Market Talk – October 23, 2020

ASIA:

China has vowed to retaliate if the US proceeds with the sale of advanced weaponry to Taiwan worth more than a billion dollars, Fox news reported. The statement from China’s defense ministry gave no specifics, but the development marks a further deterioration in ties between Beijing and Washington that have hit their lowest ebb in decades. The statement issued late Thursday night demanded the cancellation of the sale and an end to all interactions between the US and Taiwanese militaries in order to “avoid serious repercussions for relations between China and the US and their armed forces and peace and stability in the Taiwan Strait.”

Credit Suisse Group AG’s 2020 Global Wealth report reported only China and India saw gains in household wealth in the first half of the year, growing by 4.4% and 1.6%, respectively. Latin America suffered the most, with a 13% plunge, as currency devaluations aggravated losses in gross domestic product. Wealth per adult slipped to an average $76,984 from $77,309 at the start of the year, the report found. Switzerland, the Netherlands, Taipei and Hong Kong saw gains, while Norway and the UK posted the biggest declines. Global wealth creation is expected to rebound next year as the economy recovers. The “main outlier” is North America, the report says, where the economy is hobbled by the “continued weakness due to the high prevalence of Covid-19” in the US. The region’s wealth per adult is projected to drop 5% this year, and remain near that level in 2021.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 increased 42.32 points or 0.18% to 23,516.59
  • Shanghai decreased 34.50 points or -1.04% to 3,278.00
  • Hang Seng increased 132.65 points or 0.54% to 24,918.78
  • ASX 200 decreased 6.80 points or -0.11% to 6,167.00
  • Kospi increased 5.76 points or 0.24% to 2,360.81
  • SENSEX increased 127.01 points or 0.31% to 40,685.50
  • Nifty50 increased 33.90 points or 0.28% to 11,930.35

The major Asian currency markets had a mixed day today:

  • AUDUSD increased 0.001 or 0.14% to 0.71361
  • NZDUSD increased 0.0012 or 0.18% to 0.66806
  • USDJPY decreased 0.2 or -0.19% to 104.72
  • USDCNY decreased 0.00107 or -0.02% to 6.66788

Precious Metals:

  • Gold decreased 0.11 USD/t oz. or -0.01% to 1,903.93
  • Silver decreased 0.16 USD/t. oz or -0.65% to 24.590

Some economic news from last night:

Japan:

CPI, n.s.a (MoM) (Sep) decreased from 0.2% to -0.1%

National Core CPI (YoY) (Sep) increased from -0.4% to -0.3%

National CPI (YoY) (Sep) decreased from 0.2% to 0.0%

National CPI (MoM) remain the same at -0.1%

CPI Tokyo Ex Food and Energy (MoM) (Oct) increased from -0.1% to 0.0%

Manufacturing PMI (Oct) increased from 47.7 to 48.0

Services PMI (Oct) decreased from 46.9 to 46.6

Australia:

Manufacturing PMI decreased from 55.4 to 54.2

Services PMI increased from 50.8 to 53.8

New Zealand:

CPI (QoQ) (Q3) increased from -0.5% to 0.7%

CPI (YoY) (Q3) decreased from 1.5% to 1.4%

Singapore:

URA Property Index (QoQ) (Q3) remain the same at 0.80%

Indonesia:

Foreign Direct Investment (YoY) (Q3) increased from -6.90% to 1.10%

Some economic news from today:

India:

Bank Loan Growth increased from 5.1% to 5.7%

Deposit Growth remain the same at 10.5%

FX Reserves, USD increased from 551.51B to 555.12B

Singapore:

CPI (YoY) (Sep) increased from -0.4% to 0.0%

EUROPE/EMEA:

More than 1 million people from Hong Kong could emigrate to the UK in the next five years under a new visa, including 500,000 in the first year, according to official estimates. An economic impact assessment by the Home Office gives a “high” range estimate of 500,000 people with British national (overseas) (BNO) status and their dependants arriving in the UK in the first year, with more than 1 million over five years. Total immigration to the UK in the year ending March was 715,000. There will be no quota on the numbers of visas granted.

The major Europe stock markets had a green day:

  • CAC 40 increased 58.26 points or 1.20% to 4,909.64
  • FTSE 100 increased 74.63 points or 1.29% to 5,860.28
  • DAX 30 increased 102.69 points or 0.82% to 12,645.75

The major Europe currency markets had a mixed day today:

  • EURUSD increased 0.00384 or 0.32% to 1.18587
  • GBPUSD decreased 0.00451 or -0.34% to 1.30327
  • USDCHF decreased 0.0027 or -0.29% to 0.90464

Some economic news from Europe today:

UK:

Core Retail Sales (MoM) (Sep) increased from 0.6% to 1.6%

Core Retail Sales (YoY) (Sep) increased from 4.3% to 6.4%

Retail Sales (MoM) (Sep) increased from 0.9% to 1.5%

Retail Sales (YoY) (Sep) increased from 2.7% to 4.7%

Composite PMI (Oct) decreased from 55.7 to 52.9

Manufacturing PMI (Oct) decreased from 54.1 to 53.3

Services PMI (Oct) decreased from 56.1 to 52.3

Steel Production (Metric Ton) (Sep) decreased from 560.90K to 544.90K

France:

French Manufacturing PMI (Oct) decreased from 51.2 to 51.0

French Markit Composite PMI (Oct) decreased from 48.5 to 47.3

French Services PMI (Oct) decreased from 47.5 to 46.5

Germany:

German Composite PMI (Oct) decreased from 54.7 to 54.5

German Manufacturing PMI (Oct) increased from 56.4 to 58.0

German Services PMI (Oct) decreased from 50.6 to 48.9

Euro Zone:

Manufacturing PMI (Oct) increased from 53.7 to 54.4

Markit Composite PMI (Oct) decreased from 50.4 to 49.4

Services PMI (Oct) decreased from 48.0 to 46.2

US/AMERICAS:

The Food and Drug Administration (FDA) approved the drug Remdesivir as an effective treatment against the coronavirus. Famously used by President Donald Trump, the antiviral drug helps patients recover faster by shortening the virus’s lifespan. Gilead Sciences’ stock jumped 5% on Thursday after-hours trading after the news was released. The five-day treatment will cost Americans who have private health insurance $3,120, and $2,340 for those with government-supported healthcare. Fifty other countries have also approved the drug as a temporary treatment for the coronavirus.

Treasury Department’s delayed currency report is expected to be released after the election. The last currency report, released in January, included Switzerland, Germany, Vietnam, South Korea, Japan, Italy, Ireland, and Malaysia on its currency manipulator watchlist. Chairman for the Official Monetary and Financial Institutions Forum think tank Mark Sobel said that Treasury Secretary Steven Mnuchin has “bigger fish to fry” with the ongoing election. Furthermore, Sobel pointed to Thailand and Taiwan as possible concerns for currency manipulation. Earlier this month, an investigation was launched into whether Vietnam was deliberately undervaluing its currency against the dollar.

US manufacturing and service sectors expanded this October, according to data from IHS Markit this Friday which tracked a  PMI reading of 55.5. The data indicates the strongest growth since February 2019 and advanced from September’s reading of 54.3. Flash composite new ordrs fell to 54.3 last month compared to 54.8 in September. However, business is showing signs of recovery. The flash services sector PMI advanced to 56 in October, marking a 20-month high.

Economists at Reuters believe Brazil’s central bank will vote to maintain its key interest rate during next week’s deliberation. Copom, the decision making branch of the central bank, is set to meet next Wednesday to discuss the current policy. Rates currently stand at 2%, a historic low.

US Market Closings:

  • Dow declined 28.09 points or -0.1% to 28,335.57
  • S&P 500 advanced 11.9 points or 0.34% to 3,465.39
  • Nasdaq advanced 42.28 points or 0.37% to 11,548.28
  • Russell 2000 advanced 10.25 points or 0.63% to 1,640.5

Canada Market Closings:

  • TSX Composite advanced 24.72 points or 0.15% to 16,304.08
  • TSX 60 advanced 2.02 points or 0.21% to 972.54

Brazil Market Closing:

  • Bovespa declined 657.98 points or -0.65% to 101,259.75

ENERGY:

The oil markets had a negative day today:

  • Crude Oil decreased 0.88 USD/BBL or -2.17% to 39.7600
  • Brent decreased 0.77 USD/BBL or -1.81% to 41.6900
  • Natural gas decreased 0.033 USD/MMBtu or -1.10% to 2.9740
  • Gasoline decreased 0.0217 USD/GAL or -1.87% to 1.1364
  • Heating oil decreased 0.0112 USD/GAL or -0.96% to 1.1495

The above data was collected around 15:00 EST on Friday

  • Top commodity gainers: Platinum (2.10%), Wheat (1.89%), Rubber (4.16%), and Orange Juice (3.69%)
  • Top commodity losers: Crude Oil (-2.17%), Lumber (-3.24%), Gasoline (-1.87%), and Brent (-1.81%)

The above data was collected around 15:07 EST on Friday.

BONDS:

Japan 0.04%(+1bp), US 2’s 0.15% (-0bps), US 10’s 0.84%(-1bps); US 30’s 1.65%(-1bps), Bunds -0.57% (-1bp), France -0.30% (-1bp), Italy 0.76% (-4bp), Turkey 13.55% (+12bp), Greece 1.00% (+7bp), Portugal 0.19% (-2bp); Spain 0.20% (+4bp) and UK Gilts 0.27% (-1bp).