Market Talk – November 6, 2020

ASIA:

Chinese short-video and live-streaming app Kuaishou filed for an initial public offering on the Hong Kong Stock Exchange, CNBC reported. The offering is reportedly expected to raise $5 billion. Morgan Stanley, Bank of America Securities, and China Renaissance are the underwriters, according to the filing. Video game streaming aside, analysts say the video apps at the forefront of popularity among Chinese consumers are: ByteDance’s Douyin, the Chinese version of the popular short-video sharing app TikTok, as well as Kuaishou and Bilibili — both backed by Tencent.

The decision to suspend Ant Group’s planned initial public offering in China was based on a comprehensive consideration about safeguarding the interests of financial consumers and investors, People’s Bank of China said in a statement on Friday. China halted the $37 billion listing on Tuesday, thwarting the world’s largest stock market debut with just days to go in a dramatic blow to the financial technology and online consumer lending firm founded by billionaire Jack Ma. The move comes amid broader efforts by Chinese policymakers to prevent systemic financial risks and curb rising debt. It has thrown the company and its investors into a tailspin, and its executives are now racing to satisfy tighter regulations.

Indian banks are loosening their purse strings and lending more as pent-up demand surfaces in the Indian festive season, though growth is still nearly half that seen last year. Several lenders, including State Bank of India, the country’s largest lender, and HDFC Bank, India’s most valuable bank by market capitalization, saw demand for housing and vehicle loans return to near pre-pandemic levels in the quarter ended September. Even though retail demand has picked up, however, corporate credit demand continues to remain sluggish.

India’s cotton exports could jump 40% in 2020/21 from a year ago to 7 million bales, the highest in seven years, as the depreciation of the rupee and a rally in global prices allow exporters to clinch export contracts, Reuters reported from a leading trade body. Higher exports by the world’s biggest cotton producer in 2020/21 season, started on Oct. 1, could weigh on global prices and limit shipments from rivals such as the United States and Brazil to key Asian buyers such as China, Bangladesh, and Vietnam. The Cotton Association of India, said on Thursday a recovery in global prices could lift Indian exports to 7 million bales in the new season from 5 million bales a year ago.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 increased 219.95 points or 0.91% to 24,325.23
  • Shanghai decreased 7.97 points or -0.24% to 3,312.16
  • Hang Seng increased 17.05 points or 0.07% to 25,712.97
  • ASX 200 increased 50.60 points or 0.82% to 6,190.20
  • Kospi increased 2.71 points or 0.11% to 2,416.50
  • SENSEX increased 552.90 points or 1.34% to 41,893.06
  • Nifty50 increased 143.25 points or 1.18% to 12,263.55

The major Asian currency markets had a mixed day today:

  • AUDUSD increased 0.00123 or 0.17% to 0.72698
  • NZDUSD increased 0.0022 or 0.33% to 0.67843
  • USDJPY decreased 0.4 or -0.38% to 103.27
  • USDCNY decreased 0.02806 or -0.42% to 6.58730

Precious Metals:

  • Gold increased 4.09 USD/t oz. or 0.21% to 1,952.65
  • Silver increased 0.244 USD/t. oz or 0.97%% to 25.572

Some economic news from last night:

Japan:

Average Cash Earnings (YoY) increased from -1.3% to -0.9%

Household Spending (MoM) (Sep) increased from 1.7% to 3.8%

Household Spending (YoY) (Sep) decreased from -6.9% to -10.2%

Overall wage income of employees (Sep) increased from -1.3% to -0.9%

Overtime Pay (YoY) (Sep) increased from -13.50% to -12.00%

Foreign Bonds Buying increased from -1,063.2B to 72.1B

Foreign Investments in Japanese Stocks decreased from 228.7B to -212.7B

 

Australia:

AIG Services Index (Oct) increased from 36.2 to 51.4

New Zealand:

Inflation Expectations (QoQ) increased from 1.4% to 1.6%

Indonesia:

FX Reserves (USD) (Oct) decreased from 135.20B to 133.70B

 

Some economic news from today:

India:

Bank Loan Growth decreased from 5.7% to 5.1%

Deposit Growth decreased from 10.5% to 10.1%

FX Reserves, USD increased from 560.53B to 560.72B

Hong Kong:

Foreign Reserves (USD) (Oct) increased from 453.40B to 475.00B

EUROPE/EMEA:

European diplomats have been told that there are still “fundamental differences” in the hunt for a Brexit trade deal and that the UK has “blocked” progress in key areas while trying to run down the clock. The EU’s chief Brexit negotiator, Michel Barnier, briefed representatives from all 27 member states on Wednesday afternoon. Mr. Barnier told the meeting that Level Playing Field (LPF) was “the most fundamental point where we still have major differences.” He mentioned a level playing field as the mechanism that would ensure that, in future, the UK sticks to the same rules as the European Union in areas such as labor law and state aid.

German airline Lufthansa will start trialing rapid pre-flight coronavirus antigen tests in Germany next week, which passengers will need to pass in order to fly. Only those testing negative or able to provide evidence of a negative test within the previous 48 hours will be allowed to board, the airline said on Friday. The carrier will use the tests for two daily flights between Munich and Hamburg from November 12 onwards to see how the test procedure can be included in the pre-flight routine.

The major European stock markets had a mixed day today:

  • CAC 40 decreased 23.11 points or -0.46% to 4,960.88
  • FTSE 100 increased 3.84 points, or 0.07% to 5,910.02
  • DAX 30 decreased 88.07 points or -0.70% to 12,480.02

 

The major European currency markets had a mixed day today:

  • EURUSD increased 0.00641 or 0.54% to 1.18817
  • GBPUSD increased 0.00209 or 0.16% to 1.31587
  • USDCHF decreased 0.0060 or -0.66% to 0.89882

 

Some economic news from Europe today:

Germany:

German Industrial Production (MoM) (Sep) increased from 0.5% to 1.6%

Norway:

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

France:

French Current Account (Sep) decreased from -4.70B to -5.70B

French Exports (Sep) increased from 35.4B to 37.6B

French Imports (Sep) increased from 43.1B to 43.3B

French Non-Farm Payrolls (QoQ) (Q3) increased from -0.9% to 1.8%

French Reserve Assets Total (Oct) increased from 196.141.0M to 196.617.0M

French Trade Balance (Sep) increased from -7.7B to -5.8B

Spain:

Spanish Industrial Production (YoY) (Sep) increased from -5.7% to -3.4%

UK:

Halifax House Price Index (MoM) (Oct) decreased from 1.5% to 0.3%

Halifax House Price Index (YoY) increased from 7.3% to 7.5%

Italy:

Italian Retail Sales (YoY) (Sep) increased from 1.0% to 1.3%

Italian Retail Sales (MoM) (Sep) decreased from 8.2% to -0.8%

 

US/AMERICAS:

The winner of the 2020 US presidential election remains unclear. Although Democratic candidate Joe Biden appears to be leading in the polls, the Trump campaign is asserting widespread voter fraud and plans to sue a number of states. Numerous states are still counting ballots, as they were unable to calculate the mail-in votes in a timely manner.

The state of Georgia “remains too close to call,” according to Secretary of State Brad Raffensperger, and will likely require a recount. At the time of this writing, 4,169 ballots in Georgia remained uncounted. Former Vice President Joe Biden is leading the state by 43,800 votes, but it still remains too close to call.

White House economic advisor Larry Kudlow promised that there will be “a peaceful transfer of power” should Joe Biden win the election. “This is a great country. This is the greatest democracy in the world. And we abide by the rule of law, and so will this president,” Kudlow told reporters at CNBC. Regarding on-going voter fraud, Kudlow said that is not his area of expertise. However, he did say that the sitting president “intends to keep on fighting. He wants to make sure that the ballots are counted legally, legal ballots are counted. And he intends to keep up the fight.”

The United States Post Office (USPS) continues to find missing ballots at centers throughout the country. Today, USPS noted that they found over 1,000 ballots in Philadelphia, 300 in Pittsburgh, and 266 in Lehigh Valley–all from the key state of Pennsylvania. According to law, all mail-in ballots must be received by Friday night to be included in the official tally. US Judge Emmet Sullivan ordered USPS facilities to sweep their mail rooms twice per day to search for unaccounted ballots. Despite the order, Sullivan has expressed his dismay and said any state or office found guilty of mishandling votes will be held accountable.

US Market Closings:

  • Dow declined 66.78 points or -0.24% to 28,323.4
  • S&P 500 declined 1.01 points or -0.03% to 3,509.44
  • Nasdaq advanced 4.3 points or 0.04% to 11,895.23
  • Russell 2000 declined 15.89 points or -0.96% to 1,644.16

Canada Market Closings:

  • TSX Composite declined 15.34 points or -0.09% to 16,282.83
  • TSX 60 declined 1.65 points or -0.17% to 966.87

Brazil Market Closing:

  • Bovespa advanced 173.71 points or 0.17% to 100,925.11

ENERGY:

The oil markets had a negative day today:

  • Crude Oil decreased 1.63 USD/BBL or -4.20% to 37.1600
  • Brent decreased 1.45 USD/BBL or -3.54% to 39.4800
  • Natural gas decreased 0.057 USD/MMBtu or -1.94% to 2.8850
  • Gasoline decreased 0.031 USD/GAL or -2.78% to 1.0849
  • Heating oil decreased 0.0276 USD/GAL or -2.36% to 1.1420

Top commodity gainers: Rubber (1.49%), Sugar (2.97%), Copper (1.26%), and Palladium (4.52%)

Top commodity losers: Lumber (-3.78%), Lean Hogs (-3.86%), Crude Oil (-4.20%), and Brent (-3.54%)

The above data was collected around 16:13 EST on Friday.

BONDS:

Japan 0.02%(+0bp), US 2’s 0.15% (+0bps), US 10’s 0.82%(+4bps);US 30’s 1.59%(+5bps), Bunds -0.64% (-1bp), France -0.37% (-1bp), Italy 0.61% (-2bp), Turkey 13.81% (-7bp), Greece 0.88% (+1bp), Portugal 0.10% (+1bp), Spain 0.10% (+1bp) and UK Gilts 0.29% (+5bp).