Market Talk – September 11, 2020

ASIA:

China has imposed “reciprocal restrictions” on all American diplomats at the US embassy and its consulates in China, including the consulate in the Hong Kong Special Administrative Region in China, in response to US restrictions on the Chinese embassy and consulates, according to Chinese Foreign Ministry on Friday. The relevant measures apply to senior diplomats and all other personnel of the embassy and consulates, with the aim of urging the US to repeal its wrong decisions as soon as possible, Zhao further explained, without specifying the measures.

India and China issued a joint statement over an ongoing border dispute in the Himalayas, calling for dialogue and disengagement to ease tensions between the nuclear-armed rivals. It came after foreign ministers from both countries met at the sidelines of the Shanghai Cooperation Organization meeting in Moscow on Thursday.

Moody’s Investors Service on Friday slashed India’s growth projection for the current fiscal to -11.5%, from -4% estimated earlier, saying the economic contraction would be more pronounced due to the lockdown and continued rise in coronavirus cases. The US-based rating agency also projected India’s debt burden to peak at around 90% of GDP in the current fiscal and the Centre’s fiscal deficit to be close to 7.5% of gross domestic product. In the previous fiscal, India’s debt burden was 72% of GDP, while the fiscal deficit stood at 4.6%.

India had an estimated 6.4 million coronavirus cases in early May, according to a survey conducted by the Indian Council of Medical Research (ICMR), while the official count was 85,940 on May 15. The ICMR’s serological survey suggests that the country may have missed a significant proportion of cases in the first three months of the pandemic. The number of cases in the country was over 4.5 million as of Friday morning.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 increased 171.02 points or 0.74% to 23,406.49
  • Shanghai increased 25.52 points or 0.79% to 3,260.35
  • Hang Seng increased 189.77 points or 0.78% to 24,503.31
  • ASX 200 decreased 49.10 points or -0.83% to 5,859.40
  • Kospi increased 0.21 points or 0.01% to 2,396.69
  • SENSEX increased 14.23 points or 0.04% to 38,854.55
  • Nifty50 increased 15.20 points or 0.13% to 11,464.45

The major Asian currency markets had a mixed day today:

  • AUDUSD increased 0.0017 or 0.23% to 0.72794
  • NZDUSD increased 0.00182 or 0.27% to 0.66661
  • USDJPY decreased 0.03 or -0.02% to 106.15
  • USDCNY decreased 0.00503 or -0.07% to 6.83445

Precious Metals:

  • Gold decreased 10.22 USD/t oz. or -0.52% to 1,943.85
  • Silver decreased 0.14 USD/t. oz or -0.50% to 26.785

Some economic news from last night:

China:

China Thomson Reuters IPSOS PCSI (Sep) decreased from 75.34 to 66.69

Japan:

BSI Large Manufacturing Conditions (Q3) increased from -52.3 to 0.1

PPI (YoY) (Aug) increased from -0.9% to -0.5%

PPI (MoM) (Aug) decreased from 0.6% to 0.2%

Thomson Reuters IPSOS PCSI (Sep) increased from 32.23 to 36.72

South Korea:

M2 Money supply (Jul) increased from 8.00% to 8.50%

New Zealand:

Business NZ PMI (Aug) decreased from 58.8 to 50.7

FPI (MoM) (Aug) decreased from 1.2% to 0.7%

 

Some economic news from today:

China:

FDI (Aug) increased from 0.50% to 2.60%

M2 Money Stock (YoY) (Aug) decreased from 10.7% to 10.4%

New Loans (Aug) increased from 992.7B to 1,280.0B

Outstanding Loan Growth (YoY) (Aug) remain the same at 13.0%

Chinese Total Social Financing increased from 1,690.0B to 3,580.0B

India:

Bank Loan Growth remain the same at 5.5%

Deposit Growth remain the same at 11.0%

FX Reserves, USD increased from 541.43B to 542.01B

M3 Money Supply remain the same at 12.6%

Cumulative Industrial Production (Jul) increased from -35.90% to -29.20%

Industrial Production (YoY) (Jul) increased from -16.6% to -10.4%

Manufacturing Output (MoM) (Jul) increased from -17.1% to -11.1%

 

EUROPE/EMEA:

Nearly half of the United Kingdom’s 30 million employees have worked from home during the pandemic, according to the country’s statistics body, with an additional 9 million placed on the country’s furlough scheme. But now, despite rising cases and a growing public desire for flexible work arrangements, the government desperately wants employees back in offices, CNN reported. Ministers and business leaders cite the economic impact on city centers as the driving force behind their push — but their rhetoric is irking many employees, who feel it suggests they’re not working hard enough from home.

France has recorded almost 10,000 new coronavirus cases in 24 hours, marking its highest single-day count since the start of the outbreak. Health authorities reported 9,843 new confirmed Covid-19 cases on Thursday, surpassing the previous daily record by almost 900.

France’s gross domestic product, which had shrunk by a record -13.8% in the second quarter, is forecast to grow by 17% in the subsequent three months, the national statistics office INSEE reported. French economic activity should run at 95% of pre-epidemic levels in the third quarter and at 96% of pre-outbreak levels in the fourth, INSEE said. Economic activity ran at 81% of pre-outbreak levels in the second quarter, data showed.

The major Europe stock markets had a mixed day:

  • CAC 40 increased 10.21 points or 0.20% to 5,034.14
  • FTSE 100 increased 28.77 points or 0.48% to 6,032.09
  • DAX 30 decreased 6.05 points or -0.05% to 13,202.84

The major Europe currency markets had a mixed day today:

  • EURUSD increased 0.00132 or 0.11% to 1.18379
  • GBPUSD decreased 0.00149 or -0.12% to 1.27933
  • USDCHF decreased 0.00117 or -0.13% to 0.90908

Some economic news from Europe today:

UK:

NIESR GDP Estimate increased from -7.6% to 7.0%

Inflation Expectations decreased from 2.9% to 2.8%

Construction Output (MoM) (Jul) decreased from 23.5% to 17.6%

U.K. Construction Output (YoY) (Jul) increased from -24.8% to -12.7%

GDP (MoM) decreased from 8.7% to 6.6%

Index of Services increased from -19.9% to -8.1%

Industrial Production (YoY) (Jul) increased from -12.5% to -7.8%

Industrial Production (MoM) (Jul) decreased from 9.3% to 5.2%

Manufacturing Production (MoM) (Jul) decreased from 11.0% to 6.3%

Manufacturing Production (YoY) (Jul) increased from -14.6% to -9.4%

Monthly GDP 3M/3M Change increased from -20.4% to -7.6%

Trade Balance (Jul) decreased from -5.12B to -8.64B

Trade Balance Non-EU (Jul) decreased from 0.30B to -2.36B

Germany:

German CPI (MoM) (Aug) increased from -0.5% to -0.1%

German CPI (YoY) (Aug) increased from -0.1% to 0.0%

German HICP (MoM) (Aug) increased from -0.5% to -0.2%

German HICP (YoY) (Aug) decreased from 0.0% to -0.1%

German WPI (YoY) (Aug) increased from -2.6% to -2.2%

German WPI (MoM) (Aug) decreased from 0.5% to -0.4%

Spain:

Spanish CPI (YoY) (Aug) increased from -0.6% to -0.5%

Spanish CPI (MoM) (Aug) increased from -0.9% to 0.0%

Spanish HICP (MoM) (Aug) increased from -1.6% to 0.0%

Spanish HICP (YoY) (Aug) increased from -0.7% to -0.6%

Spanish Industrial Production (YoY) (Jul) increased from -14.3% to -6.4%

Italy:

Italian Quarterly Unemployment Rate decreased from 9.2% to 8.3%

US/AMERICAS:

President Donald Trump reiterated his promise to forgive federal deferred payroll taxes, which he implemented as part his executive order. “When we win I, as your President, will totally forgive ALL deferred payroll taxes with money from the General Fund. I will ALWAYS protect Seniors and your Social Security!” the president tweeted on Friday. Under the current plan, private sector employers may temporarily opt-out of paying the 6.2% payroll tax, however, the government expects this tax to be repaid in 2021. Without payroll tax forgiveness, numerous Americans will see a slenderized paycheck during the beginning of the new year.

As lawmakers deliberate over the next coronavirus relief plan, at least 20 US states have issued an additional $300 in weekly unemployment benefits. The CARES Act previously provided those who are unemployed with an extra $600 weekly but ended in late July. The current unemployment rate in the US stands at 8.4%, down from the April peak of 14.7%, but still beneath the historic low of 3.5% that the country experienced prior to the pandemic.

US Secretary of State Mike Pompeo visited Doha this Friday to engage in peace talks with t the goal of ultimately ending the war in Afghanistan. “To have the Afghans sitting at the table together prepared to have what will be contentious discussions about how to move their country forward,” Pompeo said about the historic visit. Afghan representatives, as well as representatives from the Taliban, plan to meet with Pompeo and US negotiators on Saturday to determine the next steps. The US has already spent over $6 trillion in battling wars in the Middle East since the 9/11 tragedy occurred.

Bahia, a Brazilian state, has agreed to purchase 50 million doses of an experimental coronavirus vaccine. Sputnik V, located in Russia, is currently in phase three of testing the effectiveness of this vaccine. If approved by regulators, the vaccine may become available as soon as November 2020.

US Market Closings:

  • Dow advanced 131.06 points or 0.48% to 27,665.64
  • S&P 500 advanced 1.78% or 0.05% to 3,340.97
  • Nasdaq declined 66.05 points or -0.6% to 10,853.54
  • Russell 2000 declined 10.48 points or -0.7% to 1,497.27

Canada Market Closings:

  • TSX Composite advanced 37.14 points or 0.23% to 16,222.46
  • TSX 60 advanced 3.07 points or 0.32% to 973.83

Brazil Market Closing:

  • Bovespa declined 471.37 points or -0.48% to 98,363.22

ENERGY:

The oil markets had a mixed day today:

  • Crude Oil increased 0.23 USD/BBL or 0.62% to 37.5300
  • Brent increased 0.05 USD/BBL or 0.12% to 40.1100
  • Natural gas decreased 0.041 USD/MMBtu or -1.77% to 2.2720
  • Gasoline increased 0.0134 USD/GAL or 1.23% to 1.1060
  • Heating oil increased 0.0156 USD/GAL or 1.44% to 1.0956

The above data was collected around 13:00 EST on Friday.

  • Top commodity gainers: Ethanol (7.05%), Lean Hogs (3.57%), Oat (3.50%), and Rice (10.55%)
  • Top commodity losers: Orange Juice (-1.35%), Wheat (-2.45%), Natural Gas (-1.77%), and Rubber (-2.36%)

The above data was collected around 13:08 EST on Friday.

BONDS:

Japan 0.03%(+0bp), US 2’s 0.14% (-0bps), US 10’s 0.67%(-1bps); US 30’s 1.42%(-2bps), Bunds -0.48% (-5bp), France -0.18% (-5bp), Italy 1.04% (-3bp), Turkey 13.26% (-5bp), Greece 1.12% (-2bp), Portugal 0.34% (-4bp); Spain 0.32% (+3bp) and UK Gilts 0.18% (-5bp).