Market Talk – March 27, 2020

ASIA: 

The Reserve Bank of India’s Monetary Policy Committee met today and announced a series of measures to counter the economic slowdown caused by the novel coronavirus pandemic. The repo rate and reverse repo rate have been cut by 74 bps and 90 bps respectively. All commercial banks and lending institutions can allow a three-month moratorium on all loans outstanding on March 1, 2020. RBI Governor Shaktikanta Das predicted a big global recession and said India will not be immune to it.

The total number of coronavirus cases in India surged to 724 on Friday, according to the Ministry of Health data. According to the ministry, 67 people have been recovered or cured, whereas the death toll now stands at 17.

 China and the U.S. aim to work closer together in light of the spread of the coronavirus, leaders of both countries said in a phone call Friday. “China has been through much & has developed a strong understanding of the Virus,” Trump said on Twitter. “We are working closely together. Much respect!”

China is closing its border to most foreigners amid fears of imported novel coronavirus cases causing a second outbreak in the country where the infection was first detected. In a statement late Thursday, the government said that “in view of the rapid spread of Covid-19 across the world, China has decided to temporarily suspend the entry into China by foreign nationals holding visas or residence permits” as of March 28.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 increased 724.83 points or 3.88% to 19,389.43
  • Shanghai increased 7.29 points or 0.26% to 2,772.20
  • Hang Seng increased 131.94 points or 0.56% to 23,484.28
  • ASX 200 decreased 270.90 points or -5.30% to 4,842.40
  • Kospi increased 31.49 points or 1.87% to 1,717.73
  • SENSEX decreased 131.18 points or -0.44% to 29,815.59

The major Asian currency markets had a mixed day today:

  • AUDUSD increased 0.01316 or 2.17% to 0.61916
  • NZDUSD increased 0.0074 or 1.24% to 0.6033
  • USDJPY decreased 1.51 or -1.38% to 107.76
  • USDCNY increased 0.00413 or 0.06% to 7.08663

Precious Metals:

  • Gold increased 3.1 USD/t oz. or 0.19% to 1,626.35
  • Silver increased 0.053 USD/t. oz or 0.37% to 14.4350

Some economic news from last night:

China:

Chinese Industrial profit (YoY) (Feb) increased from 5.40% to 38.30%

Chinese Industrial profit YTD (Feb) decreased from -3.3% to -38.3%

Japan:

Tokyo Core CPI (YoY) (Mar) decreased from 0.5% to 0.4%

Tokyo CPI (YoY) (Mar) remain the same at 0.4%

CPI Tokyo Ex Food and Energy (MoM) (Mar) increased from 0.0% to 0.1%

South Korea:

Consumer Confidence (Mar) decreased from 96.9 to 78.4

Indonesia:

Loans (YoY) (Feb) decreased from 6.10% to 5.93%

Some economic news from today:

India:

Cash Reserve Ratio decreased from 4.00% to 3.00%

Interest Rate Decision decreased from 5.15% to 4.40%

Reverse REPO Rate decreased from 4.90% to 4.15%

Bank Loan Growth remain the same at 6.1%

Deposit Growth increased from 9.0% to 9.1%

FX Reserves, USD decreased from 481.89B to 469.91B

EUROPE/EMEA:

European markets took a turn down today after a few days of positive run. The UK PM Boris Johnson, the UK health minister, and the chief medical adviser announced that they have tested positive for the coronavirus which was the big news of the day. The UK PM announced that he is still in good health to run the country whilst being self-isolated.

Post-Brexit talks are expected to return next week with ministers agreeing to communicate via video link. Both the UK and the EU chief negotiators are currently in self-isolation after testing positive.

Still, discussions are ongoing in Europe regarding the prospect of a “coronabond” which will help add liquidity back into the European economy. However, currently there is no clear direction.

Albania and North Macedonia have been given the green light to begin talks of joining the EU.

The French President Macron told European leaders that temporarily shutting the borders within the EU could bring the end of the Schengen Agreement.

The major Europe stock markets had a negative day today:

  • CAC 40 decreased 192.09 points or -4.23% to 4,351.49
  • FTSE 100 decreased 305.40 points, or -5.25% to 5,510.33
  • DAX 30 decreased 368.44 points or -3.68% to 9,632.52

The major Europe currency markets had a mixed day today:

  • EURUSD increased 0.00723 or 0.65% to 1.11243
  • GBPUSD increased 0.02838 or 2.33% to 1.24688
  • USDCHF decreased 0.0062 or -0.64% to 0.95512

Some economic news from Europe today:

Norway:

Core Retail Sales (MoM) (Feb) increased from 0.5% to 2.0%

France:

French Consumer Confidence (Mar) decreased from 104 to 103

Italy:

Italian Business Confidence (Mar) decreased from 98.8 to 89.5

Italian Consumer Confidence (Mar) decreased from 110.9 to 101.0

US/AMERICAS:

The US House of Representatives approved the $2 trillion coronavirus stimulus package this Friday, leading to President Trump signing the bill into law later in the day. The bill passed unanimously in the Senate on Thursday. The bipartisan agreement to expedite the process was almost delayed after Rep. Thomas Massie of Kentucky disagreed on the allocation of funds but his demands were shutdown by both sides.

Boeing stock declined -10.27% this Friday after announcing that they will not accept a government bailout.  CEO David Calhoun said that the company has $15 billion in liquid assets to cover the costs of the slowdown, which began long before the coronavirus outbreak. Despite having the assets, Boeing initially requested $60 billion stimulus package for the entire aerospace industry. Calhoun said the measure would “keep our industry and people warm so when the recovery comes we’re ready to go.” Yesterday, the Senate’s stimulus bill draft included clauses forbidding companies receiving aid from engaging in stock buybacks for up to a year after the loan was repaid or paying out dividends to stockholders, which likely influenced Boeing’s decision.

Canadian Prime Minister Justin Trudeau announced that the Canada Emergency Business Account will provide businesses affected by the coronavirus with guaranteed bank loans of up to C$40,000 that will interest-free for one year.

US Market Closings:

  • Dow declined 915.39 points or -4.06% to 21,636.78
  • S&P 500 declined 88.6 points or -3.37% to 2,541.47
  • Nasdaq declined 295.16 points or -3.79% to 7,502.38
  • Russell 2000 declined 48.33 points or -4.09% to 1,131.99

Canada Market Closings:

  • TSX Composite declined 683.43 points or -5.11% to 12,687.74
  • TSX 60 declined 44.11 points or -5.4% to 772.12

Brazil Market Closing:

  • Bovespa declined 4,280.88 points or -5.51% to 73,428.78

ENERGY:

Crudes slipped today 2-5% after announcements regarding an over supply and insufficient worldwide storage to cope with the production. Oilprice.com raises a good point regarding the ruble which dropped to a four-year low, helping sustain the Russian oil industry during this time.

The oil markets had a mixed day today:

  • Crude Oil decreased 0.94 USD/BBL or -4.16% to 21.6600
  • Brent decreased 1.56 USD/BBL or -5.92% to 24.7800
  • Natural gas decreased 0.036 USD/MMBtu or -1.99% to 1.7690
  • Gasoline increased 0.0155 USD/GAL or 2.37% to 0.6688
  • Heating oil decreased 0.0034 USD/GAL or -0.31% to 1.0785
  • Top commodity gainers: Ethanol (3.78%), Gasoline (2.37%), Coal (1.44%), and Oat (1.94%)
  • Top commodity losers: Lean Hogs (-6.79%), Coffee (-6.90%), Brent (-5.92%), and Feeder Cattle (-7.44%)

The above data was collected around 15.18 EST on Friday.

BONDS:

Japan 0.01%(-1bp), US 2’s 0.27% (-3bps), US 10’s 0.74%(-11bps); US 30’s 1.32%(-12bps), Bunds -0.37% (-8bp), France -0.06% (-13bp), Italy 1.36% (+8bp), Turkey 12.91% (+59bp), Greece 1.59% (+6bp), Portugal 0.63% (-5bp); Spain 0.53% (-4bp) and UK Gilts 0.36% (-3bp).

 

  • Italian 6-Month BOT Auction increased from -0.287% to 0.055%