Market Talk – May 15, 2020

ASIA:

Chinese industry rebounded in April from record falls, but the country’s economic recovery remains fragile after the latest threat from US President Donald Trump strained relations further. Industrial production rose 3.9% year-on-year in April after collapsing 13.5% during the January-February period, the National Bureau of Statistics said on Friday.

Taiwan has sought India’s support to attend the World Health Assembly despite China opposing that Taiwan has no right to join as China claims Taiwan as its territory. India is set to take over as the next chairperson of the World Health Organization’s decision-making executive body in May. This leaves the nation with a major choice on whether to support a US move to reinstate Taiwan’s observer status at the World Health Assembly (WHA) or to China’s opposition to it.

The U.N. labor agency urged Indian states to relax workers’ rights to help industry survive the coronavirus They urged lawmakers to consult workers first as a union linked to India’s ruling party said it would protest the planned moves. Six states, including the most populous Uttar Pradesh and the commercial hub of Gujarat, have said they plan to suspend some laws on wages and working hours to help industry recover from a seven-week lockdown.

India’s tally of confirmed COVID-19 cases crossed 85,000 on Friday, with more people testing positive for the deadly virus. Going by the numbers declared by different states and union territories, India has now surpassed China’s official tally of 82,933 confirmed COVID-19 cases.

Russian lawmakers have allowed online or postal voting after passing President Vladimir Putin’s constitutional amendment, which will allow him to stay in power until 2036. The initial vote was supposed to take place in April, but was canceled due to the virus. Russian President put the country back to work on Monday, after saying the “non-working” days are now over. Russia is now second on the leaderboard of having the highest number of COVID-19 cases.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 increased 122.69 points or 0.62% to 20,037.47
  • Shanghai decreased 1.88 points or -0.07% to 2,868.46
  • Hang Seng decreased 32.27points or -0.14% to 23,797.47
  • ASX 200 increased 76.10 points or 1.43% to 5,404.80
  • Kospi increased 2.32 points or 0.12% to 1,927.28
  • SENSEX decreased 25.16 points or -0.08% to 31,097.73

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.00528 or -0.82% to 0.64154
  • NZDUSD decreased 0.0079 or -1.31% to 0.59316
  • USDJPY increased 0.03 or 0.02% to 107.31
  • USDCNY increased 0.02377 or 0.33% to 7.13349

Precious Metals:

  • Gold increased 10.80 USD/t oz. or 0.62% to 1,743.40
  • Silver increased 0.77 USD/t. oz or 4.83% to 16.6290

Some economic news from last night:

China:

China Thomson Reuters IPSOS PCSI (May) decreased from 67.96 to 66.46

Fixed Asset Investment (YoY) (Apr) increased from -16.1% to -10.3%

Industrial Production (YoY) (Apr) increased from -1.1% to 3.9%

Chinese Industrial Production YTD (YoY) (Apr) increased from -8.4% to -4.9%

Retail Sales (YoY) (Apr) increased from -15.8% to -7.5%

Chinese Retail Sales YTD (YoY) (Apr) increased from -19.64% to -16.84%

Chinese Unemployment Rate increased from 5.9% to 6.0%

Japan:

PPI (YoY) (Apr) decreased from -0.4% to -2.3%

PPI (MoM) (Apr) decreased from -0.9% to -1.5%

Thomson Reuters IPSOS PCSI (May) decreased from 32.31 to 29.58

South Korea:

Exports (YoY) (Apr) decreased from -24.3% to -25.1%

Imports (YoY) (Apr) increased from -15.9% to -15.8%

Trade Balance (Apr) decreased from -0.95B to -1.39B

Export Price Index (YoY) (Apr) decreased from -3.8% to -5.9%

Import Price Index (YoY) (Apr) decreased from -7.9% to -14.1%

Indonesia:

Export Growth (YoY) (Apr) decreased from -0.20% to -7.02%

Import Growth (YoY) (Apr) decreased from -0.75% to -18.58%

Trade Balance (Apr) decreased from 0.74B to -0.35B

Some economic news from today:

Hong Kong:

GDP (QoQ) (Q1) decreased from -0.3% to -5.3%

GDP (YoY) (Q1) decreased from -2.9% to -8.9%

India:

FX Reserves, USD increased from 481.08B to 485.31B

Exports (USD) (Apr) decreased from 21.41B to 10.36B

Imports (USD) (Apr) decreased from 31.16B to 17.12B

Trade Balance (Apr) increased from -9.76B to -6.76B

Indonesia:

Car Sales (YoY) (Apr) decreased from -15.00% to -90.60%

EUROPE/EMEA:

The UK chief negotiator David Frost said talks have been difficult and with very little progress when dealing with his counterpart Michael Barnier of the EU. He insisted that within the next fortnight for the EU to change their hardline stance and come to a solution that is beneficial for both parties. He said as of the 1st of June, drastic change must happen for any success in talks and that he will make the UK’s stance public so that all member states can see their approach in detail. Mr. Frost said that the UK was committed to working hard to find an agreement.

The UK government has issued a statement that it is deeply concerned that the EU will not live up to their agreement to protect the rights of UK citizens living in the EU. There are currently 1.2 million UK nationals living in the EU.

Germany has now ruled that burning an EU or a flag of any other country is considered a hate crime and punishable for a prison term of up to three years.

The major Europe stock markets had a green day today:

  • CAC 40 increased 4.50 points or 0.11% to 4,277.63
  • FTSE 100 increased 58.23 points or 1.01% to 5,799.77
  • DAX 30 increased 128.15 points or 1.24%% to 10,465.17

The major Europe currency markets had a mixed day today:

  • EURUSD increased 0.00046 or 0.04% to 1.08120
  • GBPUSD decreased 0.01091 or -0.89% to 1.21229
  • USDCHF decreased 0.0005 or -0.05% to 0.97267

Some economic news from Europe today:

Germany:

German PPI (YoY) (Apr) decreased from -0.8% to -1.9%

German PPI (MoM) (Apr) increased from -0.8% to -0.7%

German GDP (YoY) (Q1) decreased from 0.2% to -1.9%

German GDP (QoQ) (Q1) decreased from -0.1% to -2.2%

Norway:

Trade Balance (Apr) increased from 2.5B to 3.2B

France:

French CPI (MoM) (Apr) increased from -0.1% to 0.0%

French CPI (YoY) decreased from 0.7% to 0.3%

French HICP (YoY) (Apr) decreased from 0.8% to 0.4%

French HICP (MoM) (Apr) decreased from 0.1% to 0.0%

Italy:

Italian Industrial New Orders (MoM) (Mar) decreased from -4.1% to -26.5%

Italian Industrial New Orders (YoY) (Mar) decreased from -2.5% to -26.6%

Italian Industrial Sales (YoY) (Mar) decreased from 1.10% to -25.20%

Italian Industrial Sales (MoM) (Mar) decreased from -1.70% to -25.80%

Italian CPI (YoY) (Apr) decreased from 0.1% to 0.0%

Italian CPI (MoM) (Apr) remain the same at 0.1%

Italian CPI Ex Tobacco (MoM) (Apr) decreased from 0.1% to -0.1%

Italian HICP (MoM) (Apr) decreased from 2.2% to 0.5%

Italian HICP (YoY) (Apr) remain the same at 0.1%

Euro Zone:

Employment Change (QoQ) decreased from 0.3% to -0.2%

Employment Overall (Q1) decreased from 160,756.0K to 160,636.0K

GDP (YoY) (Q1) increased from -3.3% to -3.2%

GDP (QoQ) (Q1) remain the same at -3.8%

Trade Balance (Mar) increased from 23.0B to 28.2B

Reserve Assets Total (Apr) increased from 866.31B to 909.92B

US/AMERICAS:

The US government is launching “Operation Warp Speed” to expedite developing a coronavirus vaccine. By the end of the year, the Trump administration would like to have 300 million vaccines available domestically. “What we’re doing now is we’re narrowing those down to the core group that we’re going to place huge multi-hundred-million-dollar bets on and scale massive vaccine domestic production so that we, by the end of the year, we hope, would have one or more safe and effective vaccines and hundreds of millions of doses,” Health and Human Services Secretary Alex Azar told reporters at Fox.

President Trump also plans to partner with India to “beat the invisible enemy.” The US plans to donate ventilators to India. In exchange, India will help the US to develop a vaccination and grant access to their manufacturing plants. Bill Gates, a controversial yet prominent figure during this crisis, separately met with Prime Minister Modi on Thursday via video chat to discuss vaccine development. President Trump separately noted that a vaccine is not required for the US economy to reopen, stating that the virus is likely to go away on its own.

One in five Americans have lost their job or have been furloughed since the pandemic began, the New York Times reported. According to a survey by the Federal Reserve, low-income households have suffered the most significant losses, as 39% of job losses occurred in households netting under $40,000 annually. The survey highlighted the need for many Americans, who may be living paycheck to paycheck, to get back to work.

Brazil’s Health Minister Nelson Teich Luiz resigned this Friday after spending less than one month in his current role. His unexplained resignation comes a day after President Bolsonaro agreed to loosen restriction to use an antimalaria drug to treat the coronavirus. His predecessor, Health Minister Luiz Henrique Mandetta, left his position after promoting a nationwide lockdown to the dismay of the Bolsonaro administration. Gen. Eduardo Pazuello, who has no formal health training, will fill in for Luiz until a new minister is appointed.

To curb the economic impact of the coronavirus, Brazil has reduced or deferred taxes by 170 billion reais ($29.15 billion), according to Reuters. Federal Revenue Service Chief Jose Tostes Neto said that the government may consider additional deferrals in the coming weeks. The Brazilian government is already anticipating a -4.7% contraction in GDP for 2020.

US Market Closings:

  • Dow advanced 60.08 points or 0.25% to 23,685.42
  • S&P 500 advanced 11.2 points or 0.39% to 2,863.7
  • Nasdaq advanced 70.84 points or 0.79% to 9,014.56
  • Russell 2000 advanced 19.44 points or 1.57% to 1,256.99

Canada Market Closings:

  • TSX Composite advanced 129.24 points or 0.89% to 14,638.9
  • TSX 60 advanced 5.63 points or 0.64% to 886.85

Brazil Market Closing:

  • Bovespa declined 1,454.19 points or -1.84% to 77,556.62

ENERGY:

WTI and Brent continued an impressive climb making it a positive third week for oil. Today, WTI moved up 7.76%, and Brent 5.43% over positive news that China is easing their lockdown and demand is picking up in the region.

The oil markets had a mixed day today:

  • Crude Oil increased 1.79 USD/BBL or 6.49% to 29.3500
  • Brent increased 1.25 USD/BBL or 4.02% to 32.3800
  • Natural gas decreased 0.059 USD/MMBtu or -3.47% to 1.6430
  • Gasoline increased 0.0371 USD/GAL or 3.99% to 0.9658
  • Heating oil increased 0.0099 USD/GAL or 1.09% to 0.9184

The above data was collected around 14.41 EST on Friday.

  • Top commodity gainers: Crude Oil (6.49%), Silver (4.83%), Ethanol (5.19%), and Brent (4.02%)
  • Top commodity losers: Natural Gas (-3.47%), Lumber (-4.37%), Lean Hogs (-15.44%), and Coal (-3.11%)

The above data was collected around 14.45 EST on Friday.

BONDS:

Japan 0.00%(+1bp), US 2’s 0.15% (+0bps), US 10’s 0.65%(+3bps); US 30’s 1.33%(+3bps), Bunds -0.53% (+1bp), France -0.02% (+2bp), Italy 1.88% (+6bp), Turkey 12.87% (+1bp), Greece 2.07% (+2bp), Portugal 0.90% (+2bp); Spain 0.86% (+3bp) and UK Gilts 0.23% (+3bp).