Market Talk – October 26, 2020

ASIA:

China said Monday that it would impose sanctions on American companies — including Lockheed Martin, Boeing, and Raytheon — that have been involved in selling weapons to Taiwan. Speaking at a press conference Monday, the Chinese Ministry of Foreign Affairs spokesperson Zhao Lijian called on the United States to stop selling arms to the self-governed island and to cut military ties with the government in Taipei. The sanctions are just the latest escalation in growing tensions between the United States and China over Taiwan. Even though the island has never been controlled by China’s ruling Communist Party, Beijing insists it is an integral part of its territory and has threatened to use force if necessary, to assert its control.

US Secretary of State Mike Pompeo landed in India on Monday, the first leg of a five-day Asian trip aimed at strengthening strategic ties in the face of growing Chinese influence across the region. The trip is part of the latest US effort to bolster allies against an increasingly assertive China, which has been making political and military inroads across Asia, analysts say. Pompeo is due to travel to Sri Lanka and the Maldives, two Indian Ocean countries where China has financed and built various infrastructure, to the alarm of India and the United States.

Japan’s prime minister, Yoshihide Suga, has said the country will become carbon neutral by 2050, heralding a bolder approach to tackling the climate emergency by the world’s third-biggest economy. Suga announced this on Monday in his first policy address to parliament since taking office and mentioned responding to climate change is no longer a constraint on economic growth. Japan had come under pressure to strengthen its climate commitments after initially saying that it would achieve an 80% reduction in emissions by 2050 followed by carbon neutrality “as soon as possible” in the second half of the century.

The major Asian stock markets had a negative day today:

  • NIKKEI 225 decreased 22.25 points or -0.09% to 23,494.34
  • Shanghai decreased 26.88 points or -0.82% to 3,251.12
  • Hang Seng closed
  • ASX 200 decreased 11.40 points or -0.18% to 6,155.60
  • Kospi decreased 16.90 points or -0.72% to 2,343.91
  • SENSEX decreased 540.00 points or -1.33% to 40,145.50
  • Nifty50 decreased 162.60 points or -1.36% to 11,767.75

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.0018 or -0.26% to 0.71167
  • NZDUSD decreased 0.0009 or -0.13% to 0.66793
  • USDJPY increased 0.1570 or 0.15% to 104.86
  • USDCNY increased 0.0374 or 0.56% to 6.70332

Precious Metals:

  • Gold increased 2.96 USD/t oz. or 0.16% to 1,903.75
  • Silver decreased 0.22 USD/t. oz or -0.88% to 24.365

Some economic news from last night:

Japan:

Corporate Services Price Index (CSPI) (YoY) increased from 1.1% to 1.3%

Some economic news from today:

Japan:

Coincident Indicator (MoM) decreased from 1.1% to 0.9%

Leading Index increased from 86.7% to 88.4%

Singapore:

Industrial Production (YoY) (Sep) increased from 15.4% to 24.2%

Industrial Production (MoM) (Sep) decreased from 15.5% to 10.1%

EUROPE/EMEA:

France urged Arab countries on Sunday to stop calls for boycotts of French products, while President Emmanuel Macron vowed the country would never give in to Islamic radicals. The French foreign ministry said in a statement Sunday that there have been calls in recent days to boycott French products, notably food products, in several Middle Eastern countries, as well as calls for demonstrations against France over the publication of satirical cartoons of the Prophet Mohammad. Calls to boycott French goods are already growing in the Arab world and beyond after President Emmanuel Macron criticized Islamists and vowed not to “give up cartoons” depicting the Prophet Mohammed. In Saudi Arabia, the Arab world’s largest economy, a hashtag calling for the boycott of French supermarket retailer Carrefour was the second most trending on Sunday.

British armed forces forcibly boarded and regained control of an oil tanker in the English Channel on Sunday evening following a suspected hijacking, according to the UK defense ministry. A spokesperson for Hampshire police said Monday that seven men were arrested “on suspicion of seizing or exercising control of a ship by use of threats or force.” The crew members on the vessel are safe and did not sustain any injuries, Navios Tanker Management, the ship’s operator, said in a statement Monday.

The major Europe stock markets had a negative day:

  • CAC 40 decreased 93.52 points or -1.91% to 4,816.12
  • FTSE 100 decreased 68.27 points or -1.16% to 5,792.01
  • DAX 30 decreased 468.57 points or -3.71% to 12,177.18

The major Europe currency markets had a mixed day today:

  • EURUSD decreased 0.00365 or -0.31% to 1.18231
  • GBPUSD decreased 0.00175 or -0.13% to 1.30225
  • USDCHF increased 0.00295 or 0.33% to 0.90704

Some economic news from Europe today:

Spain:

Spanish PPI (YoY) increased from -3.5% to -3.3%

Germany:

German Business Expectations (Oct) decreased from 97.4 to 95.0

German Current Assessment (Oct) increased from 89.2 to 90.3

German Ifo Business Climate Index (Oct) decreased from 93.2 to 92.7

US/AMERICAS:

The Dow dropped 650.19 points lower or 2.3% after 83,000 new coronavirus cases were reported in the US over the weekend. This Monday marks the worst day for the index since September. The president maintains that the country’s uptick in testing has skewed the data to look as if the pandemic is on the rise. Pessimism over the prospect of reaching a stimulus package deal spooked traders further.

Despite record low borrowing rates, new home sales in the US fell for the first time in four months this September, according to the Commerce Department. New home sales dropped 3.5% to an adjusted rate of 959,000, while August’s figure was revised lower to 994,000 from the originally reported 1.011 million units. Northeast home sales felt the biggest downturn last month after declining 28.9%. Homes in the South fell 4.7% and homes in the Midwest dropped off 4.1%. The median household price across the country rose 3.5% to 326,800.

ExxonMobil CEO Darren Woods sent an email to 75,000 employees warning that “further reductions” to their US and Canadian workforce are “necessary.” The company doubled its outstanding debt this year after borrowing $23 billion, and reported sequential quarterly losses. Woods reaffirmed that the, despite the popularity of renewable energy, “oil and gas will continue to play an important role in the long-term energy mix.” Although the company is still finalizing its jobs review, mass layoffs are expected and may impact overall unemployment figures in both the US and Canada.

US Market Closings:

  • Dow declined 650.19 points or -2.29% to 27,685.38
  • S&P 500 declined 64.42 points or -1.86% to 3,400.97
  • Nasdaq declined 189.35 points or -1.64% to 11,358.94
  • Russell 2000 declined 35.29 points or -2.15% to 1,605.21

Canada Market Closings:

  • TSX Composite declined 224.53 points or -1.38% to 16,079.55
  • TSX 60 declined 12.63 points or -1.3% to 959.91

Brazil Market Closing:

  • Bovespa declined 242.79 points or -0.24% to 101,016.96

ENERGY:

The oil markets had a mixed day today:

  • Crude Oil decreased 1.37 USD/BBL or -3.44% to 38.4800
  • Brent decreased 1.38 USD/BBL or -3.30% to 40.3900
  • Natural gas increased 0.042 USD/MMBtu or 1.41% to 3.0130
  • Gasoline decreased 0.0291 USD/GAL or -2.56% to 1.1098
  • Heating oil decreased 0.0321 USD/GAL or -2.79% to 1.1192

The above data was collected around 13:05 EST on Monday

  • Top commodity gainers: Natural Gas (1.41%), Palm Oil (3.21%), Rubber (3.54%), and Cotton (1.30%)
  • Top commodity losers: Crude Oil (-3.44%), Platinum (-3.01%), Heating Oil (-2.79%), and Brent (-3.30%)

The above data was collected around 13:07 EST on Monday.

BONDS:

Japan 0.04%(+0bp), US 2’s 0.15% (-1bps), US 10’s 0.80%(-4bps); US 30’s 1.59%(-5bps), Bunds -0.58% (-1bp), France -0.29% (+0bp), Italy 0.75% (-1bp), Turkey 13.88% (+33bp), Greece 0.94% (+2bp), Portugal 0.17% (-1bp); Spain 0.19% (+5bp) and UK Gilts 0.28% (-0bp).

 

  • US 3-Month Bill Auction remain the same at 0.100%
  • US 6-Month Bill Auction decreased from 0.115% to 0.110%
  • French 3-Month BTF Auction increased from -0.685% to -0.673%
  • French 6-Month BTF Auction increased from -0.678% to -0.652%
  • French 12-Month BTF Auction increased from -0.646% to -0.638%