Market Talk – October 6, 2020

ASIA:

China said at a World Trade Organization meeting that restrictions by the United States on Chinese mobile applications TikTok and WeChat are in violation of the body’s rules, Reuters reported. A representative for China said at the closed-door meeting on Friday that the measures “are clearly inconsistent with WTO rules, restrict cross-border trading services and violate the basic principles and objectives of the multilateral trading system.”

US Secretary of State Mike Pompeo on Tuesday backed formalizing the informal grouping to build a “true security framework” that could counter the challenge posed by an aggressive China. He was meeting counterparts from Australia, India, and Japan – a group known as “The Quad” – to discuss an increasingly assertive China. Mr Pompeo accused China’s governing Communist Party of “exploitation, corruption and coercion”.

India’s gas imports are set to rise as GAIL (India) Ltd has reopened its western India imports facility after months of a shutdown during the monsoon and as local demand has returned to pre-pandemic levels, GAIL (India) head of marketing said on Monday. GAIL had stopped importing liquefied natural gas (LNG) cargoes at its 5 million tonnes/year Ratnagiri terminal in western India in May, as the start of the monsoon season makes operations difficult without a breakwater to protect the harbor from large waves.

The major Asian stock markets had a green day today:

  • NIKKEI 225 increased 121.59 points or 0.52% to 23,433.73
  • Shanghai closed
  • Hang Seng increased 212.87 points or 0.90% to 23,980.65
  • ASX 200 increased 20.50 points or 0.35% to 5,962.10
  • Kospi increased 7.90 points or 0.34% to 2,365.90
  • SENSEX increased 600.87 points or 1.54% to 39,574.57
  • Nifty50 increased 159.05 points or 1.38% to 11,662.40

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.0076 or -1.05% to 0.71157
  • NZDUSD decreased 0.0051 or -0.76% to 0.66010
  • USDJPY decreased 0.1200 or -0.11% to 105.61
  • USDCNY increased 0.0246 or 0.37% to 6.74651

Precious Metals:

  • Gold decreased 28.4 USD/t oz. or -1.48% to 1,884.50
  • Silver decreased 1.01 USD/t. oz or -4.15%% to 23.340

Some economic news from last night:

South Korea:

CPI (YoY) (Sep) increased from 0.7% to 1.0%

CPI (MoM) (Sep) increased from 0.6% to 0.7%

Australia:

Exports (MoM) (Aug) remain the same at -4%

Imports (MoM) (Aug) decreased from 7% to 2%

Trade Balance (Aug) decreased from 4.607B to 2.643B

ANZ Job Advertisements (MoM) increased from 2.6% to 7.8%

RBA Interest Rate Decision (Oct) remain the same at 0.25%

Indonesia:

Consumer Confidence (Sep) decreased from 86.9 to 83.4

Some economic news from today:

India:

Nikkei Services PMI (Sep) increased from 41.8 to 49.8

New Zealand:

GlobalDairyTrade Price Index decreased from 3.6% to 2.2%

EUROPE/EMEA:

Spain’s government released the country’s forecast on Tuesday. The forecast is a worse-than-feared contraction of the coronavirus-battered economy this year, but a strong rebound in 2021 with a possible return to pre-pandemic levels in 2022. Economy Minister Nadia Calvino told a news conference that the government now foresees GDP to fall 11.2% in 2020 — down from a previous prediction in May for a 9.2% slump and a far cry from last year’s growth of 2 percent. For 2021, Calvino forecast GDP growth of 7.2%, from a previous estimate of 6.8%. But growth could go to as much as 9.8% next year thanks to the European Union recovery fund, according to a slide presentation next to the minister.

Boris Johnson has vowed to defeat Covid and build a better country over the next decade in his leader’s speech to the virtual Conservative conference. Evoking the UK’s recovery from World War Two, he said he wanted to build a “new Jerusalem”, with opportunity for all, improved housing and healthcare.

Dubai’s economy could contract sharply by around 11 percent in 2020 due to restrictions on travel and tourism during the ongoing coronavirus pandemic, S&P Global Ratings said in a research note on Saturday. While it does not rate Dubai, the rating agency said based on publicly available information, Dubai’s gross general government debt will reach about 77 percent of GDP this year (AED290 billion) compared to 61 percent in 2019.

The major Europe stock markets had a green day today:

  • CAC 40 increased 23.59 points or 0.48% to 4,895.46
  • FTSE 100 increased 7.00 points, or 0.12% to 5,949.94
  • DAX 30 increased 77.71 points or 0.61% to 12,906.02

The major Europe currency markets had a mixed day today:

  • EURUSD decreased 0.00464 or -0.39% to 1.17432
  • GBPUSD decreased 0.01027 or -0.79% to 1.28875
  • USDCHF increased 0.00222 or 0.24% to 0.91732

Some economic news from Europe today:

Germany:

German Factory Orders (MoM) (Aug) increased from 3.3% to 4.5%

IHS Markit Construction PMI (Sep) decreased from 48.0 to 45.5

UK:

Construction PMI (Sep) increased from 54.6 to 56.8

Housing Equity Withdrawal (QoQ) decreased from -4.5B to -7.7B

US/AMERICAS:

The Democrats and Republicans have officially reached a stalemate in agreeing upon a coronavirus stimulus bill. President Trump said that he would no longer debate the stimulus package until after the election next month. “I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business,” Trump announced on social media.

Today, before the president’s announcement, Federal Reserve Chair Jerome Powell urged Congress to send Americans stimulus money to avoid a “tragic” scenario. “Over time, household insolvencies and business bankruptcies would rise, harming the productive capacity of the economy, and holding back wage growth,” Powell said. Alternatively, Powell noted that providing too much funding could backfire, but the risks of “overdoing it” are less significant. “By contrast, the risks of overdoing it seem, for now, to be smaller. Even if policy actions ultimately prove to be greater than needed, they will not go to waste,” Powell noted.

After being discharged from the hospital on Monday, doctors say that President Trump is doing “extremely well” and experiencing no apparent signs of the virus. “Many people every year, sometimes over 100,000, and despite the Vaccine, die from the Flu. Are we going to close down our Country? No, we have learned to live with it, just like we are learning to live with Covid, in most populations far less lethal!!!” Trump posted online, reiterating his stance to keep the country open.

US Market Closings:

  • Dow declined 375.88 points or -1.34% to 27,772.76
  • S&P 500 declined 47.66 points or -1.4% to 3,360.97
  • Nasdaq declined 177.88 points or -1.57% to 11,154.6
  • Russell 2000 declined 4.67 points or -0.3% to 1,577.29

Canada Market Closings:

  • TSX Composite declined 174.06 points or -1.06% to 16,236.13
  • TSX 60 declined 10.39 points or -1.06% to 973.01

Brazil Market Closing:

  • Bovespa declined 474.16 points or -0.49% to 95,615.03

ENERGY:

The oil markets had a mixed day today:

  • Crude Oil increased 0.63 USD/BBL or 1.61% to 39.8500
  • Brent increased 0.63 USD/BBL or 1.53% to 41.9200
  • Natural gas decreased 0.123 USD/MMBtu or -4.65% to 2.5220
  • Gasoline increased 0.0147 USD/GAL or 1.23% to 1.2137
  • Heating oil increased 0.0352 USD/GAL or 3.10% to 1.1704
  • Top commodity gainers: Heating Oil (3.10%), Crude Oil (1.61%), Palm Oil (2.22%), and Soybeans (2.15%)
  • Top commodity losers: Natural Gas (-4.65%), Lumber (-3.16%), Silver (-4.15%), and Cotton (-40.50%)

 

The above data was collected around 16:48 EST on Tuesday.

BONDS:

Japan 0.04%(+1bp), US 2’s 0.15% (+0bps), US 10’s 0.73%(-3bps);US 30’s 1.54%(-3bps), Bunds -0.51% (+1bp), France -0.24% (+0bp), Italy 0.78% (-2bp), Turkey 12.71% (+0bp), Greece 0.98% (+0bp), Portugal 0.25% (+0bp), Spain 0.24% (+5bp) and UK Gilts 0.29% (-0bp).

  • US 3-Year Note Auction increased from 0.170% to 0.193%
  • US 52-Week Bill Auction remain the same at 0.140%
  • Spanish 12-Month Letras Auction decreased from -0.448% to -0.501%
  • Spanish 6-Month Letras Auction decreased from -0.466% to -0.511%