Market Talk – March 5, 2020

ASIA:

India’s Supreme Court has overturned India’s central bank’s decision that restricted banking access for virtual currency trading. Following this decision, cryptocurrency companies are expected to revive plans to invest and expand their business in India.

India’s service sector activity gathered momentum in February driven by a quicker expansion in new work orders that supported a faster increase in output and job creation, a monthly survey showed Tuesday. The seasonally adjusted Nikkei India Services Business Activity Index rose from 52.2 in January to 52.5 in February, indicating an upturn in output

Mainland China’s equity market surged on Thursday, as investors continued bottom fishing after the International Monetary Fund (IMF) announced a $50 billion aid package on Wednesday to combat the impact of the coronavirus. Around late afternoon, the benchmark Shanghai Composite Index surged 1.8% or 54.23 points, to 3,065.90. The Shenzhen Composite Index, which tracks stocks on China’s second exchange, was up 1.54%, or 29.29 points, to 1,925.03. The blue-chip CSI300 index advanced 2.1%, or 85.94 points, to 4,201.

China has hinted at retaliation against the US for its decision to slash the number of Chinese state media staff allowed in the country. This may result in escalating a diplomatic feud over the treatment of journalists in both nations. Earlier, China expelled three Wall Street Journal reporters. Following this, the US issued a notification stating that it will cap the number of employees for Xinhua, China Global Television network, the international arm of state broadcaster CCTV, as well as China Radio International and the China Daily at a total of 100 down from 160.

The major Asian stock markets had a green day today:

  • NIKKEI 225 increased 229.06 points or 1.09% to 21,329.12
  • Shanghai increased 60.01 points or 1.99% to 3,071.68
  • Hang Seng increased 545.80 points or 2.08% to 26,767.87
  • ASX 200 increased 70.30 points or 1.11% to 6,395.70
  • Kospi increased 25.93 points or 1.26% to 2,085.26
  • SENSEX increased 61.13 points or 0.16% to 38,470.61

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.00263 or -0.40% to 0.66007
  • NZDUSD decreased 0.0001 or 0.02% to 0.6298
  • USDJPY decreased 0.71 or -0.66% to 106.91
  • USDCNY increased 0.0172 or 0.25% to 6.9401

Precious Metals:

  • Gold increased 20.1 USD/t oz. or 1.23% to 1,656.50
  • Silver increased 0.0985 USD/t. oz or 0.57% to 17.2800

Some economic news from last night:

South Korea:

Current Account (Jan) decreased from 4.33B to 1.01B

Japan:

Foreign Bonds Buying decreased from 656.3B to -489.7B

Foreign Investments in Japanese Stocks decreased from -68.1B to -745.0B

Australia:

Exports (MoM) (Jan) decreased from 1% to -3%

Imports (MoM) (Jan) decreased from 2% to -3%

Trade Balance (Jan) decreased from 5.376B to 5.210B

Some economic news from today:

Singapore:

Retail Sales (MoM) increased from -0.4% to 0.1%

Retail Sales (YoY) (Jan) decreased from -3.4% to -5.3%

EUROPE/EMEA:

Following two years of growth, trade conflicts between the US and China, political unrest in Hong Kong, and a protracted Brexit all contributed to a 5% dip in the global art market, which totaled $64.1 billion in 2019. Overall the UK market, which accounted for 20% of global sales ($12.7 billion), fell by 9%. British dealers reported a drop in revenue of 4%, while the UK auction market slumped by 20% to $4.3 billion.

Italy is closing all schools and universities across the country in an effort to prevent a further spread of the novel coronavirus, the country’s government said Wednesday. All schools will be closed from Thursday, and will remain shut until Sunday, March 15, Prime Minister Giuseppe Conte and Education Minister Lucia Azzolina announced. The Civil Protection Agency said Wednesday that the country had 3,089 cases of coronavirus, including 107 dead and 276 recovered.

France will probably reach stage 3, which is the last stage, of the COVID-19 epidemic in the next few days, the government has announced. President Emmanuel Macron is set to welcome public and private researchers working to fight the virus at the Elysée later today. The meeting will aim to encourage cooperation between all individuals to ensure the flow of relations between them so that solutions can be brought in the shortest time possible.

The major Europe stock markets had a negative day today:

  • CAC 40 decreased 103.79 points or -1.90% to 5,361.10
  • FTSE 100 decreased 110.16 points, or -1.62% to 6,705.43
  • DAX 30 decreased 182.97 points or -1.51% to 11,944.72

The major Europe currency markets had a mixed day today:

  • EURUSD increased 0.00413 or 0.37% to 1.11793
  • GBPUSD increased 0.0042 or 0.33% to 1.2914
  • USDCHF decreased 0.00569 or -0.59% to 0.95111

Some economic news from Europe today:

Spain:

Spanish Consumer Confidence decreased from 87.2 to 85.7

US/AMERICAS:

Investors continued to flee the marketplace this Thursday, erasing any gains from Wednesday’s premature recovery, after the three major US indexes plunged over 3%. The Dow plummeted 969.58 points or -3.58%; aside from Walgreen’s neutral day (+0.12%), all 30 stocks on the Dow declined. United Technologies experienced the steepest percentage drop at -9.19%, followed by Boeing (-7.65%), JPMorgan Chase (-5.33%), and ExxonMobil (-5.02%).

Travel stocks, unsurprisingly, pushed the S&P 500 lower today after Royal Caribbean (-17.11%), Carnival (-14.14%), American Airlines (-13.44%), and Norwegian Cruise (-13.36%) dropped significantly. American Airlines’ continual decline also caused the Nasdaq to drop this Thursday as did losses from Marriott (-6.85%), and Expedia (-5.80%).

The big banks are placing restrictions on employee travel amid the coronavirus outbreak. Employees at Citigroup, Morgan Stanley, JPMorgan, Goldman, and Wells Fargo are not permitted to travel internationally unless approved. MetLife and New York Mellon placed similar restrictions on travel.

Elizabeth Warren officially suspended her presidential campaign this Thursday. This leaves Senator Bernie Sanders and former Vice President Joe Biden as the last two contenders for the Democratic nomination – unless there is a surprise change or new nominee at the last moment. It is not yet clear who Warren will support.

The Supreme Court of Canada has ordered that the Trans Mountain Pipeline project continued as intended after overturning numerous appeals. The ruling comes a month after the Federal Court of Appeals approved the pipeline’s expansion.

US Market Closings:

  • Dow declined 969.58 points or -3.58% to 26,121.28
  • S&P 500 declined 106.18 points or -3.39% to 3,023.94
  • Nasdaq declined 279.49 points or -3.1% to 8,738.59
  • Russell 2000 declined 52.37 points or -3.42% to 1,478.82

Canada Market Closings:

  • TSX Composite declined 225.54 points or -1.34% to 16,553.99
  • TSX 60 declined 13.76 points or -1.37% to 987.4

Brazil Market Closing:

  • Bovespa declined 4,990.98 points or -4.65% to 102,233.24

ENERGY:

The oil markets had a negative day today:

  • Crude Oil decreased 0.43 USD/BBL or -0.91% to 46.6300
  • Brent decreased 0.59 USD/BBL or -1.15% to 50.8100
  • Natural gas decreased 0.04 USD/MMBtu or -2.07% to 1.8930
  • Gasoline decreased 0.016 USD/GAL or -1.04% to 1.5219
  • Heating oil decreased 0.0207 USD/GAL or -1.35% to 1.5178
  • Top commodity gainers: Gold (1.23%), Ethanol (3.78%), Bitumen (1.59%), and Rubber (1.24%)
  • Top commodity losers: Coffee (-4.48%), Palladium (-2.68%), Cocoa (-1.99%), and Natural Gas (-2.07%)

The above data was collected around 11.10 EST on Thursday.

BONDS:

Japan -0.10%(-4bp), US 2’s 0.59% (-10bps), US 10’s 0.95%(-11bps); US 30’s 1.60%(-10bps), Bunds -0.63% (+1bp), France -0.24% (-4bp), Italy 1.09% (+10bp), Turkey 11.06 % (-22bp), Greece 1.30% (+9bp), Portugal 0.22% (+3bp); Spain 0.23% (+5bp) and UK Gilts 0.34% (-4bp).

  • Japan 30-Year JGB Auction decreased from 0.430% to 0.340%
  • French 10-Year OAT Auction decreased from -0.11% to -0.32%
  • US 4-Week Bill Auction decreased from 1.530% to 0.925%
  • US 8-Week Bill Auction decreased from 1.500% to 0.820%
  • Spanish 3-Year Bonos Auction decrease from -0.301% to -0.416%
  • Spanish 5-Year Bonos Auction decrease from -0.103% to -0.260%
  • Spanish 10-Year Obligacion Auction decrease from 0.240% to 0.170%