Market Talk – October 9, 2020

ASIA:

The recovery in China’s service sector activity extended into a fifth straight month in September, an industry survey showed on Friday, with hiring increasing for the second month in a row. The Caixin/Markit services Purchasing Managers’ Index (PMI) rose to 54.8 from August’s 54.0, the highest reading since June and staying well above the 50-mark that separates monthly growth from contraction. The services sector, which accounts for about 60% of the economy and half of urban jobs, had initially been slower to return to growth than large manufacturers, but the recovery has gathered pace in recent months as COVID-19 restrictions on public gatherings lifted. The official PMI also showed activity in China’s services sector expanded at a faster pace in September.

Retail inflation in India likely rose further above the central bank’s medium-term target last month as food prices climbed due to lingering supply disruptions, a Reuters poll found, reducing the chances of another interest rate cut. The Oct. 6-8 Reuters poll of 47 economists suggested consumer prices rose 6.88% last month from a year ago, its highest in five months and faster than August’s 6.69% rate. If realized, inflation would be above the top end of the RBI’s medium-term target range of 2%-6% for the sixth consecutive month.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 decreased 27.38 points or -0.12% to 23,619.69
  • Shanghai increased 54.02 points or 1.68% to 3,272.08
  • Hang Seng decreased 74.22 points or -0.31% to 24,119.13
  • ASX 200 increased 0.20 points or 0.00% to 6,102.20
  • Kospi closed
  • SENSEX increased 326.82 points or 0.81% to 40,509.49
  • Nifty50 increased 79.60 points or 0.67% to 11,914.20

 

The major Asian currency markets had a mixed day today:

  • AUDUSD increased 0.00578 or 0.81% to 0.72306
  • NZDUSD increased 0.00782 or 1.19% to 0.66643
  • USDJPY decreased 0.33 or -0.31% to 105.69
  • USDCNY decreased 0.04732 or -0.70% to 6.69104

Precious Metals:

  • Gold increased 30.36 USD/t oz. or 1.60% to 1,923.45
  • Silver increased 1.15 USD/t. oz or 4.84% to 24.978

 

Some economic news from last night:

China:

Caixin Services PMI (Sep) increased from 54.0 to 54.8

Chinese Composite PMI decreased from 55.1 to 54.5

Japan:

Average Cash Earnings (YoY) increased from -1.5% to -1.3%

Household Spending (YoY) (Aug) increased from -7.6% to -6.9%

Household Spending (MoM) (Aug) increased from -6.5% to 1.7%

Overall wage income of employees (Aug) increased from -1.5% to -1.3%

Overtime Pay (YoY) (Aug) increased from -17.10% to -14.00%

Australia:

Home Loans (MoM) increased from 10.7% to 13.6%

 

Some economic news from today:

India:

Interest Rate Decision remain the same at 4.00%

Reverse REPO Rate remain the same at 3.35%

Cash Reserve Ratio remain the same at 3.00%

Bank Loan Growth decreased from 5.3% to 5.1%

Deposit Growth decreased from 12.0% to 10.5%

FX Reserves, USD increased from 542.02B to 545.64B

 

EUROPE/EMEA:

The U.K. economy grew 2.1% in August on a monthly basis, as the country’s gradual recovery from the coronavirus crisis continued, albeit at a slightly slower pace. August’s estimated growth in GDP (gross domestic product) was lower than expectations, with economists polled by Reuters expecting a monthly expansion of 4.6%. It follows an expansion of 6.4% in July, 9.1% in June and 2.7% in May, following a record 19.5% plunge in April, according to the Office for National Statistics. The U.K.’s dominant services sector grew by 2.4% in August, following growth of 5.9% in July. It was boosted in large part by almost 70% growth in the food and beverage services industry, which the ONS attributed to easing of restrictions and the government’s “Eat Out to Help Out” scheme.

UAE-based Arabtec Holding, the builders of Burj Khalifa, the world’s tallest skyscraper, has decided to close down and file for liquidation, Bloomberg reported. As debts mounted, the shareholders of the company voted to dissolve the firm. The move is likely to threaten thousands of jobs and scores of suppliers and subcontractors in the Persian Gulf. Arabtec’s shareholders include Abu Dhabi state fund Mubadala.

The major Europe stock markets had a green day:

  • CAC 40 increased 34.87 points or 0.71% to 4,946.81
  • FTSE 100 increased 38.62 points or 0.65% to 6,016.65
  • DAX 30 increased 9.02 points or 0.07% to 13,051.23

 

The major Europe currency markets had a mixed day today:

  • EURUSD increased 0.00575 or 0.49% to 1.18216
  • GBPUSD increased 0.00985 or 0.76% to 1.30331
  • USDCHF decreased 0.00712 or -0.78% to 0.90987

 

Some economic news from Europe today:

UK:

NIESR GDP Estimate increased from 8.0% to 15.2%

U.K. Construction Output (YoY) (Aug) increased from -15.6% to -13.0%

Construction Output (MoM) (Aug) decreased from 17.2% to 3.0%

GDP (MoM) decreased from 6.4% to 2.1%

Index of Services increased from -8.1% to 7.1%

Industrial Production (YoY) (Aug) increased from -7.4% to -6.4%

Industrial Production (MoM) (Aug) decreased from 5.2% to 0.3%

Manufacturing Production (MoM) (Aug) decreased from 6.9% to 0.7%

Manufacturing Production (YoY) (Aug) increased from -10.1% to -8.4%

Monthly GDP 3M/3M Change increased from -6.8% to 8.0%

Trade Balance (Aug) decreased from -8.64B to -9.01B

Trade Balance Non-EU (Aug) increased from -2.36B to -2.31B

 

Norway:

Core CPI YTD (Sep) decreased from 3.7% to 3.3%

Core Inflation (MoM) (Sep) increased from -0.4% to 0.2%

CPI (MoM) (Sep) increased from -0.4% to 0.4%

CPI (YoY) (Sep) decreased from 1.7% to 1.6%

PPI (YoY) (Sep) increased from -12.1% to -9.6%

France:

French Industrial Production (MoM) (Aug) decreased from 3.8% to 1.3%

Italy:

Italian Industrial Production (MoM) (Aug) increased from 7.0% to 7.7%

Italian Industrial Production (YoY) (Aug) increased from -8.3% to -0.3%

ENERGY:

The oil markets had a mixed day today:

  • Crude Oil decreased 0.55 USD/BBL or -1.34% to 40.6400
  • Brent decreased 0.52 USD/BBL or -1.20% to 42.8200
  • Natural gas increased 0.14 USD/MMBtu or 5.28% to 2.7710
  • Gasoline decreased 0.03 USD/GAL or -2.11% to 1.2039
  • Heating oil increased 0.00 USD/GAL or 0.28% to 1.1920

The above data was collected around 13:55 EST on Friday

  • Top commodity gainers: Silver (4.84%), Natural Gas (5.28%), Bitumen (8.02%), and Palladium (3.06%)
  • Top commodity losers: Rice (-1.38%), Gasoline (-2.11%), Lumber (-4.95%), and Coal (-1.52%)

The above data was collected around 14:01 EST on Friday.

US/AMERICAS:

After 109 years, International Business Machines Corp (IBM) is looking to divide into two separate companies to focus on a new cloud computing service. IBM already has the support of 4,600 clients internationally with a $60 billion backlog, according to Reuters. The new company will be announced by 2021 and will employ 90,000 individuals.

Democratic House Speaker Nancy Pelosi is using all the tools in her legal arsenal to remove Donald Trump from office before the November 3 election. After a failed impeachment, Pelosi is now calling on the 25th Amendment of the Consitution to determine President Trump’s fitness to hold office. Pelosi said that due to Trump’s coronavirus diagnosis, he is physically and mentally unfit to hold office, although numerous world leaders, such as the UK’s Boris Johnson and potentially Canada’s PM Justin Trudeau, have contracted COVID-19 while maintaining office. The Trump administration called the move a publicity stunt that does not have a chance at being passed into law. Furthermore, Trump believes they are attempting to boost Kamala Harris’ to the presidential nominee over Joe Biden.

The 2020 US presidential election is guaranteed to be met with complications, and other countries are preparing in advance. Canadian Prime Minister Justin Trudeau said he is preparing for “distruptions,” especially if the US election results remain unknown due to mail-in ballots and/or both sides refusing to accept defeat. “Of course, what happens in the United States is going to be impacting Canada after the election, but our job is to be ready for all outcomes and, as you know, as a matter of course I don’t comment or weigh in on American political processes,” Trudeau said.

The Canadian economy added 378,200 jobs in September, according to new data from Statistics Canada. Unemployment fell to 9%, down 10.2% from the month prior. The report doubled a Reuters’ poll that predicted a gain of only 156,600 positions.

Consumer inflation in Brazil grew at its fastest pace in September since 2003. Rising fuel and food prices pushed inflation higher, with the benchmark IPCA rising 0.64% from the month prior, beating analysts’ expectations of 0.54%. The data will supports the case for maintaining the target rate once the central bank meets later this month.

US Market Closings:

  • Dow advanced 161.39 points or 0.57% to 28,586.9
  • S&P 500 advanced 30.31 points or 0.88% to 3,477.14
  • Nasdaq advanced 158.96 points or 1.39% to 11,579.94
  • Russell 2000 advanced 9 points or 0.55% to 1,637.55

Canada Market Closings:

  • TSX Composite declined 28.27 points or 0.17% to 16,562.81
  • TSX 60 declined 0.33 of a point or -0.03% to 990.95

Brazil Market Closing:

  • Bovespa declined 436.42 points or-0.45% to 97,483.31

BONDS:

Japan 0.04%(+0bp), US 2’s 0.15% (+1bps), US 10’s 0.79%(+3bps); US 30’s 1.60%(+4bps), Bunds -0.53% (-1bp), France -0.27% (-1bp), Italy 0.73% (-3bp), Turkey 13.26% (-11bp), Greece 0.94% (+4bp), Portugal 0.19% (-2bp); Spain 0.18% (+4bp) and UK Gilts 0.28% (-1bp).

  • Italian 12-Month BOTAuction decreased from -0.225% to -0.436%