Market Talk – September 2, 2020

ASIA:

The US Trade Representative’s office said on Tuesday it has extended China tariff exclusions for a wide range of goods, including smart watches and certain medical masks, through the end of 2020, rather than renewing the previous one-year extensions. The tariffs on some $125 billion worth of goods were set at 15%, then lowered to 7.5% by the Phase 1 deal signed in January. The products included a number of Bluetooth and wearable data-transmitting devices, such as those imported from China by Apple Inc, FitBit, Sonos and other technology companies.

India’s central bank appears to have stopped trying to rein in the rupee to help exports, letting the currency drift to a six-month high and raising expectations it will gain further, analysts and market participants said. Dollar-buying intervention by the Reserve Bank of India (RBI) in recent months has made the rupee one of the worst-performing Asian currencies in 2020, despite massive dollar inflows into stock markets and for corporate fundraising.

Japan’s chief government spokesman, Yoshihide Suga, is set to announce on Wednesday his candidacy to lead the ruling Liberal Democratic Party (LDP), and is heavily favored to become prime minister, local media news agency reported. Suga has not yet declared he would run to succeed Prime Minister Shinzo Abe, who said last week he would resign. But Suga has privately indicated his intention to do so, a source has told Reuters. The party’s leader will almost certainly become premier because of its majority in the lower house of parliament.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 increased 109.08 points or 0.47% to 23,247.15
  • Shanghai decreased 5.81 points or -0.17% to 3,404.80
  • Hang Seng decreased 64.76 points or -0.26% to 25,120.09
  • ASX 200 increased 109.80 points or 1.84% to 6,063.20
  • Kospi increased 14.82 points or 0.63% to 2,364.37
  • SENSEX increased 185.23 points or 0.48% to 39,086.03
  • Nifty50 increased 64.75 points or 0.56% to 11,535.00

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.0053 or -0.72% to 0.73240
  • NZDUSD decreased 0.00058 or -0.09% to 0.67659
  • USDJPY increased 0.0034 or 0.33% to 106.22
  • USDCNY decreased 0.00255 or -0.04% to 6.82958

Precious Metals:

  • Gold decreased 35.89 USD/t oz. or -1.82% to 1,934.25
  • Silver decreased 1.056 USD/t. oz or -3.75% to 27.108

Some economic news from last night:

Japan:

Monetary Base (YoY) increased from 9.8% to 11.5%

South Korea:

CPI (YoY) (Aug) increased from 0.3% to 0.7%

CPI (MoM) (Aug) increased from 0.0% to 0.6%

Australia:

GDP (QoQ) (Q2) decreased from -0.3% to -7.0%

GDP (YoY) (Q2) decreased from 1.6% to -6.3%

GDP Capital Expenditure (Q2) decreased from -0.8% to -4.9%

GDP Chain Price Index (Q2) decreased from 1.1% to -0.2%

GDP Final Consumption (Q2) decreased from -0.3% to -8.1%

New Zealand:

Terms of Trade – Exports Prices (Q2) increased from -0.2% to 2.4%

Terms of Trade – Exports Volume (QoQ) (Q2) decreased from 1.8% to -7.0%

Terms of Trade – Imports Prices (Q2) decreased from 0.5% to -0.1%

Terms of Trade Index (QoQ) (Q2) increased from -0.7% to 2.5%

Indonesia:

Core Inflation (YoY) (Aug) decreased from 2.07% to 2.03%

EUROPE/EMEA:

Germany has told China to stop threatening Europe after China said a politician from the Czech Republic who visited Taiwan this week would pay a “heavy price” for expressing support for the self-governing island facing Chinese subjugation. President Xi Jinping wants to reclaim Taiwan, a self-governing country in Southeast Asia, after it broke away from China in the mid-20th century. China has said it is prepared to retake the island by force, if necessary.

Germany is in a V-shaped economic recovery as it bounces back more strongly than expected from the effects of the first phase of the coronavirus pandemic, the economy minister said Tuesday. Altmaier said Germany “can and will” avoid lockdowns like Germans lived through in March and April.

France is due to present a mammoth spending plan for its virus-hit economy Thursday, hoping to reverse a dramatic downturn in growth and ward off the threat of mass layoffs at struggling companies. President Emmanuel Macron’s government has earmarked €100 billion to counter the devastating impact of the coronavirus at a time when daily virus numbers in France are on the rise again. The French budget boost is separate from a €750 billion European Union plan agreed after acrimonious haggling in July. The government expects GDP for the whole year to contract by 11 percent.

The major Europe stock markets had a green day:

  • CAC 40 increased 93.64 points or 1.90% to 5,031.74
  • FTSE 100 increased 78.90 points or 1.35% to 5,940.95
  • DAX 30 increased 269.18 points or 2.07% to 13,243.43

The major Europe currency markets had a mixed day today:

  • EURUSD decreased 0.00841 or -0.71% to 1.18419
  • GBPUSD decreased 0.00741 or -0.55% to 1.33249
  • USDCHF increased 0.00243 or 0.27% to 0.91156

Some economic news from Europe today:

Norway:

Current Account (Q2) decreased from 63.2B to 20.5B

Spain:

Spanish Unemployment Change increased from -89.8K to 29.8K

Germany:

German Retail Sales (YoY) (Jul) decreased from 6.7% to 4.2%

German Retail Sales (MoM) (Jul) increased from -1.9% to -0.9%

UK:

Nationwide HPI (MoM) (Aug) increased from 1.8% to 2.0%

Nationwide HPI (YoY) (Aug) increased from 1.5% to 3.7%

Euro Zone:

PPI (YoY) (Jul) increased from -3.7% to -3.3%

PPI (MoM) (Jul) decreased from 0.7% to 0.6%

US/AMERICAS

Wall Street experienced another historical day of trading today after both the Nasdaq and S&P 500 peaked to new highs. Lam Research jumped 6.93%, helping the Nasdaq to surpass the 12,000 level, followed by Align Technology (6.04%), Applied Materials (5.4%), and Illumina (5.01%). On the S&P 500, DXC Technology led the way after advancing 11.68%, followed by Brown-Forman b (10.92%), Lam Research (6.82%), and Twitter (6.79%).

Disappointing payroll data revealed only 428,000 jobs were added to the US economy in August, despite analysts at Bloomberg anticipating a growth rate of 1 million. The low number indicates that the US is still slowly recovering as all businesses and sectors have yet to reach pre-pandemic levels.

The Centers for Disease Control and Prevention (CDC) implemented an order declaring evictions illegal through the end of the year. The CDC claims this move will help to save lives as millions of Americans remain unemployed due to coronavirus-related shutdowns. However, landlords across the nation are protesting the bill and cite that they could foreclose on properties without adequate rental income. Furthermore, the move could cause property values to decline if numerous properties go into foreclosure.

US Vice President Mike Pence reaffirmed his support to cast the re-election of President Donald Trump as critical for preserving law and order and economic viability, asserting that Democratic rival Joe Biden would set America on a path to socialism and decline. Amid widening protests over the police shooting of Jacob Blake in Wisconsin, Pence and other Republicans at the national convention described the Nov. 3 election between Trump and Biden as a choice between law and order and lawlessness.

US Market Closings:

  • Dow advanced 454.84 points or 1.59% to 29,100.5
  • S&P 500 advanced 54.19 points or 1.54% to 3,580.84
  • Nasdaq advanced 116.78 points or 0.98% to 12,056.44
  • Russell 2000 advanced 13.71 points or 0.87% to 1,592.29

Canada Market Closings:

  • TSX Composite advanced 52.98 points or 0.32% to 1,592.29
  • TSX 60 advanced 3.88 points or 0.39% to 1,002.17

Brazil Market Closing:

  • Bovespa declined 256.52 points or -0.25% to 101,911.13

ENERGY:

The oil markets had a negative day today:

  • Crude Oil decreased 1.04 USD/BBL or -2.43% to 41.7200
  • Brent decreased 0.91 USD/BBL or -2.00% to 44.6700
  • Natural gas decreased 0.025 USD/MMBtu or -0.99% to 2.4880
  • Gasoline decreased 0.0302 USD/GAL or -2.44% to 1.2083
  • Heating oil decreased 0.0414 USD/GAL or -3.35% to 1.1959

The above data was collected around 13:21 EST on Wednesday.

  • Top commodity gainers: Orange Juice (3.52%), Tin (0.73%), Rubber (2.19%), and Lean Hogs (0.73%)
  • Top commodity losers: Silver (-3.75%), Platinum (-4.45%), Cheese (-14.89%), and Milk (-16.05%)

The above data was collected around 13:27 EST on Wednesday.

BONDS:

Japan 0.05%(+0bp), US 2’s 0.13% (+0bps), US 10’s 0.65%(-2bps); US 30’s 1.39%(-4bps), Bunds -0.47% (-6bp), France -0.18% (-6bp), Italy 1.05% (-6bp), Turkey 13.19% (+0bp), Greece 1.15% (-1bp), Portugal 0.35% (-8bp); Spain 0.36% (+3bp) and UK Gilts 0.24% (-6bp).

 

  • German 5-Year Bobl Auction increased from -0.720% to -0.690%