Market Talk – March 6, 2020

 

ASIA:

China’s economy could be contracting this year for the first time since the 70s, according to analysts, as the country grinds to a halt due to the coronavirus. The Caixin purchasing managers index dropped drastically to 26.5 from 51.6, the lowest level since 2005.

The Reserve Bank of India has taken over one of India’s largest banks, Yes Bank. The bank announced its financial position has deteriorated dramatically. The companies stock fell 56% since the announcement. However, the central bank assured customers that accounts are secured.

The EU-India summit, which was scheduled for the 13th of March in Brussels, has been put on hold due to the spread of the coronavirus.

The major Asian stock markets had a negative day today:

  • NIKKEI 225 decreased 579.37 points or -2.72% to 20,749.75
  • Shanghai decreased 37.17 points or -1.21% to 3,034.51
  • Hang Seng decreased 621.20 points or -2.32% to 26,146.67
  • ASX 200 decreased 179.50 points or -2.81% to 6,216.20
  • Kospi decreased 45.04 points or -2.16% to 2,040.22
  • SENSEX decreased 893.99 points or -2.32% to 37,576.62

The major Asian currency markets had a mixed day today:

  • AUDUSD increased 0.0017 or 0.25% to 0.6634
  • NZDUSD increased 0.0047 or 0.75% to 0.6358
  • USDJPY decreased 0.8420 or 0.79% to 105.3190
  • USDCNY decreased 0.0039 or 0.06% to 6.9347

Precious Metals:

  • Gold decreased 3 USD/t oz. or -0.18% to 1,668.90
  • Silver decreased 0.286 USD/t. oz or -1.64% to 17.1950

Some economic news from last night:

Indonesia:

FX Reserves (USD) (Feb) decreased from 131.70B to 130.40B

Japan:

Overall wage income of employees (Jan) increased from -0.2% to 1.5%

Overtime Pay (YoY) (Jan) increased from -2.3% to -1.8%

Average Cash Earnings (YoY) increased from -0.2% to 1.5%

Household Spending (YoY) (Jan) increased from -4.8% to -3.9%

Household Spending (MoM) (Jan) increased from -1.7% to -1.6%

Foreign Reserves (USD) (Feb) increased from 1,342.3B to 1,359.0B

Australia:

Retail Sales (MoM) (Jan) increased from -0.7% to -0.3%

Some economic news from today:

Japan:

Coincident Indicator (MoM) (Jan) increased from -0.8% to 0.3%

Leading Index (MoM) (Jan) decreased from 0.8% to -0.7%

Hong Kong:

Foreign Reserves (USD) (Feb) increased from 445.70B to 446.10B

India:

FX Reserves, USD increased from 476.12B to 481.54B

EUROPE/EMEA:

The EU foreign affairs chief has asked for the rumors surrounding the Greece-Turkey border being open to stop as thousands of refugees are attempting to enter into Europe. The border is firmly closed, and he asked the countries involved to quit their game.

The EU held an emergency meeting in Brussels today regarding actions required in order to tackle the coronavirus. Meanwhile, the German health minister has ruled out the possible prevention of travel within the EU to curb the coronavirus.

Iran has stated they could be subjected to using force to stop travel due to the global pandemic.

The major Europe stock markets had a negative day today:

  • CAC 40 decreased 221.99 points or -4.14% to 5,139.11
  • FTSE 100 decreased 242.88 points, or -3.62% to 6,462.55
  • DAX 30 decreased 402.85 points or -3.37% to 11,541.87

The major Europe currency markets had a mixed day today:

  • EURUSD increased 0.00842 or 0.75% to 1.13112
  • GBPUSD increased 0.0051 or 0.39% to 1.3004
  • USDCHF decreased 0.0091 or 0.97% to 0.9368

Some economic news from Europe today:

Germany:

German Factory Orders (MoM) (Jan) increased from -2.1% to 5.5%

Norway:

Manufacturing Production (MoM) (Jan) increased from 0.1% to 0.4%

France:

French Current Account (Jan) decreased from -0.30B to -2.80B

French Exports (Jan) decreased from 42.0B to 40.3B

French Imports (Jan) increased from 45.7B to 46.2B

French Reserve Assets Total (Feb) increased from 182,471.0M to 188,033.0M

French Trade Balance (Jan) decreased from -3.7B to -5.9B

Spain:

Spanish Industrial Production (YoY) (Jan) decreased from 1.1% to -2.1%

UK:

Halifax House Price Index (MoM) (Feb) decreased from 0.4% to 0.3%

Halifax House Price Index (YoY) decreased from 4.1% to 2.8%

Italy:

Italian Retail Sales (YoY) (Jan) increased from 0.8% to 1.4%

Italian Retail Sales (MoM) (Jan) decreased from 0.5% to 0.0%

US/AMERICAS:

Payroll figures for February showed signs of improvement, according to a report issued by the Labor Department this Friday morning. The US incorporated 273,000 new positions last month, far exceeding most analysts’ expectations of 175,000 jobs. Hourly earnings rose 3% YoY, and the unemployment rate dipped down to a near historic low of 3.5%.

Secretary of State Mike Pompeo criticized the Chinese government for putting the US “behind the curve” by failing to share data on the coronavirus outbreak that began in Wuhan. “That’s not the way infectious disease doctors tell me it should work. It’s not the way America works with transparency and openness and the sharing of the information that needs to take place,” Pompeo told reporters at CNBC. The secretary said he felt confident that the US could contain the outbreak, however, he believes it would have been easier to manage if Bejing and the White House had communicated freely at the beginning of the outbreak.

On Thursday, the US Senate approved an $8.3 billion fund to combat the coronavirus. The original proposal was for $2.5 billion, but with recent cases emerging the amount requested exceeded triple the amount. The money will go toward test kits, public sanitization efforts, quarantine costs, and vaccine testing. President Donald Trump and Vice President Mike Pence will visit the Center for Disease Control this Friday to officially sign the bill.

Bank of Canada Governor Stephen Poloz warned that the economic slowdown could persist into the second quarter. The central bank voted to lower rates to a three-year low earlier in the week in hopes of offsetting the blow. If the coronavirus situation persists, Poloz warns that he sees longer-term layoffs as well as a drop in consumer spending.

US Market Closings:

  • Dow declined 256.5 points or -0.98% to 25,864.78
  • S&P 500 declined 51.57 points or -1.71% to 2,972.37
  • Nasdaq declined 162.98 points or -1.87% to 8,575.62
  • Russell 2000 declined 29.2 points or -2.0% to 1,449.22

Canada Market Closings:

  • TSX Composite declined 378.97 points or -2.29% to 16,175.02
  • TSX 60 declined 21.85 points or -2.21% to 965.55

Brazil Market Closing:

  • Bovespa declined 4,236.47 points or -4.14% to 97,996.77

ENERGY:

The OPEC+ group failed to agree on a production cut to offset the loss in global demand caused by the coronavirus. The consequence was that oil price dropped by 10%. The Russian oil minister not only disagreed to cut production, but in fact said they perhaps will increase production as the cartel failed to find unity.

The oil markets had a negative day today:

  • Crude Oil decreased 3.7 USD/BBL or -8.06% to 42.1900
  • Brent decreased 3.85 USD/BBL or -7.71% to 46.0800
  • Natural gas decreased 0.032 USD/MMBtu or -1.72% to 1.8300
  • Gasoline decreased 0.1004 USD/GAL or -6.72% to 1.3936
  • Heating oil decreased 0.096 USD/GAL or -6.42% to 1.3983
  • Top commodity gainers: Lean Hogs (0.54%), Milk (0.06%), Platinum (3.01%), and Baltic Dry(6.58%)
  • Top commodity losers: Crude Oil (-8.06%), Brent (-7.71%), Palm Oil (-8.12%), and Gasoline (-6.72%)

The above data was collected around 12.50 EST on Friday.

BONDS:

Japan -0.10%(-4bp), US 2’s 0.47% (-12bps), US 10’s 0.74%(-18bps); US 30’s 1.30%(-24bps), Bunds -0.72% (-4bp), France -0.24% (-4bp), Italy 1.07% (-4bp), Turkey 11.41% (+35bp), Greece 1.45% (+16bp), Portugal 0.25% (-1bp); Spain 0.22% (-0bp) and UK Gilts 0.23% (-8bp).