Market Talk – May 29, 2020

ASIA:

President Donald Trump launched a blistering attack on China on Friday, and announced a slew of retaliatory measures that will plunge US-China relations deeper into crisis. “They’ve ripped off the United States like no one has ever done before,” Trump said of China, as he decried the way Beijing has “raided our factories” and “gutted” American industry, casting Beijing as a central foil he will run against in the remaining months of his re-election campaign.

President Donald Trump has threatened to slap new taxes on American companies like Apple to dissuade them from moving their manufacturing bases from China to countries like India and Ireland instead of the US amidst the COVID-19 pandemic. According to the New York Post, Apple is looking to shift a significant portion of its production to India from China. Trump has routinely threatened to raise tariffs on consumer electronics during his ongoing trade war with China.

India’s GDP grew by a slower pace of 3.1 % in the Jan-March quarter, India’s Central Statistics Office reported on Friday. During the quarter under review, only one week of nationwide lockdown was observed. Growth was 4.2% in the fiscal year through March 2020, the Statistics Ministry said, as compared to 6.1% in FY19.

Alphabet Inc’s Google is exploring an investment in Vodafone Group Plc’s struggling India business, the Financial Times reported on Thursday. Google is considering buying a stake of about 5% in Vodafone Idea.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 decreased 38.42 points or -0.18% to 21,877.89
  • Shanghai increased 6.13 points or 0.22% to 2,852.35
  • Hang Seng decreased 171.29 points or -0.74% to 22,961.47
  • ASX 200 decreased 95.40 points or -1.63% to 5,755.70
  • Kospi increased 1.06 points or 0.05% to 2,029.60
  • SENSEX increased 223.51 points or 0.69% to 32,424.10

The major Asian currency markets had a mixed day today:

  • AUDUSD increased 0.00107 or 0.16% to 0.66413
  • NZDUSD increased 0.0007 or 0.11% to 0.62047
  • USDJPY decreased 0.02 or -0.02% to 107.64
  • USDCNY decreased 0.01823 or -0.25% to 7.15510

Precious Metals:

  • Gold increased 14.40 USD/t oz. or 0.84% to 1,732.90
  • Silver increased 0.39 USD/t. oz or 2.21% to 17.8050

Some economic news from last night:

Japan:

Jobs/applications ratio (Apr) decreased from 1.39 to 1.32

Tokyo Core CPI (YoY) (May) increased from -0.1% to 0.2%

Tokyo CPI (YoY) (May) increased from 0.2% to 0.4%

CPI Tokyo Ex Food and Energy (MoM) (May) remain the same at 0.1%

Unemployment Rate (Apr) increased from 2.5% to 2.6%

Industrial Production (MoM) (Apr) decreased from -3.7% to -9.1%

Industrial Production forecast 1m ahead (MoM) (May) decreased from 1.4% to -4.1%

Industrial Production forecast 2m ahead (MoM) (Jun) increased from -1.4% to 3.9%

Retail Sales (YoY) (Apr) decreased from -4.7% to -13.7%

South Korea:

Industrial Production (YoY) (Apr) decreased from 7.4% to -4.5%

Industrial Production (MoM) (Apr) decreased from 4.7% to -6.0%

Retail Sales (MoM) increased from -1.0% to 5.3%

Service Sector Output (MoM) (Apr) increased from -4.4% to 0.5%

Australia:

Housing Credit (Apr) decreased from 0.3% to 0.2%

Private Sector Credit (MoM) (Apr) decreased from 1.1% to 0.1%

Singapore:

Bank Lending (Apr) decreased from 692.4B to 689.7B

Indonesia:

Loans (YoY) (Apr) decreased from 7.95% to 5.73%

Some economic news from today:

Japan:

Household Confidence (May) increased from 21.6 to 24.0

Housing Starts (YoY) (Apr) decreased from -7.6% to -12.9%

Construction Orders (YoY) (Apr) increased from -14.3% to -14.2%

India:

Federal Fiscal Deficit (Apr) decreased from 10,364.85B to 2,795.12B

FX Reserves, USD increased from 487.04B to 490.04B

GDP Annual decreased from 6.1% to 4.2%

GDP Quarterly (YoY) (Q4) decreased from 4.1% to 3.1%

Infrastructure Output (YoY) (Apr) decreased from -9.0% to -38.1%

EUROPE/EMEA:

Angela Merkel has warned that the coronavirus has been a test for the EU. According to the UK tabloid The Express, she thinks the consequences of COVID-19 it will be “long felt” and that it was a “stress test” for Europe.

A report by the European Environment Agency has shown that emissions has fallen 2.1% year-over-year in 2018 and 23% lower than in 1990. The EU is targeting a 6-7% decrease in emissions to hit its targets for 2050.

Slightly contrary to Micheal Gove’s statement yesterday that the EU was willing to change its stance to make a deal. Michel Barnier’s senior advisor reverted back to their hardline stance and said that the EU would not change trade demands due to pressure from the UK. He also mentioned that the EU was open for discussions and an extension to the transition period.

A survey from the European Parliament suggested that of all the 27 member states, Italians were the most disappointed with the way the EU handled the pandemic as only 16% of Italians reported that they were satisfied by the actions of the EU. An EU court of auditors has announced they will work on analyzing the EU response to the pandemic.

The major Europe stock markets had a negative day today:

  • CAC 40 decreased 75.95 points or -1.59% to 4,695.44
  • FTSE 100 decreased 142.19 points or -2.29% to 6,076.60
  • DAX 30 decreased 194.28 points or -1.65%% to 11,586.85

The major Europe currency markets had a mixed day today:

  • EURUSD increased 0.00536 or 0.48% to 1.11263
  • GBPUSD increased 0.00617 or 0.50% to 1.23799
  • USDCHF decreased 0.0034 or 0.35% to 0.9611

Some economic news from Europe today:

Germany:

German Import Price Index (MoM) (Apr) increased from -3.5% to -1.8%

German Import Price Index (YoY) (Apr) decreased from -5.5% to -7.4%

German Retail Sales (MoM) (Apr) decreased from -4.0% to -5.3%

German Retail Sales (YoY) (Apr) decreased from -1.2% to -6.5%

Norway:

Credit Indicator (YoY) (Apr) decreased from 4.7% to 4.6%

Central Bank Currency Purchase (Jun) decreased from -2,100.0M to -2,300.0M

Unemployment Rate n.s.a. (Apr) decreased from 10.40% to 6.40%

France:

French Consumer Spending (MoM) (Apr) decreased from -16.9% to -20.2%

French CPI (MoM) remain the same at 0.0%

French CPI (YoY) decreased from 0.3% to 0.2%

French GDP (QoQ) (Q1) decreased from -0.1% to -5.3%

French HICP (YoY) decreased from 0.4% to 0.2%

French HICP (MoM) remain the same at 0.0%

French PPI (MoM) (Apr) decreased from -1.7% to -2.9%

Swiss:

KOF Leading Indicators (May) decreased from 59.7 to 53.2

Italy:

Italian GDP (QoQ) (Q1) remain the same at -5.3%

Italian GDP (YoY) (Q1) remain the same at -5.4%

Italian CPI (YoY) (May) decreased from 0.0% to -0.1%

Italian CPI (MoM) (May) decreased from 0.1% to -0.1%

Italian HICP (YoY) (May) decreased from 0.1% to -0.2%

Italian HICP (MoM) (May) decreased from 0.5% to -0.2%

Spain:

Spanish Current account (Mar) decreased from 1.33B to -1.05B

Euro Zone:

M3 Money Supply (YoY) (Apr) increased from 7.5% to 8.3%

Loans to Non Financial Corporations (Apr) increased from 5.4% to 6.6%

Private Sector Loans (YoY) decreased from 3.4% to 3.0%

Core CPI (YoY) remain the same at 0.9%

CPI (MoM) decreased from 0.3% to -0.1%

CPI (YoY) (May) decreased from 0.3% to 0.1%

CPI, n.s.a (May) decreased from 105.43 to 105.30

HICP ex Energy & Food (YoY) (May) remain the same at 1.1%

US/AMERICAS:

The United States has officially cut all funding to the World Health Organization (WHO) for allegedly mishandling the coronavirus to protect Chinese interests. “China has total control over the World Health Organization despite only paying $40 million per year compared to what the United States has been paying, which is approximately $450 million a year,” President Trump declared this Friday. “Why is it that China shut off infected people from Wuhan to all other parts of China? It didn’t go to Beijing, it went nowhere else, but they allowed them to freely travel throughout the world, including Europe and the United States,” he questioned.

Tensions over social media censorship have reached a peak and the Trump administration is now threatening to step in to regulate Twitter. “Twitter is doing nothing about all of the lies & propaganda being put out by China or the Radical Left Democrat Party,” Trump tweeted to his 80+ million followers this Friday, “They have targeted Republicans, Conservatives & the President of the United States. Section 230 should be revoked by Congress. Until then, it will be regulated!” Facebook CEO Mark Zuckerberg responded by saying his company was not engaging in media censorship, and has a different policy than Twitter. “I believe strongly that Facebook shouldn’t be the arbiter of truth of everything that people say online,” the Facebook CEO stated.

Americans continued to hoard their wealth last month at unprecedented levels. According to the US Bureau of Economic Analysis, personal savings rose to a 33% historic high last month. The department said this is the highest level of personal savings seen since they began collecting data in the 1960s.

Violent protests and civil unrest have broken out in Minneapolis after police officers killed an unarmed black man by the name of George Floyd. Violent acts are overriding the peaceful protests and have included burning buildings to the ground and looting stores. The police seem ill-equipped to handle the matter and even arrested CNN reporter Omar Jiminez live on-air. President Trump is now threatening to send in the national guard if the city is unable to regain control. Worsening the Trump-Twitter feud, Twitter removed a post the president made in the early morning which stated, “when the looting starts, the shooting starts.”

The United Nations High Commissioner Michelle Bachelet has condemned US police brutality that disproportionately targets African Americans. “Procedures must change, prevention systems must be put in place, and above all police officers who resort to excessive use of force should be charged and convicted for the crimes committed,” Bachelet commented. She also urged protestors to use peaceful means as ““violence and destruction of property won’t solve the problem of police brutality and enshrined discrimination.” President Trump is ordering an expedited investigation into Monday’s murder by the Department of Justice and FBI.

US Market Closings:

  • Dow declined 17.53 points or -0.07% to 25,383.11
  • S&P 500 advanced 14.58 points or 0.48% to 3,044.31
  • Nasdaq advanced 120.88 points or 1.29% to 9,489.87
  • Russell 2000 declined 6.64 points or -0.47% to 1,394.04

Canada Market Closings:

  • TSX Composite declined 69.9 points or -0.46% to 15,192.83
  • TSX 60 declined 5.99 points or -0.65% to 917.17

Brazil Market Closing:

  • Bovespa advanced 453.5 points or 0.52% to 87,402.59

ENERGY:

Bloomberg reported that the WTI price rally was the biggest monthly rally since 1983. However, still 45% lower than the beginning of the year. WTI had an impressive day climbing close to 5% with the price matching that of Brent crude.

The oil markets had a negative day today:

  • Crude Oil decreased 0.18 USD/BBL or -0.53% to 33.5300
  • Brent decreased 0.53 USD/BBL or -1.50% to 34.7600
  • Natural gas decreased 0.05 USD/MMBtu or -2.74% to 1.7730
  • Gasoline decreased 0.0057 USD/GAL or -0.57% to 0.9919
  • Heating oil decreased 0.0022 USD/GAL or -0.24% to 0.9258

The above data was collected around 10.55 EST on Friday.

  • Top commodity gainers: Ethanol (3.98%), Silver (2.21%), Rice (1.15%), and Bitumen (2.45%)
  • Top commodity losers: Natural Gas (-2.74%), Orange Juice (-1.76%), Cotton (-1.65%), and Coffee (-2.47%)

The above data was collected around 11.00 EST on Friday.

BONDS:

Japan 0.01%(+1bp), US 2’s 0.17% (-1bps), US 10’s 0.67%(-3bps); US 30’s 1.44%(-3bps), Bunds -0.44% (-2bp), France -0.08% (-2bp), Italy 1.46% (+2bp), Turkey 12.24% (+20bp), Greece 1.51% (-0bp), Portugal 0.52% (-4bp); Spain 0.56% (+5bp) and UK Gilts 0.19% (-2bp).

  • Italian 5-Year BTP Auction decreased from 1.36% to 0.91%
  • Italian 10-Year BTP Auction decreased from 1.78% to 1.42%