Market Talk – March 20, 2020

ASIA:

The total number of coronavirus cases in India has climbed to 195 after over 35 new cases emerged from the various parts of the country. This marks the highest number of reported cases in a single day. At present, there are 171 active coronavirus patients in the country, according to the data released by the Ministry of Health and Family Welfare.

India’s Finance Minister called an emergency meeting today with multiple ministries including Civil Aviation and Tourism and Animal Husbandry to announce stimulus packages to reduce the impact of shutdown due to the coronavirus outbreak. She said that the economic task force, announced by Prime Minister Narendra Modi during his address to the nation on March 19, has not been constituted yet.

India’s domestic stock markets surged on Friday following four sessions of bruising losses. This comes amid hopes of a stimulus package as Prime Minister Narendra Modi announced a financial task force to combat the COVID-19 pandemic’s economic fallout. The S&P BSE Sensex index touched 30,418.20 in early afternoon deals, and the broader NSE Nifty 50 benchmark – which started the day at 8,284.45 – climbed to as high as 8,883.

Chinese businesses are getting back to work just as many parts of the world are shutting down, and that could add a second jolt to the world’s second-largest economy. This week, several economists cut their forecasts for China’s GDP, predicting a sharp contraction in the first quarter and low single-digit growth for the year.

China is reporting that it has now contained the coronavirus’s spread, and the Japanese government is considering when to reopen schools — indications that the worst of the pandemic may be behind both of those countries.

Malaysians with Singapore work permits can continue to work in Singapore with health screenings and accommodation arrangements made for them, while food and products will continue to be transported across the border smoothly, the Ministry of Foreign Affairs said in a statement on Friday.

The major Asian stock markets had a green day today:

  • NIKKEI 225 closed
  • Shanghai increased 43.49 points or 1.61% to 2,745.62
  • Hang Seng increased 1,095.94 points or 5.05% to 22,805.07
  • ASX 200 increased 33.70 points or 0.70% to 4,816.60
  • Kospi increased 108.51 points or 7.44% to 1,566.15
  • SENSEX increased 1,627.73 points or 5.75% to 29,915.96

The major Asian currency markets had a mixed day today:

  • AUDUSD increased 0.00808 or 1.41% to 0.58298
  • NZDUSD increased 0.00365 or 0.64% to 0.57195
  • USDJPY decreased 0.21 or -0.19% to 111.11
  • USDCNY decreased 0.02702 or -0.38% to 7.12968

Precious Metals:

  • Gold increased 16.3 USD/t oz. or 1.11% to 1,486.05
  • Silver increased 0.3845 USD/t. oz or 3.18% to 12.4930

Some economic news from last night:

South Korea:

PPI (YoY) (Feb) decreased from 1.1% to 0.7%

PPI (MoM) (Feb) decreased from 0.4% to -0.3%

New Zealand:

Credit Card Spending (YoY) decreased from 3.7% to 2.5%

China:

PBoC Loan Prime Rate remain the same at 4.05%

Some economic news from today:

India:

FX Reserves, USD decreased from 487.24B to 481.89B

EUROPE/EMEA:

European markets reacted well to the news of the ECB stimulus program, pushing the ECB’s planned purchases for this year in excess of 1 trillion Euros. Dax, CAC, and FTSE all pressed higher during the trading day.

The coronavirus death toll exceeded 10,000 today with more than half of those recorded in Europe. Italy is now topping the list for most deaths in Europe.

The German Institute for Employment Research (IAB) has announced that it expects the German economy to shrink 2% this year due to the coronavirus.

The French police are jailing people found on the streets without a valid reason after the countrywide lockdown, with the police saying they may increase the 14-day lockdown as a lot of citizens are not abiding by the law.

The major Europe stock markets had a green day today:

  • CAC 40 increased 193.31 points or 5.01% to 4,048.80
  • FTSE 100 increased 39.17 points, or 0.76% to 5,190.78
  • DAX 30 increased 318.52 points or 3.70% to 8,928.95

The major Europe currency markets had a mixed day today:

  • EURUSD increased 0.00033 or 0.03% to 1.06643
  • GBPUSD increased 0.00752 or 0.65% to 1.15752
  • USDCHF decreased 0.00052 or -0.05% to 0.98778
  • Some economic news from Europe today:

Germany:

German PPI (MoM) (Feb) decreased from 0.8% to -0.4%

German PPI (YoY) (Feb) decreased from 0.2% to -0.1%

Norway:

Interest Rate Decision decreased from 1.00% to 0.25%

Spain:

Spanish Trade Balance decreased from -2.09B to -3.51B

UK:

Inflation Expectations decreased from 3.1% to 3.0%

Public Sector Net Borrowing (Feb) increased from -12.43B to -0.39B

Public Sector Net Cash Requirement (Feb) increased from -19.112B to 1.380B

Euro Zone:

Current Account (Jan) increased from 32.6B to 34.7B

Current Account n.s.a. (Jan) decreased from 51.2B to 8.7B

US/AMERICAS:

The Department of Education announced that they will not issue standardized testing for US students this year. All interest on federally held student loans have been temporarily suspended for at least sixty days.

New York Governor Andrew Cuomo announced this Friday that all employees from non-essential sectors must work from home. New York Mayor Bill de Blasio has been urging Cuomo to issue a “shelter in place” lockdown but was met with much resistance. On Thursday night, cases in NY surged from 2,950 to 7,102 which prompted Cuomo to take, what he deemed, “the most drastic action we can take.” Cuomo reiterated that this measure is not a “shelter in place” measure, which in his opinion would only occur in the event of an active shooter or terrorist attack. “This is not life as usual. Accept it. Realize it and deal with it,” the governor stated. “These provisions will be enforced. These are not helpful hints. This is not if you really want to be a great citizen. These are legal provisions,” the governor warned.

California took matters one step further on Thursday night and issued an immediate order for residents to “shelter in place.” All residents of California, the most populous state in the US, must remain indoors until further notice. “This is not a permanent state, this is a moment in time,” California Governor Gavin Newsom stated. Essential services such as pharmacies, hospitals, banks, gas stations, and grocery stores will remain open.

Mexico and the US agreed to restrict non-essential travel between their shared border. As with the US-Canada border restriction, commerce will still be permitted to flow between the two countries. “We’re working closely to prevent the spread of the coronavirus across North America,” President Trump stated today, calling the measures “a joint collaboration” that will reduce the risk of a “mass migration.”

US Market Closings:

  • Dow declined 913.49 points or -4.55% to 19,173.70
  • S&P 500 declined 104.70 points or -4.35% to 2,304.69
  • Nasdaq declined 271.06 points or -3.79% to 6,879.52
  • Russell 2000 declined 44.7 points or -4.22% to 1,014.05

Canada Market Closings:

  • TSX Composite declined 318.71 points or -2.62% to 11,851.81
  • TSX 60 declined 20.05 points or -2.7% to 721.98

Brazil Market Closing:

  • Bovespa declined 1,262.44 points or -1.85% to 67,069.36

ENERGY:

Crude oil reacted down slightly after one of the best percentage daily gains on record yesterday. Donald Trump tweeted yesterday that he will get involved with a price war at the appropriate time.

The oil markets had a negative day today:

  • Crude Oil decreased 5.44 USD/BBL or -21.57% to 19.7800
  • Brent decreased 0.99 USD/BBL or -3.48% to 27.4800
  • Natural gas decreased 0.066 USD/MMBtu or -3.64% to 1.7450
  • Gasoline decreased 0.0339 USD/GAL or -4.77% to 0.6775
  • Heating oil decreased 0.0197 USD/GAL or -1.85% to 1.0448
  • Top commodity gainers: Bitumen (4.63%), Palm Oil (4.13%), Orange Juice (6.62%), and Feeder Cattle (3.32%)
  • Top commodity losers: Rice (-4.49%), Crude Oil (-21.57%), Gasoline (-4.77%), and Ethanol (-5.98%)

The above data was collected around 16.15 EST on Friday.

BONDS:

Japan 0.10%(+5bp), US 2’s 0.34% (+8bps), US 10’s 0.93%(-20bps); US 30’s 1.49%(-26bps), Bunds -0.28% (-11bp), France 0.12% (-14bp), Italy 1.68% (-14bp), Turkey 13.07% (-37bp), Greece 2.51% (+13bp), Portugal 0.92% (-17bp); Spain 0.77% (-14bp) and UK Gilts 0.56% (-16bp).