Market Talk – September 10, 2020

ASIA:

The US says it has revoked the visas of more than 1,000 Chinese students and researchers who are deemed to be a security risk. The move follows a proclamation by President Donald Trump in May aimed at Chinese nationals suspected of having ties to the military. He said some had stolen data and intellectual property. China has accused the US of racial discrimination.

India and China held discussions aimed at seeking a resolution to the prolonged military crisis along the LAC in east Ladakh with foreign minister S. Jaishankar and his Chinese counterpart Wang Yi, meeting in Moscow for over two hours on Thursday. India has repeatedly made it clear that peace on the borders is now a requisite for healthy bilateral ties.

India’s central bank appointed a committee to roll out a loan restructuring scheme for companies facing Covid-19 related stress has submitted their reports to the central bank on Thursday. The committee has made recommendations for 26 sectors that could be factored by lending institutions while finalizing loan resolution plans. The committee said banks could adopt a graded approach based on the severity of the coronavirus pandemic in a sector. RBI Governor Shaktikanta Das had said that banks could extend the loan moratorium by three, six, or even 12 months under one-time restructuring. The moratorium was initially granted to ease the hardships faced by the borrowers during the pandemic.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 increased 202.93 points or 0.88% to 23,235.47
  • Shanghai decreased 19.80 points or -0.61% to 3,234.82
  • Hang Seng decreased 155.39 points or -0.64% to 24,313.54
  • ASX 200 increased 29.90 points or 0.51% to 5,908.50
  • Kospi increased 20.67 points or 0.87% to 2,396.48
  • SENSEX increased 646.40 points or 1.69% to 38,840.32
  • Nifty50 increased 171.25 points or 1.52% to 11,449.25

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.00187 or -0.26% to 0.72584
  • NZDUSD decreased 0.00344 or -0.51% to 0.66494
  • USDJPY decreased 0.08 or -0.07% to 106.14
  • USDCNY increased 0.01001 or 0.15% to 6.84508

Precious Metals:

Gold decreased 0.71 USD/t oz. or -0.04% to 1,945.95

Silver decreased 0.17 USD/t. oz or -0.61%% to 26.860

 

Some economic news from last night:

Japan:

Core Machinery Orders (YoY) (Jul) increased from -22.5% to -16.2%

Core Machinery Orders (MoM) (Jul) increased from -7.6% to 6.3%

Foreign Bonds Buying increased from -117.6B to 377.9B

Foreign Investments in Japanese Stocks increased from -590.5B to 11.6B

Australia:

MI Inflation Expectations decreased from 3.3% to 3.1%

New Zealand:

Electronic Card Retail Sales (MoM) (Aug) decreased from 1.2% to -7.9%

Electronic Card Retail Sales (YoY) (Aug) decreased from 11.4% to -0.8%

EUROPE/EMEA:

The Brexit talks appear to be on the point of collapse after Britain flatly rejected an EU ultimatum over the government’s plans to break international law by reneging on key parts of the withdrawal agreement. The clash on Thursday followed an EU demand that Boris Johnson drop his plans within three weeks or face financial or trade sanctions after the bloc’s lawyers concluded that Britain had already breached the withdrawal agreement by tabling the controversial internal market bill.

German economic institute DIW said it on Thursday it expects the country’s economy to decline by 6% this year due to the coronavirus pandemic, revising upwards an earlier estimate of a 9.4% contraction. For next year DIW raised its GDP growth forecast to 4.1% from 3% in June but cautioned pandemic could still lead to setbacks. Germany’s economy shrank by an unprecedented 9.7% in the second quarter.

US President Donald Trump said on Thursday it was possible another country could soon join a diplomatic accord between Israel and the United Arab Emirates. Trump is to host a signing ceremony next Tuesday that will include delegations with Israel and the UAE. His negotiators have been trying to get other Gulf nations, such as Bahrain and Oman, to join in normalizing relations with Israel.

The major Europe stock markets had a negative day today:

  • CAC 40 decreased 19.05 points or -0.38% to 5,023.93
  • FTSE 100 decreased 9.52 points, or -0.16% to 6,003.32
  • DAX 30 decreased 28.32 points or -0.21% to 13,208.89

The major Europe currency markets had a mixed day today:

  • EURUSD increased 0.00095 or 0.08% to 1.18151
  • GBPUSD decreased 0.0198 or -1.52% to 1.28050
  • USDCHF decreased 0.00157 or -0.17% to 0.91058

Some economic news from Europe today:

Norway:

Core CPI YTD (Aug) increased from 3.5% to 3.7%

Core Inflation (MoM) (Aug) decreased from 0.9% to -0.4%

CPI (MoM) (Aug) decreased from 0.7% to -0.4%

CPI (YoY) (Aug) increased from 1.3% to 1.7%

PPI (YoY) (Aug) increased from -13.3% to -12.1%

France:

French Industrial Production (MoM) (Jul) decreased from 13.0% to 3.8%

France Thomson Reuters IPSOS PCSI (Sep) decreased from 41.59 to 40.97

Italy:

Italian Industrial Production (MoM) (Jul) decreased from 8.2% to 7.4%

Italian Industrial Production (YoY) (Jul) increased from -13.9% to -8.0%

Italy Thomson Reuters IPSOS PCSI (Sep) decreased from 37.82 to 37.66

UK:

Thomson Reuters IPSOS PCSI (Sep) increased from 45.3 to 45.4

RICS House Price Balance (Aug) increased from 13% to 44%

Germany:

Germany Thomson Reuters IPSOS PCSI (Sep) increased from 50.29 to 51.06

Euro Zone:

Deposit Facility Rate (Sep) remain the same at -0.50%

ECB Marginal Lending Facility remain the same at 0.25%

ECB Interest Rate Decision (Sep) remain the same at 0.00%

US/AMERICAS:

The US Senate failed to advance the “targeted” $300 billion coronavirus stimulus package presented by Senate Republicans. The lawmakers voted 52-47 on the bill, falling short of the 60 votes requires to pass the bill. All Democratic Senators and one Republican (Rand Paul) opposed the bill which would have reduced the enhanced unemployment pay by half and eliminated the potential for a second $1,200 stimulus check.

As the Senate continues to deliberate on the next coronavirus relief package, a recent report by the US Bureau of Labor Statistics shows that the majority of Americans used their one-time $1,200 stimulus check for basic necessities. According to the report, 59% of recipients used the payment for basic living expenses like food and bills. Around 66% said they used a portion to pay for food, while 47% recalled using the money for household and personal care products. Over a quarter of those polled used the money to pay for rent, while 23% allocated the money for their mortgages.

Jobless claims in the US remained relatively unchanged since last week, according to the Labor Department. First-time filings reached 884,00, exceeding analysts’ expectations of 850,000. Continuing claims (those filing for two weeks or more) rose by 93,000 from last week to 13.385 million.

Canadians have defaulted on nearly C$1 billion worth of mortgage payments since the pandemic began, the Canada Mortgage And Housing Corporation reported. Nearly 760,000 citizens have applied for a form of a mortgage deferral through a chartered bank, which roughly equated to one in six citizens filing to defer a payment.

US Market Closings:

  • Dow declined 405.89 points or -1.45% to 27,534.58
  • Nasdaq declined 221.97 points or 1.99% to 10,919.59
  • S&P 500 declined 59.77 points or -1.76% to 3,339.19
  • Russell 2000 declined 18.73 points or -1.23% to 1,507.75

Canada Market Closings:

  • TSX Composite declined 198.28 points or -1.21% to 16,185.32
  • TSX 60 declined 12.48 points or -1.27% to 970.76

Brazil Market Closing:

  • Bovespa declined 2,457.46 points or -2.43% to 98,834.59

ENERGY:

The oil markets had a negative day today:

  • Crude Oil decreased 1.05 USD/BBL or -2.76% to 37.0000
  • Brent decreased 1.04 USD/BBL or -2.55% to 39.7500
  • Natural gas decreased 0.08 USD/MMBtu or -3.34% to 2.3120
  • Gasoline decreased 0.0306 USD/GAL or -2.73% to 1.0883
  • Heating oil decreased 0.0257 USD/GAL or -2.33% to 1.0757
  • Top commodity gainers: Lean Hogs (4.89%), Ethanol (19.09%), Rubber (2.99%), and Lumber (3.33%)
  • Top commodity losers: Gasoline (-2.73%), Crude Oil (-2.76%), Oat (-2.62%), and Natural Gas (-3.34%)

The above data was collected around 17:15 EST on Thursday.

BONDS:

Japan 0.03%(+0bp), US 2’s 0.14% (-1bps), US 10’s 0.68%(-2bps);US 30’s 1.42%(-4bps), Bunds -0.44% (+2bp), France -0.15% (+2bp), Italy 1.07% (-2bp), Turkey 13.31% (-26bp), Greece 1.14% (-1bp), Portugal 0.38% (+1bp), Spain 0.37% (+9bp) and UK Gilts 0.22% (-2bp).