Market Talk – May 5, 2022

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ASIA:

India’s central bank raised its main lending rate off record lows in a surprise move on Wednesday to contain rising inflation, shocking markets and pushing the benchmark 10-year bond yield to its highest levels in three years. The Reserve Bank of India raised the repo rate – the rate at which it lends to banks – by 40 basis points to 4.40%, in its first change in the rate in two years and its first-rate hike in nearly four years. The central bank also raised banks’ cash reserve ratio (CRR), or the proportion of deposits that banks need to set aside with the RBI as cash, by 50 basis points to 4.50% effective from May 21. India’s 10-year benchmark bond yield jumped to 7.42%, its highest since May 2019, right after the policy decision, while the rupee strengthened against the dollar to as much as 76.21. The 10-year yield closed at 7.38% while the rupee ended at 76.4125 per dollar.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 closed
  • Shanghai increased 20.70 points or 0.68% to 3,067.76
  • Hang Seng decreased 76.12 points or -0.36% to 20,793.40
  • ASX 200 increased 60.00 points or 0.82% to 7,364.70
  • Kospi closed
  • SENSEX increased 33.20 points or 0.06% to 55,702.23
  • Nifty50 increased 5.05 points or 0.03% to 16,682.65

 

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.01410 or -1.94% to 0.71081
  • NZDUSD decreased 0.01170 or -1.78% to 0.64252
  • USDJPY increased 1.122 or 0.87% to 130.383
  • USDCNY increased 0.06190 or 0.93% to 6.68378

 

Precious Metals:

  • Gold decreased 2.59 USD/t oz. or -0.14% to 1,878.33
  • Silver decreased 0.448 USD/t. oz or -1.95% to 22.510

 

 

Some economic news from last night:

China:

Caixin Services PMI (Apr) decreased from 42.0 to 36.2

Hong Kong:

Manufacturing PMI (Apr) increased from 42.0 to 51.7

Australia:

Building Approvals (MoM) (Mar) decreased from 42.0% to -18.5%

Exports (MoM) (Mar) remain the same at 0%

Imports (MoM) (Mar) decreased from 13% to -5%

Private House Approvals (Mar) decreased from 14.6% to -3.0%

Trade Balance (Mar) increased from 7.457B to 9.314B

 

Some economic news from today

India:

Nikkei Services PMI (Apr) increased from 53.6 to 57.9

Hong Kong:

Retail Sales (YoY) (Mar) increased from -14.6% to -13.8%

Singapore:

Retail Sales (MoM) (Mar) increased from -1.5% to 7.5%

Retail Sales (YoY) (Mar) increased from -3.5% to 8.7%

 

 

EUROPE/EMEA:

The Bank of England sent a stark warning that Britain risks a double-whammy of a recession and inflation above 10% as it raised interest rates on Thursday to their highest since 2009, hiking by quarter of a percentage point to 1%. The pound fell by more than a cent against the U.S. dollar to hit its lowest level since mid-2020, below $1.24, as the gloominess of the BoE’s new forecasts for the world’s fifth-largest economy caught investors by surprise. The BoE’s nine rate-setters voted 6-3 for the rise in Bank Rate from 0.75%, with Catherine Mann, Jonathan Haskel and Michael Saunders calling for a bigger increase to 1.25%. The BoE said it was also worried about the impact of renewed COVID-19 lockdowns in China which threaten to hit supply chains again and add to inflation pressures.

A third operation is underway to evacuate civilians from the Ukrainian port city of Mariupol and the besieged Azovstal steel plant, U.N. Secretary-General Antonio Guterres told the U.N. Security Council on Thursday. The United Nations and International Committee of the Red Cross (ICRC) have so far helped nearly 500 civilians flee the area during two operations in the past week.

 

 

The major Europe stock markets had a mixed day:

 

  • CAC 40 decreased 27.28 points or -0.43% to 6,368.40
  • FTSE 100 increased 9.82 points or 0.13% to 7,503.27
  • DAX 30 decreased 68.30 points or -0.49% to 13,902.52

 

 

The major Europe currency markets had a mixed day today:

  • EURUSD decreased 0.00948 or -0.89% to 1.05161
  • GBPUSD decreased 0.0273 or -2.16% to 1.23400
  • USDCHF increased 0.01375 or 1.41% to 0.98755

 

Some economic news from Europe today:

Germany:

German Factory Orders (MoM) (Mar) decreased from -0.8% to -4.7%

IHS Markit Construction PMI (Apr) decreased from 50.9 to 46.0

Swiss:

CPI (MoM) (Apr) decreased from 0.6% to 0.4%

CPI (YoY) (Apr) increased from 2.4% to 2.5%

France:

French Industrial Production (MoM) (Mar) increased from -1.2% to -0.5%

UK:

Composite PMI (Apr) increased from 57.6 to 58.2

Services PMI (Apr) increased from 58.3 to 58.9

Norway:

Interest Rate Decision remain the same at 0.75%

 

US/AMERICAS:

Wall Street experienced its worst day of trading since 2020 this Thursday. The Dow erased over 1,000 points, dismissing the advance it made yesterday after Powell quelled inflation fears. The S&P had its second-worst trading day of the year after dropping 3.56%. As tech stocks took a beating today, the Nasdaq plummeted 4.99%.

The Labor Department reported an 200,000 increase in jobless claims for the last week of April. Continuing claims, compiled a week prior, fell by 19,000 to 1.38 million, the lowest level in over 50 years. Productivity in the US fell to 7.5% during Q1, marking the fastest decline since 1947. Labor costs surged 11.6%, bringing the overall increase over the past four quarters to 7.2%. This marks another record as labor has not been this costly since 1982.

US Market Closings:

  • Dow declined 1,063.09 points or -3.12% to 32,997.97
  • S&P 500 declined 153.3 points or -3.56% to 4,146.87
  • Nasdaq declined 647.16 points or -4.99% to 12,317.69
  • Russell 2000 declined 78.78 points or -4.04% to 1,871.15

 

Canada Market Closings:

  • TSX Composite declined 488.78 points or -2.31% to 20,696.17
  • TSX 60 declined 28.28 points or -2.21% to 1,253.28

 

Brazil Market Closing:

  • Bovespa declined 3,039.55 points or -2.81% to 105,304.19

 

 

ENERGY:

 

The oil markets had a mixed day today:

 

  • Crude Oil decreased 0.12 USD/BBL or -0.11% to 107.690
  • Brent increased 0.23 USD/BBL or 0.21% to 110.37
  • Natural gas increased 0.277 USD/MMBtu or 3.29% to 8.6920
  • Gasoline decreased 0.0153 USD/GAL or -0.42% to 3.6370
  • Heating oil decreased 0.1339 USD/GAL or -3.19% to 4.0631

 

The above data was collected around 13:21 EST on Thursday

 

  • Top commodity gainers: Methanol (4.33%) and Natural Gas (3.29%), Wheat (3.00%), Bitumen (3.20%)
  • Top commodity losers: Rhodium(-3.85%), Cocoa (-4.47%), Oat (-4.73%) and Palm Oil (-4.97%)

 

The above data was collected around 13:32 EST on Thursday.

 

BONDS:

 

Japan 0.2250%(+0.8bp), US 2’s 2.73% (+0.080%), US 10’s 3.1037% (+15.76bps); US 30’s 3.20% (+0.160%), Bunds 1.053% (+7.5bp), France 1.577% (+6.8bp), Italy 3.0380% (+7.6bp), Turkey 20.72% (+45bp), Greece 3.457% (+2.8bp), Portugal 2.186% (+5.7bp); Spain 2.191% (+11.7bp) and UK Gilts 1.9650% (-0.3bp).