Market Talk – September 21, 2021

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ASIA:

Crisis-hit Chinese property developer Evergrande used billions of dollars raised by selling wealth management products to retail investors to plug funding gaps and even to pay back other wealth management investors, executives of the company said in a statement. Evergrande financial advisers marketed the products widely, including to homeowners in its apartment blocks, while its managers persuaded subordinates to invest, said the executives of Evergrande’s wealth management division. The Hong Kong-listed group is one of the biggest real estate developers in China and the most indebted in the world. It was worth as much as HK$320bn (US$41bn) last year but its market value has plunged to $3.7bn as it verges on defaulting on its offshore bonds and creditors scramble for repayment.

India’s upcoming festive season raises hopes for consumer demand picking up, rating agency ICRA said in a note on Monday, while noting the “unconvincing” performance of high frequency indicators so far this month. Big ticket purchases like automobiles, electronics and even real estate tend to pick up pace during the festive season, which begins in October, but concerns over a potential third wave of coronavirus infections has kept consumer sentiment subdued. Relative to the pre-pandemic levels, diesel consumption, two-wheeler output, vehicle registrations and domestic passenger traffic recorded lower volumes in August 2021, ICRA said.

 

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 decreased 660.34 points or -2.17% to 29,839.71
  • Shanghai closed
  • Hang Seng increased 122.40 or 0.51% to 24,221.54
  • ASX 200 increased 25.60 points or 0.35% to 7,273.80
  • Kospi closed
  • SENSEX increased 514.34 points or 0.88% to 59,005.27
  • Nifty50 increased 165.10 points or 0.95% to 17,562.00

 

 

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.00196 or -0.27% to 0.72392
  • NZDUSD decreased 0.00009 or -0.01% to 0.70085
  • USDJPY decreased 0.1 or -0.09% to 109.28
  • USDCNY increased 0.00084 or 0.01% to 6.48118

 

Precious Metals:

  • Gold increased 12.07 USD/t oz. or 0.68% to 1,775.95
  • Silver increased 0.365 USD/t. oz or 1.64% to 22.610

 

Some economic news from last night:

New Zealand:

Westpac Consumer Sentiment (Q3) decreased from 107.1 to 102.7

Credit Card Spending (YoY) decreased from 6.9% to -6.3%

 

Some economic news from today:

Indonesia:

Deposit Facility Rate (Sep) remain the same at 2.75%

Lending Facility Rate (Sep) remain the same at 4.25%

Loans (YoY) (Aug) increased from 0.50% to 1.16%

Interest Rate Decision remain the same at 3.50%

New Zealand:

GlobalDairyTrade Price Index decreased from 4.0% to 1.0%

 

 

EUROPE/EMEA:

German technology and engineering group Bosch, which is the world’s largest car parts supplier, believes semiconductor supply chains in the automotive industry are no longer fit for purpose as the global chip shortage rages on. Harald Kroeger, a member of the Bosch management board, said in an interview that supply chains have buckled in the last year as demand for chips in everything from cars to PlayStation 5s and electric toothbrushes have surged worldwide. Volkswagen and BMW cut their production as they struggled to get the chips, they needed to build their cars. These companies and semiconductor suppliers should now be looking to figure out how the chip supply chain can be improved, Kroeger said.

Germany’s respected Ifo Institute and newspaper Frankfurter Allgemeine Zeitung surveyed 153 economists at German universities, asking them how different coalition formations could affect Germany’s economic growth, unemployment, public debt, and income inequality. The survey results, published Tuesday, found that 83% of the German economists said the lowest economic growth rate would be the product of a so-called “Red/Red/Green” coalition of the SPD, the Left Party (Die Linke) and the Greens. With Chancellor Angela Merkel due to leave office after Germany’s federal election on Sunday, the country’s priorities could change dramatically, particularly as power could soon be shared among newer — and more unpredictable — political forces. In 2019, almost a quarter of the EU’s gross domestic product (24.7%) was generated by Germany, according to Eurostat, and so how the country is governed — at a time of transition in terms of global trade and consumer trends — matters.

 

The major Europe stock markets had a green day:

  • CAC 40 increased 96.92 points or 1.50% to 6,552.73
  • FTSE 100 increased 77.07 points or 1.12% to 6,980.98
  • DAX 30 increased 216.47 points or 1.43% to 15,348.53

 

The major Europe currency markets had a mixed day today:

  • EURUSD decreased 0.00016 or -0.01% to 1.17260
  • GBPUSD increased 0.00006 or 0.00% to 1.36623
  • USDCHF decreased 0.00405 or -0.44% to 0.92367

 

Some economic news from Europe today:

UK:

CBI Industrial Trends Orders (Sep) increased from 18 to 22

Public Sector Net Borrowing (Aug) increased from 6.21B to 19.78B

Public Sector Net Cash Requirement (Aug) increased from -2.363B to 5.834B

Swiss:

Trade Balance (Aug) decreased from 5.304B to 5.055B

 

US/AMERICAS:

Prime Minister Justin Trudeau will continue acting as Canada’s prime minister after a narrow race against Erin O’Toole. However, Trudeau’s efforts to win a majority government through the use of a snap election have backfired. At the time of this writing, Trudeau’s Liberal Party only secured one additional seat at 158, while Conservatives have around 119 seats, which is only two fewer seats than prior to the election. “Thank you, Canada — for casting your vote, for putting your trust in the Liberal team, for choosing a brighter future. We’re going to finish the fight against COVID. And we’re going to move Canada forward. For everyone,” the prime minister announced on Twitter. Others were less than enthusiastic about Trudeau’s win. “If Justin Trudeau thinks he can threaten Canadians with another election in 18 months, the Conservative Party will be ready. Whenever that day comes, I will be ready to lead Canada’s Conservatives,” O’Toole stated.

Unvaccinated travelers will not be permitted to enter the United States beginning in November. The Biden Administration noted that they planned to lift the 14-day quarantine requirement for foreign travelers who are vaccinated, however, the Centers for Disease Control and Prevention (CDC) is still analyzing which vaccinations will be valid. It is not yet clear how US citizens will be affected by the new law. However, a White House representative said that Americans will face “stricter testing requirements.” Americans who are unvaccinated must take a COVID test one day before re-entering the country and then must take a second test upon arrival. Many see the move as a method to restrict movement for those who are unvaccinated, as the requirements are expected to tighten. Masks are still required for both vaccinated and unvaccinated airline passengers. Border restrictions for nonessential travel between Canada, the US, and Mexico were extended once again until October 21.

The majority of analysts believe that the Fed will announce the beginning of their tapering program in November, as indicated by a new CNBC Fed Survey. The Federal Reserve has hinted that they would begin to scale back on their $120 billion monthly asset purchases but has yet to make a formal announcement. It is expected that the central bank will drastically decrease its purchase by $15 billion per month. Additionally, analysts polled do not believe rates will rise until the end of 2022. The central bank will make an official announcement as to their policy plans tomorrow after their two-day meeting.

US Market Closings:

  • Dow declined 50.63 points or -0.15% to 33,919.84
  • S&P 500 declined 3.54 points or -0.08% to 4,354.19
  • Nasdaq advanced 32.5 points or 0.22% to 14,746.4
  • Russell 2000 advanced 3.98 points or 0.18% to 2,186.18

 

Canada Market Closings:

  • TSX Composite advanced 89.75 points or 0.45% to 20,244.29
  • TSX 60 advanced 5.92 points or 0.49% to 1,211.14

 

Brazil Market Closing:

  • Bovespa advanced 1,405.99 points or 1.29% to 110,249.73

 

ENERGY:

 

The oil markets had a mixed day today:

 

  • Crude Oil increased 0.18 USD/BBL or 0.26% to 70.4700
  • Brent increased 0.33 USD/BBL or 0.45% to 74.2500
  • Natural gas decreased 0.211 USD/MMBtu or -4.23% to 4.7740
  • Gasoline decreased 0.0113 USD/GAL or -0.53% to 2.1039
  • Heating oil increased 0.013 USD/GAL or 0.60% to 2.1720

 

The above data was collected around  12:35 EST on Tuesday

 

  • Top commodity gainers: Silver (1.64%) and Platinum (4.91%), Lumber (3.52%) and Orange Juice (2.21%)
  • Top commodity losers: Oat (-1.17%), Wheat (-1.21%), Rubber (-3.86%), and Natural Gas (-4.23%)

 

The above data was collected around 12:40 EST on Tuesday.

 

BONDS:

 

Japan 0.046%(+0.1bp), US 2’s 0.2100%(-0.004%), US 10’s 1.3192%(+0.68bps); US 30’s 1.8571%(+0.01%),Bunds -0.320% (-0.5bp), France 0.0160% (-1bp), Italy 0.6902% (-2.92bp), Turkey 16.58% (-9bp), Greece 0.7530% (-4.10bp), Portugal 0.245% (-0.70bp); Spain 0.343% (+0.09bp) and UK Gilts 0.806% (+0.9bp).