) decreased from 1.4% to 1.3%

HICP ex Energy and Food (MoM) (Feb) increased from -1.3% to 0.4%

Trade Balance (Jan) decreased from 23.1B to 1.3B

Germany:

Germany Thomson Reuters IPSOS PCSI (Mar) decreased from 54.27 to 53.70

German Car Registration (MoM) (Feb) increased from -13.1% to -2.6%

German Car Registration (YoY) (Feb) decreased from -7.3% to -10.8%

German WPI (MoM) (Feb) decreased from 1.0% to -0.9%

German WPI (YoY) (Feb) decreased from 0.3% to -0.9%

France:

France Thomson Reuters IPSOS PCSI (Mar) decreased from 44.51 to 43.50

French Car Registration (MoM) (Feb) increased from -36.4% to 25.0%

French Car Registration (YoY) (Feb) increased from -13.4% to -2.7%

US/AMERICAS:

President Donald Trump and the Coronavirus Task Force held a public briefing this afternoon. Last week, the president declared a national emergency. FEMA is on standby and the warning level remains at a one, the highest level for concern. The president announced that he will be invoking the Defense Production Act “in case we need it.” All home foreclosures and evictions are temporarily suspended. President Trump admitted that there have been issues with testing for the virus. The US is working to expand the current process and aims to move toward self-swab testing whereby people can administer their own examines and seek professional help if needed. Vice President Pence reiterated during today’s announcement that only those exhibiting symptoms should seek a test.

“For the people that are now out of work because of the important and necessary containment policies, for instance the shutting down of hotels, bars and restaurants, money will soon be coming to you,” President Trump tweeted, “The onslaught of the Chinese Virus is not your fault! Will be stronger than ever!” It is unclear how the US will provide relief to Americans. The Senate passed a bill today that could expand unemployment and paid leave for workers.

In a mutual decision between the US and Canada, the neighboring countries are closing their borders to “non-essential travel.” Cargo and supplies may still pass between the two countries. “Our governments recognize that it is critical we preserve supply chains between both countries,” Trudeau commented this Wednesday. Nearly, $2 billion in goods pass the US-Canada border daily, making it essential to continue the flow.

Canada is implementing numerous new policies to help citizens affected by the global slowdown due to the coronavirus. Prime Minister Trudeau announced that the government plans to pay small businesses a three-month subsidiary wage “because no one should feel like they have to lay off a worker due to COVID-19.” Canadian students will receive a six-month grace period on their student loans whereby the loans will temporarily be interest-free. Workers who do not qualify for employment insurance without paid sick leave who need to quarantine will be eligible to receive Emergency Care Benefits every two weeks for 14 weeks. “No matter who you are or what you do, right now you should be focused on your health – and not about whether you will lose your job or run out of money for things like groceries or medicine,” Trudeau tweeted.

US Market Closings:

  • Dow declined 1,338.46 points or -6.3% to 19,898.92
  • S&P 500 declined 131.09 points or -5.18% to 2,391.1
  • Nasdaq declined 344.94 points or -4.7% to 6,989.84
  • Russell 2000 declined 115.28 points or -10.42% to 991.23

Canada Market Closings:

  • TSX Composite declined 963.79 points or -7.6% to 11,721.42
  • TSX 60 declined 52.78 points or -6.88% to 714.74

Brazil Market Closing:

  • Bovespa declined 7,722.29 points or -10.35% to 66,894.95

ENERGY:

Crude oil hit an 18-year low; the EIA reported a heavy build of 2 million barrels for the week of March 13. The global lockdown occurring around the world is causing tremendous pressure on the price of oil.

The oil markets had a negative day today:

  • Crude Oil decreased 5.89 USD/BBL or -21.93% to 20.9700
  • Brent decreased 3.72 USD/BBL or -13.00% to 24.9000
  • Natural gas decreased 0.132 USD/MMBtu or -7.19% to 1.7050
  • Gasoline decreased 0.0899 USD/GAL or -11.85% to 0.6686
  • Heating oil decreased 0.0805 USD/GAL or -7.66% to 0.9707
  • Top commodity gainers: Ethanol (5.40%), Wheat (1.55%), Coffee (4.66%), and Oat (1.28%)
  • Top commodity losers: Crude Oil (-21.93%), Copper (-7.87%), Brent (-13.00%), and Gasoline (-11.85%)

The above data was collected around 14.05 EST on Wednesday.

BONDS:

Japan -0.06%(-2bp), US 2’s 0.45% (-4bps), US 10’s 1.18%(+11bps); US 30’s 1.68%(-2bps), Bunds -0.43% (+3bp), France 0.38% (+14bp), Italy 2.25% (-13bp), Turkey 12.40% (+25bp), Greece 3.95% (+25bp), Portugal 1.38% (+12bp); Spain 1.26% (+21bp) and UK Gilts 0.78% (+20bp).

  • German 30-Year Bund Auction decreased from 0.070% to 0.010%