Market Talk – November 17, 2020

ASIA:

A survey by IHS Markit in late October of more than 6,600 companies in 12 countries found that companies in China reported the highest recovery rate from the coronavirus pandemic, followed by those in the US. US According to the latest available data from the US Bureau of Economic Analysis, multinationals’ majority-owned affiliates in China brought in sales of $392.7 billion in 2018, up 4.8% from a year ago. Respondents from both countries expected their output would recover to the pre-pandemic peak, the study found. The data also implied a two-month recovery period for businesses in China and three months for those in the US, versus an average of five months for the 48% firms globally that are waiting to recoup lost output, IHS Markit said.

Negative real rates in India and recovering growth alongside high inflation suggest its central bank has little room for more monetary stimulus, but the policy is likely to stay accommodative, economists and analysts said. With inflation staying above 7% in October for a second straight month, well above the RBI’s medium-term target of 4%, views that India is near the end of the current rate cutting cycle have become more pronounced.

Rating agency Moody’s on Thursday revised its 2020/21 growth forecast for India to an 8.9% contraction from its earlier forecast of 9.6%, citing the steady decline in new and active Covid-19 cases since September. They said the central bank would help banks and corporates through lower borrowing costs unless a second wave of infections forces it to provide more direct support through rate cuts.

Japan’s economy rebounded in the July-September period following a deep slump caused by the coronavirus pandemic to mark its first expansion in four quarters, Cabinet Office data showed on Monday. The nation’s gross domestic product, the broadest measure of economic activity, grew 5.0% in the third quarter from the preceding three-month period. It expanded at an annualized pace of 21.4%. The results exceeded expectations. Economists had expected a quarterly increase of 4.2% and an annualized 18% jump, according to a survey by Nikkei affiliate QUICK.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 increased 107.69 points or 0.42% to 26,014.62
  • Shanghai decreased 7.07 points or -0.21% to 3,339.90
  • Hang Seng increased 33.42 points or 0.13% to 26,415.09
  • ASX 200 increased 13.90 points or 0.21% to 6,498.20
  • Kospi decreased 3.88 points or -0.15% to 2,539.15
  • SENSEX increased 314.73 points or 0.72% to 43,952.71
  • Nifty50 increased 93.95 points or 0.74% to 12,874.20

The major Asian currency markets had a negative day today:

  • AUDUSD decreased 0.00163 or -0.22% to 0.73033
  • NZDUSD decreased 0.00153 or -0.22% to 0.68912
  • USDJPY decreased 0.3280 or -0.31% to 104.22
  • USDCNY decreased 0.01764 or -0.27% to 6.55294

Precious Metals:

  • Gold decreased 1.74 USD/t oz. or -0.09% to 1,886.78
  • Silver decreased 0.18 USD/t. oz or -0.73% to 24.570

Some economic news from last night:

New Zealand:

RBNZ Offshore Holdings (Oct) decreased from 41.70% to 41.40%

Singapore:

Non-Oil Exports (YoY) (Oct) decreased from 5.80% to -3.10%

Non-Oil Exports (MoM) (Oct) increased from -11.40% to -5.30%

Trade Balance increased from 3.100B to 4.360B

Some economic news from today:

Hong Kong:

Unemployment Rate (Oct) remain the same at 6.4%

New Zealand:

GlobalDairyTrade Price Index increased from -2.0% to 1.8%

EUROPE/EMEA:

According to S&P Global, S&P 500 earnings are set to fall more than 16% this year, compared to a year ago. That’s not even considering additional uncertainty from renewed restrictions on business activity as coronavirus cases continue to surge.

British officials are concerned the European Union is still not prepared to agree to the same terms it has already given Canada. Eurocrats are failing to treat the UK as an independent nation – despite time running out to reach a deal, an online news agency reported. Boris Johnson wants a deal but is sure “we will prosper” if EU negotiators refuse to accept Britain as an independent nation, the Prime Minister’s official spokesman said. Mr Johnson’s lead negotiator has signalled a deal could be reached by the end of the week if the bloc budges on state aid rules and access to Britain’s coastal waters.

German economy minister Peter Altmaier has joined a growing chorus of calls for extending subsidies to boost the rollout of electric cars. He said, “I want hundreds of thousands of employees in the car industry to still have good jobs in 10 or 15 years.” Referencing Germany’s current buyers’ or “innovation” premium, which grants up to 9,000 euros for new e-cars, he added, “For this, the innovation premium is an important contribution.”

The major European stock markets had a mixed day:

  • CAC 40 increased 11.52 points or 0.21% to 5,483.00
  • FTSE 100 decreased 55.96 points or -0.87% to 6,365.33
  • DAX 30 decreased 5.14 points or -0.04% to 13,133.47

The major European currency markets had a mixed day today:

  • EURUSD increased 0.00035 or 0.03% to 1.18619
  • GBPUSD increased 0.00268 or 0.20% to 1.32446
  • USDCHF decreased 0.0016 or -0.18% to 0.91077

Some economic news from Europe today:

Norway:

Consumer Confidence (Q4) decreased from -10.00 to -11.50

GDP (QoQ) (Q3) increased from -4.7% to 4.6%

GDP Mainland (QoQ) (Q3) increased from -6.0% to 5.2%

Italy:

Italian Trade Balance (Sep) increased from 3.929B to 5.849B

Italian Trade Balance EU (Sep) increased from 0.35B to 0.58B

US/AMERICAS:

Retail sales in the US undermined expectations this October after rising by only 0.3%, according to newly released data from the Commerce Department. September’s retail data was revised lower to 1.6% instead of the initially projected 1.9%. According to a JPMorgan survey, spending declined through November 9, and was especially limited in US stated where lockdown restrictions are on the rise. Growth for Q4 is expected to meet 5%, according to CNBC, as the holiday spending season begins.

Home Depot announced today that it will allocate $1 billion in funds to improve employee wages. The company surged in demand during the pandemic as stay-at-home orders promoted home improvement projects, and low mortgage rates increased new home sales. Home Depot’s stock is up around 24% for the year.

Amazon is entering the pharmaceutical business with a new branch called “Amazon Pharmacy.” The service will allow US residents to fill their prescriptions through Amazon Prime for free home delivery. Doctors will have the ability to send prescriptions directly to Amazon Pharmacy, similar to any brick and mortar location. Major pharmacies such as CVS (-8.59%) and Walgreens (-9.63%) experienced losses today after the news.

The World Health Organization (WHO) remains skeptical on Moderna’s new coronavirus vaccine that touts a 94.5% effective rate. “Of course, we need to wait and see what the final efficacy and the safety profile of this vaccine will be when the whole data is analyzed after they reach their primary endpoint,” WHO Dr. Soumya Swaminathan said.

US-based Kraft Heinz Co. will begin manufacturing ketchup in Canada again after closing its Ontario facility in 2014. The company plans to open a new processing facility outside of Montreal where they will produce 100 million pounds of ketchup annually.

US Market Closings:

  • Dow declined 166.49 points or -0.56% to 29,783.95
  • S&P 500 declined 17.31 points or -0.48% to 3,609.6
  • Nasdaq declined 24.79 points or -0.21% to 11,899.34
  • Russell 2000 advanced 6.57 points or 0.37% to 1,791.91

Canada Market Closings:

  • TSX Composite advanced 58.25 points or 0.34% to 16,948.06
  • TSX 60 advanced 4.42 points or 0.44% to 1,012.28

Brazil Market Closing:

  • Bovespa advanced 789.25 points or 0.74% to 107,219.17

ENERGY:

The oil markets had a mixed day today:

  • Crude Oil decreased 0.35 USD/BBL or -0.85% to 40.9900
  • Brent decreased 0.45 USD/BBL or -1.03% to 43.3700
  • Natural gas decreased 0.019 USD/MMBtu or -0.70% to 2.6780
  • Gasoline decreased 0.0055 USD/GAL or -0.48% to 1.1413
  • Heating oil increased 0.0008 USD/GAL or 0.07% to 1.2297

The above data was collected around 12:52 EST on Tuesday

  • Top commodity gainers: Soybeans (1.74%), Lumber (3.72%), Corn (1.08%), and Canola (0.97%)
  • Top commodity losers: Sugar (-1.23%), Bitumen (-1.80%), Rubber (-1.39%), and Brent (-1.03%)

The above data was collected around 12:55 EST on Tuesday.

BONDS:

Japan 0.03%(+1bp), US 2’s 0.18%(-0bps), US 10’s 0.88%(-3bps); US 30’s 1.63%(-3bps), Bunds -0.54% (+0bp), France -0.30% (+1bp), Italy 0.60% (-1bp), Turkey 12.03% (-10bp), Greece 0.77% (+4bp), Portugal 0.05% (-3bp); Spain 0.09% (-1bp) and UK Gilts 0.33% (-3bp).

  • Spanish 3-Month Letras Auction increased from -0.676% to -0.620%
  • German 2-Year Schatz Auction increased from -0.800% to -0.740%