Market Talk – May 16, 2022

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ASIA:

India’s wheat export ban has trapped some 1.8 million tonnes of grain at ports, leaving traders facing heavy losses from the prospect of selling onto a weaker domestic market. India banned wheat exports on Saturday, just days after saying it was targeting record shipments of 10 million tonnes this year, as a scorching heatwave curtailed output and domestic prices hit a record high. Only exports backed by letters of credit (LCs), or payment guarantees, issued before May 13 can proceed before the ban takes effect, India has said. Global buyers were banking on supplies from the world’s second-biggest wheat producer after exports from the Black Sea region plunged following number one exporter Russia’s Feb. 24 invasion of Ukraine.

China’s retail and factory activity fell sharply in April as wide COVID-19 lockdowns confined workers and consumers to their homes and severely disrupted supply chains, casting a long shadow over the outlook for the world’s second-largest economy. Retail sales in April shrank 11.1% from a year earlier, the biggest contraction since March 2020, data from the National Bureau of Statistics (NBS) showed on Monday. This was more than what was predicted by a Reuters poll. NBS data also showed Factory production fell 2.9% from a year earlier, dashing expectations for a rise and the largest decline since February 2020, as anti-virus measures snarled supply chains and paralyzed distribution.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 increased 119.40 points or 0.45% to 26,547.05
  • Shanghai decreased 10.54 points or -0.34% to 3,073.75
  • Hang Seng increased 51.44 points or 0.26% to 19,950.21
  • ASX 200 increased 17.90 points or 0.25% to 7,093.00
  • Kospi decreased 7.66 points or -0.29% to 2,596.58
  • SENSEX increased 180.22 points or 0.34% to 52,973.84
  • Nifty50 increased 60.15 points or 0.38% to 15,842.30

 

The major Asian currency markets had a mixed day today:

  • AUDUSD increased 0.00159 or 0.23% to 0.69544
  • NZDUSD increased 0.00039 or 0.06% to 0.62942
  • USDJPY decreased 0.006 or 0.00% to 129.252
  • USDCNY increased 0.00468 or 0.07% to 6.80216

 

Precious Metals:

  • Gold increased 5.12 USD/t oz. or 0.28% to 1,816.27
  • Silver increased 0.462 USD/t. oz or 2.19% to 21.532

 

 

Some economic news from last night:

China:

Fixed Asset Investment (YoY) (Apr) decreased from 9.3% to 6.8% Industrial Production (YoY) (Apr) decreased from 5.0% to -2.9% Chinese Industrial Production YTD (YoY) (Apr) decreased from 6.5% to 4.0% Retail Sales (YoY) (Apr) decreased from -3.5% to -11.1% Chinese Retail Sales YTD (YoY) (Apr) decreased from 3.27% to -0.17% Chinese Unemployment Rate increased from 5.8% to 6.1%

Japan:

PPI (YoY) (Apr) increased from 9.7% to 10.0% PPI (MoM) (Apr) increased from 0.9% to 1.2% South Korea:

Exports (YoY) (Apr) increased from 12.6% to 12.9% Imports (YoY) (Apr) remain the same at 18.6% Trade Balance (Apr) increased from -2.66B to -2.50B

 

Some economic news from today

Japan:

Machine Tool Orders (YoY) decreased from 30.2% to 25.0%

 

 

EUROPE/EMEA:

The European Commission has cut its forecast for European growth this year, and hiked its inflation forecast, as the Ukraine war hits the economy. In its latest Spring forecasts, the EC predicts real GDP growth in both the EU and the euro area of 2.7% in 2022, down from 4% forecast three months ago. Growth is expected to slow to 2.3% in 2023, down from a previous forecast of 2.8% in the EU (and 2.7% in the euro area). And with energy prices having soared this year, inflation is expected to average 6.1% in 2022, and peak at 6.9% in the current quarter (it hit 7.5% in April, the highest rate in the history of the monetary union).

British employers expect to raise staff pay by 3%, a big increase by normal standards but far below the current rate of inflation, and there are signs of weaker wage momentum ahead, a survey published on Monday showed. The Chartered Institute of Personnel and Development (CIPD) said recruitment intentions remained strong across all sectors with almost two-thirds of respondents in its survey expecting problems in filling vacancies over the next six months. With inflation at 7% and on course to hit 10% later this year, the Bank of England is watching pay deals closely to gauge the risk of the recent jump in prices becoming a longer-term problem for the economy.

 

The major Europe stock markets had a mixed day:

  • CAC 40 decreased 14.91 points or -0.23% to 6,347.77
  • FTSE 100 increased 46.65 points or 0.63% to 7,464.80
  • DAX 30 decreased 63.55 points or -0.45% to 13,964.38

 

 

The major Europe currency markets had a green day today:

  • EURUSD increased 0.00113 or 0.11% to 1.04231
  • GBPUSD increased 0.00258 or 0.21% to 1.22867
  • USDCHF increased 0.00078 or 0.08% to 1.00301

 

Some economic news from Europe today:

Germany:

German WPI (MoM) (Apr) decreased from 6.9% to 2.1% German WPI (YoY) (Apr) increased from 22.6% to 23.8% Euro Zone:

Trade Balance (Mar) decreased from -8.8B to -16.4B Reserve Assets Total (Apr) increased from 1,102.82B to 1,144.22B

 

 

US/AMERICAS:

Fitch Ratings predicts home prices will experience a mid-single-digit decline in 2022. This comes as the St. Louis Fed announced that the average home price during Q1 was $428,700. Fitch Ratings factored in potential stagflation in its stress text and found that revenue could decline 30% in 2023, followed by 15% the following year. The average 30-year fixed rate now sits at 5.3% and many believe rising rates will help to cool historically high prices.

US Market Closings:

  • Dow advanced 26.76 points or 0.08% to 32,223.42
  • S&P 500 declined 15.88 points or -0.39% to 4,008.01
  • Nasdaq declined 142.21 points or -1.2% to 11,662.79
  • Russell 2000 declined 9.24 points or -0.52% to 1,783.43

 

Canada Market Closings:

  • TSX Composite advanced 106.6 points or 0.53% to  20,206.41
  • TSX 60 advanced 5.88 points or 0.48% to 1,225.84

 

Brazil Market Closing:

  • Bovespa advanced 1,308.56 points or 1.22% to 108,232.74

 

 

ENERGY:

 

The oil markets had a green day today:

 

  • Crude Oil increased 4.27 USD/BBL or 3.86% to 114.7600
  • Brent increased 3.17 USD/BBL or 2.84% to 114.72
  • Natural gas increased 0.262 USD/MMBtu or 3.42% to 7.9250
  • Gasoline increased 0.0895 USD/GAL or 2.26% to 4.0473
  • Heating oil increased 0.0132 USD/GAL or 0.34% to 3.9344

 

The above data was collected around 14:12 EST on Monday

 

  • Top commodity gainers: Methanol (9.01%) and Rhodium (3.90%), Wheat (5.94%), Orange Juice (4.34%) • Top commodity losers:  Lumber (-16.58%), Steel (-2.19%) and Canola (-2.38%)

 

The above data was collected around 14:21 EST on Monday.

 

 

BONDS:

 

Japan 0.25%(+1bp), US 2’s 2.58% (-0.008%), US 10’s 2.8931% (-3.45bps); US 30’s 3.09% (+0.003%), Bunds 0.943% (-0.4bp), France 1.453% (-0.3bp), Italy 2.845% (-0.1bp), Turkey 23.39% (-31bp), Greece 3.538% (+7.4bp), Portugal 2.070% (-0.8bp); Spain 2.051% (+5.5bp) and UK Gilts 1.7370% (-0.5bp).