Market Talk – March 2, 2020

ASIA:

India has reported three more cases of coronavirus taking the total number of people who have tested positive in the country to six. An Italian national was tested positive for coronavirus in the western Indian state of Rajasthan. The other two cases were detected in the national capital New Delhi and the other in the southern state of Telangana.

India’s unemployment rate rose to 7.78% in February, the highest since October 2019, and up from 7.16% in January, according to data released by the Centre for Monitoring Indian Economy (CMIE) on Monday, reflecting the impact of a slowdown in the economy. India’s economy expanded at its slowest pace in more than six years in the last three months of 2019, with analysts predicting further deceleration as the global coronavirus outbreak stifles growth in Asia’s third-largest economy.

The Trump Administration on Monday announced a new limit on the number of Chinese citizens who may work in the United States for five state-controlled Chinese news organizations. The decision is expected to escalate tensions between Washington and Beijing in a diplomatic feud that has caught journalists in the crossfire. As per the sources, the new limits could, in effect, force Chinese citizens to leave if their visas allowing them to work in the United States are tied to the news organizations that must now choose which employees will remain on assignment.

Morgan Stanley upgraded stocks of the three nations China, Singapore and Australia in its model allocation for Asia Pacific and emerging markets on Sunday, citing expectations of further policy stimulus amid the widening public health emergency and cheaper relative valuations. Morgan Stanley stated that the coronavirus affected equity markets of China, Singapore and Australia can now provide shelter from the outbreak.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 increased 201.12 points or 0.95% to 21,344.08
  • Shanghai increased 90.63 points or 3.15% to 2,970.93
  • Hang Seng increased 161.75 points or 0.62% to 26,291.68
  • ASX 200 decreased 49.70 points or -0.77% to 6,391.50
  • Kospi increased 15.50 points or 0.78% to 2,002.51
  • SENSEX decreased 153.27 points or -0.40% to 38,144.02

The major Asian currency markets had a mixed day today:

  • AUDUSD increased 0.00132 or 0.20% to 0.65252
  • NZDUSD increased 0.0029 or 0.47% to 0.6245
  • USDJPY increased 0.63 or 0.58% to 108.12
  • USDCNY decreased 0.0109 or 0.16% to 6.9635

Precious Metals:

  • Gold increased 6.46 USD/t oz. or 0.41% to 1,588.22
  • Silver increased 0.1514 USD/t. oz or 0.91% to 16.7592

Some economic news from last night:

China:

Caixin Manufacturing PMI (Feb) decreased from 51.1 to 40.3

South Korea:

Nikkei Manufacturing PMI (Feb) decreased from 49.8 to 48.7

Japan:

Capital Spending (YoY) (Q4) decreased from 7.1% to -3.5%

Manufacturing PMI (Feb) increased from 47.6 to 47.8

Australia:

AIG Manufacturing Index (Feb) decreased from 45.4 to 44.3

ANZ Job Advertisements (MoM) decreased from 4.0% to 0.7%

Business inventories (MoM) (Q4) increased from -0.2% to 0.3%

Company Gross Operating Profits (QoQ) (Q4) decreased from -0.6% to -3.5%

Company Profits Pre-Tax (QoQ) (Q4) decreased from -0.3% to -0.6%

New Zealand:

Terms of Trade – Exports Prices (Q4) increased from 1.9% to 3.0%

Terms of Trade – Exports Volume (QoQ) (Q4) increased from -4.6% to 1.7%

Terms of Trade – Imports Prices (Q4) decreased from 1.8% to 0.3%

Terms of Trade Index (QoQ) (Q4) increased from 1.9% to 2.6%

Indonesia:

Nikkei Manufacturing PMI (Feb) increased from 49.3 to 51.9

Inflation (MoM) (Feb) decreased from 0.39% to 0.28%

Inflation (YoY) (Feb) increased from 2.68% to 2.98%

Core Inflation (YoY) (Feb) decreased from 2.88% to 2.76%

Some economic news from today:

India:

Nikkei Markit Manufacturing PMI (Feb) decreased from 55.3 to 54.5

Australia:

Commodity Prices (YoY) decreased from -2.6% to -6.1%

Hong Kong:

Retail Sales (YoY) (Jan) decreased from -19.4% to -21.4%

EUROPE/EMEA:

European markets closed higher today after a nightmare week on news about a possible stimulus package to fight against the impact of the coronavirus. Central banks across the world touted the idea of injecting cash into the economy in order to ease the pain.

Turkish PM Erdogan has warned the EU that millions of migrants are making their way to the EU border. The two parties originally signed an agreement in 2016 that Turkey will try and prevent migrants from crossing the border. Just lately with the ongoing war in Syria, Turkey asked for assistance from the EU as they cannot cope with the mounting influx of migrants.

In an attempt to persuade President Macron of France to lift his objections, Albania and Macedonia have agreed upon significant changes to their acession process in hopes they can join the EU.

Switzerland has set rules to prevent the spread of coronavirus. These rules include avoiding handshakes and disposing of tissues. There are currently 42 cases of the virus in Switzerland.

The major Europe stock markets had a mixed day today:

  • CAC 40 increased 23.62 points or 0.44% to 5,333.52
  • FTSE 100  increased 74.28 points, or 1.13% to 6,654.89
  • DAX 30 decreased 32.48 points or -0.27% to 11,857.87

The major Europe currency markets had a mixed day today:

  • EURUSD increased 0.01101 or 1.00% to 1.11321
  • GBPUSD decreased 0.00433 or -0.34% to 1.27637
  • USDCHF decreased 0.0037 or 0.38% to 0.9604

Some economic news from Europe today:

Spain:

Spanish Manufacturing PMI (Feb) increased from 48.5 to 50.4

Swiss:

procure.ch PMI (Feb) increased from 47.8 to 49.5

Italy:

Italian Manufacturing PMI (Feb) decreased from 48.9 to 48.7

France:

French Manufacturing PMI (Feb) decreased from 51.1 to 49.8

Germany:

German Manufacturing PMI (Feb) increased from 45.3 to 48.0

Norway:

Manufacturing PMI (Feb) increased from 51.1 to 52.2

Euro Zone:

Manufacturing PMI (Feb) increased from 47.9 to 49.2

UK:

BoE Consumer Credit (Jan) decreased from 1.337B to 1.230B

M4 Money Supply (MoM) (Jan) increased from 0.1% to 0.6%

Manufacturing PMI (Feb) increased from 50.0 to 51.7

Mortgage Approvals (Jan) increased from 67.93K to 70.89K

Mortgage Lending (Jan) decreased from 4.40B to 4.01B

Net Lending to Individuals decreased from 5.7B to 5.2B

US/AMERICAS:

The US markets began to recoup losses this Monday after last week’s panic sell off. The Dow advanced over 5% today or 1,293.96 points to 26,703.32. Apple’s 9.31% increase boosted the Dow during today’s session, as did advancements in Walmart (7.62%), UnitedHealth (7.12%), and Microsoft (6.65%).

US manufacturing slowed last month, according to data released this Monday by the Institute for Supply Management (ISM). Factory activity came to a reading of 50,1, toying with contraction levels, compared to a reading of 50.9 in January. The ISM index contracted for during the last five months of 2019, but showed signs of growth in January after the US-China trade deal came to fruition. Fears of supply contractions and labor shortages over the coronavirus are to blame for February’s unimpressive performance.

The coronavirus is beginning to make its way across America. The first reported death from the virus on US soil was reported over the weekend in Washington state. New York reported its first case of the virus after a woman in her 30s fell ill after visiting Iran. Florida declared a state public emergency on Sunday evening after two cases were reported in the central Gulf Coast area of the state. At the time of this writing, there are 75 confirmed coronavirus cases in the US.

The 2020 US Democratic candidates are narrowing down as both Senator Amy Klobuchar and Mayor Pete Buttigieg ended their campaigns ahead of Super Tuesday. Amy Klobuchar announced that she is backing establishment favorite Joe Biden’s bid for president, and unofficial reports claim that Buttigieg will also stand behind Biden’s presidential bid.

According to a Reuters report based on data from financial technology and analytics firm S3 Partners, short sellers won big during the last week of February after logging a profit of around $104.77 billion. The three main US indexes experienced their steepest declines last week since the Great Recession. Bear market investors were able to work their put options in their favor last week. One portfolio manager told Reuters he hopes to see the market stabilize to boost his long positions.

US Market Closings:

  • Dow advanced 1,293.96 points or 5.09% to 26,703.32
  • S&P 500 advanced 136.01 points or 4.6% to 3,090.23
  • Nasdaq advanced 384.8 points or 4.49% to 8,952.17
  • Russell 2000 advanced 42.07 points or 2.85% to 1,518.51

Canada Market Closing:

  • TSX Composite advanced 290.21 points or 1.78% to 16,553.26
  • TSX 60 advanced 16.82 points or 1.73% to 988.97

Brazil Market Closing:

  • Bovespa advanced 2,453.84 points or 2.36% to 106,625.41

ENERGY:

Crude markets rose as much as 4% on the back of positive news regarding tackling coronavirus from the central banks. Also, OPEC+ is starting to come to the table regarding production cuts.

The oil markets had a green day today:

  • Crude Oil increased 2.08 USD/BBL or 4.65% to 46.7461
  • Brent increased 1.53 USD/BBL or 3.03% to 52.0291
  • Natural gas increased 0.045 USD/MMBtu or 2.48% to 1.8582
  • Gasoline increased 0.1332 1USD/GAL or 9.59% to 1.5214
  • Heating oil increased 0.0401 USD/GAL or 2.71% to 1.5201
  • Top commodity gainers: Gasoline (9.59%), Crude Oil (4.65%), Bitumen (5.75%), and Coffee (4.77%)
  • Top commodity losers: Sugar (-4.36%), Palm Oil (-4.70%), Live Cattle (-7.39%), and Cotton (-5.34%)

The above data was collected around 16:00  EST on Monday.

BONDS:

Japan -0.10%(-4bp), US 2’s 0.81% (-7bps), US 10’s 1.07%(-10bps); US 30’s 1.63%(-4bps), Bunds -0.67% (-6bp), France -0.24% (-4bp), Italy 1.15% (+2bp), Turkey 12.42 % (-38bp), Greece 1.35% (-1bp), Portugal 0.31% (+0bp); Spain 0.30% (+4bp) and UK Gilts 0.42% (-3bp).

  • French 3-Month BTF Auction decreased from -0.587% to -0.627%
  • French 6-Month BTF Auction decreased from -0.589% to -0.628%
  • French 12-Month BTF Auction decreased from -0.591% to -0.642%
  • US 3-Month Bill Auction decreased from 1.505% to 1.155%
  • US 6-Month Bill Auction decreased from 1.440% to 1.010%