Market Talk – May 8, 2020

 ASIA:

The official Urban Unemployment rate in China was 5.9% in March, as per the data published by the Ministry of Commerce. Yet, the Chinese Academy of Social Sciences, a think tank run by the government, has published a report stating that the actual data could be far greater. Beijing’s data does not include people in rural communities or the 290 million migrant workers who work in construction, manufacturing, and other low paying but vital activities. If those migrants are included, as many as 80 million people could have been out of work at the end of March.

US lawmakers have proposed renaming the street in front of the Chinese embassy in Washington after the late Wuhan doctor Li Wenliang who was punished for warning about the spread of coronavirus. The measure would rechristen the section of the Washington street in front of the embassy “Li Wenliang Plaza,” instead of the innocuous current name of “International Place.”

The Indian government on Friday signed a US $500 million “COVID-19 Emergency Response and Health Systems Preparedness Project” with the Asian Infrastructure Investment Bank (AIIB) to help India to respond to the COVID-19 pandemic and strengthen its public health preparedness. This is the first-ever health sector support from the Bank of India.

Sugar exports from India have gained momentum due to strong demand from Indonesia and Iran as the rupee slid to a record low, increasing exporters’ margins from overseas sales, five industry officials told Reuters. Higher exports from India, the world’s biggest producer of sugar, could put pressure on global prices and limit shipments from rivals such as Brazil and Thailand.

India’s Central Board of Direct Taxes (CBDT) eases tax residence rules for (Non-Resident Indians (NRIs) who are held up in the country due to the travel ban. The Central Board of Direct Taxes (CBDT) relaxed the rules in view of the representations from such individuals, expressing concern that they will be required to file tax returns as Indian residents.

Disney’s theme parks in Tokyo will remain closed with more than 5,000 park employees working a reduced schedule after Japan extended its state of emergency until the end of May.

The major Asian stock markets had a green day today:

  • NIKKEI 225 increased 504.32 points or 2.56% to 20,179.09
  • Shanghai increased 23.82 points or 0.83% to 2,895.34
  • Hang Seng increased 249.54 points or 1.04% to 24,230.17
  • ASX 200 increased 26.90 points or 0.50% to 5,391.10
  • Kospi increased 17.21 points or 0.89% to 1,945.82
  • SENSEX increased 199.32 points or 0.63% to 31,642.70

The major Asian currency markets had a mixed day today:

  • AUDUSD increased 0.00426 or 0.66% to 0.65387
  • NZDUSD increased 0.00537 or 0.88% to 0.61432
  • USDJPY increased 0.18 or 0.17% to 106.51
  • USDCNY decreased 0.00282 or -0.04% to 7.08586

Precious Metals:

  • Gold decreased 3.94 USD/t oz. or -0.23% to 1,713.75
  • Silver increased 0.02 USD/t. oz or 0.13% to 15.5200

Some economic news from last night:

Japan:

Average Cash Earnings (YoY) decreased from 0.7% to 0.1%

Household Spending (MoM) (Mar) decreased from 0.8% to -4.0%

Household Spending (YoY) (Mar) decreased from -0.3% to -6.0%

Overall wage income of employees (Mar) decreased from 0.7% to 0.1%

Overtime Pay (YoY) (Mar) decreased from -1.80% to -4.10%

Services PMI (Apr) decreased from 33.8 to 21.5

Indonesia:

FX Reserves (USD) (Apr) increased from 121.00B to 127.90B

Some economic news from today:

Singapore:

Foreign Reserves USD (MoM) (Apr) increased from 279.1B to 301.8B

India:

Bank Loan Growth decreased from 7.2% to 6.7%

Deposit Growth increased from 9.5% to 9.8%

FX Reserves, USD increased from 479.46B to 481.08B

EUROPE/EMEA:

Today the EU decided to keep their external borders closed until at least mid-June by extending the travel ban by 30 days. Only essential travel will be permitted.

The EU is attaching new rules to government handouts by saying no dividends, bonuses, nor allowing those helped to be part of a corporate takeover.

This week the German constitutional court ruled that the ECB public sector purchase was illegal. Meaning that the Bundesbank will not be allowed to participate in the ECB’s bond purchases.

The major Europe stock markets had a green day today:

  • CAC 40 increased 48.20 points or 1.07% to 4,549.64
  • FTSE 100 closed
  • DAX 30 increased 145.21 points or 1.35% to 10,904.48

The major Europe currency markets had a mixed day today:

  • EURUSD increased 0.00188 or 0.17% to 1.08522
  • GBPUSD increased 0.0063 or 0.51% to 1.24331
  • USDCHF decreased 0.00292 or -0.30% to 0.97020

Some economic news from Europe today:

Germany:

Gemran Current Account Balance n.s.a (Mar) increased from 23.7B to 24.4B

German Exports (MoM) (Mar) decreased from 1.2% to -11.8%

German Imports (MoM) (Mar) decreased from -1.5% to -5.1%

German Trade Balance (Mar) decreased from 21.4B to 12.8B

Norway:

Manufacturing Production (MoM) (Mar) decreased from -0.5% to -3.0%

Spain:

Spanish Industrial Production (YoY) (Mar) decreased from -1.5% to -12.2%

US/AMERICAS:

Unemployment surged to 14.7% in April, according to the report released by the US Labor Department this Friday. Over 20.5 million Americans lost their livelihoods last month amid the ongoing coronavirus crisis. This figure falls slightly below the Great Depression’s record high of 24.9%, but exceeds any other recorded event in recent American history. The hospitality industry, which has come to a near standstill, let go of 7.7 million people last month. Education and health services declined by 2.5 million positions, and business services and retail saw a loss of around 2.1 million. Manufacturing also declined by 1.1 million, construction by 975,000, and warehouse and transportation by 584,000.

Reuters reported that women are especially suffering from the economic outfall of the pandemic, as unemployment rose by 15.5% for women last month compared to 13% for men. Schools are encouraging at-home learning, which has forced many women to refocus their attention away from work. Even women who produce the most or only income for their families fared worse than their male colleagues, with their unemployment rate rising 15.9%.

As reported yesterday, biotech company Moderna (+11.39%) is moving on to phase two of testing for a coronavirus vaccine. However, CEO Chief Executive Officer Stéphane Bancel told reporters at CNBC that the vaccine will be in short supply once available despite the company’s efforts to increase manufacturing. “We will all be supply-constrained for quite some time, meaning we won’t be able to make as many products as will be required to vaccinate everyone on the planet,” Bancel stated this Friday.

US Market Closings:

  • Dow advanced 455.43 points or 1.91% to 24,331.32
  • S&P 500 advanced 48.61 points or 1.69% to 2,929.8
  • Nasdaq advanced 141.66 points or 1.58% to 9,121.32
  • Russell 2000 advanced 46.71 points or 3.64% to 1,329.64

Canada Market Closings:

  • TSX Composite advanced 132.87 points or 0.9% to 14,966.56
  • TSX 60 advanced 8.05 points or 0.9% to 905.55

Brazil Market Closing:

  • Bovespa advanced 2,144.78 points or 2.75% to 80,263.35

ENERGY:

Crude and WTI continued to push up today as prospects of an increasing demand hit the markets, which will bring the second consecutive week of gains. Goldman Sachs released a report suggesting that demand could outweigh supply as of the end of May. At the time of writing, Brent pushed above 30 USD per barrel.

The oil markets had a mixed day today:

  • Crude Oil increased 0.48 USD/BBL or 2.04% to 24.0300
  • Brent increased 0.76 USD/BBL or 2.58% to 30.2200
  • Natural gas decreased 0.055 USD/MMBtu or -2.87% to 1.8610
  • Gasoline increased 0.0022 USD/GAL or 0.24% to 0.9298
  • Heating oil increased 0.0319 USD/GAL or 3.76% to 0.8797

The above data was collected around 12.04 EST on Friday.

  • Top commodity gainers: Oat (3.07%), Heating Oil (3.76%), Live Cattle (4.60%), and Ethanol (5.83%)
  • Top commodity losers: Natural Gas (-2.87%), Steel (-1.42%), Cocoa (-2.33%), and Lean Hogs (-1.31%)

The above data was collected around 12.10 EST on Friday.

BONDS:

Japan 0.01%(-0bp), US 2’s 0.12% (-1bps), US 10’s 0.65%(+2bps); US 30’s 1.36%(+4bps), Bunds -0.54% (+2bp), France -0.03% (+0bp), Italy 1.82% (-8bp), Turkey 12.69% (+13bp), Greece 2.17% (-2bp), Portugal 0.94% (-1bp); Spain 0.87% (-3bp) and UK Gilts 0.23% (-0bp).