Market Talk – September 23, 2020

ASIA:

US President Donald Trump told the United Nations General Assembly on Tuesday that China must be held accountable for having “unleashed” COVID-19 on the world, prompting Beijing to accuse him of “lies” and abusing the U.N. platform to provoke confrontation. But China’s UN ambassador Zhang Jun rejected Trump’s accusations against China as “baseless” and said “lies repeated a thousand times are still lies.” China’s President Xi Jinping struck a conciliatory tone in his pre-recorded virtual address to the General Assembly, calling for enhanced cooperation over the pandemic and stressing that China had no intention of fighting “either a Cold War or a hot war with any country.”

India’s central bank will continue to intervene to prevent any sharp appreciation in the rupee, even after signs of leniency toward currency gains in recent weeks, according to India’s private lender- ICICI Bank Ltd. The rupee gained 1.6% against the dollar in August, its biggest rise since March 2019, helped by large inflows into the nation’s stocks.

Japan’s factory activity extended declines in September largely due to a sharper fall in output, as the world’s third-largest economy struggles to stage a robust recovery from the coronavirus pandemic. The au Jibun Bank Flash Japan Manufacturing Purchasing Managers’ Index (PMI) was largely unchanged at 47.3 in September compared with a final 47.2 in the previous month. Output contracted at a faster pace for the first time in four months, weighing on the headline index, which remained below the 50.0 threshold that separates contraction from expansion for a 17th month.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 decreased 13.81 points or -0.06% to 23,346.49
  • Shanghai increased 5.41 points or 0.17% to 3,279.71
  • Hang Seng increased 25.66 points or 0.11% to 23,742.51
  • ASX 200 increased 139.80 points or 2.42% to 5,923.90
  • Kospi increased 0.65 points or 0.03% to 2,333.24
  • SENSEX decreased 65.66 points or -0.17% to 37,668.42
  • Nifty50 decreased 21.8 points or -0.20% to 11,131.85

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.00715 or -1.00% to 0.70987
  • NZDUSD decreased 0.00612 or -0.92% to 0.65701
  • USDJPY increased 0.33 or 0.32% to 105.35
  • USDCNY increased 0.03351 or 0.49% to 6.81777

Precious Metals:

  • Gold decreased 32.23 USD/t oz. or -1.70% to 1,867.05
  • Silver decreased 1.37 USD/t. oz or -5.62% to 23.044

Some economic news from last night:

Japan:

Manufacturing PMI (Sep) increased from 47.2 to 47.3

Services PMI increased from 45.0 to 45.6

Australia:

Manufacturing PMI increased from 53.6 to 55.5

Services PMI increased from 49.0 to 50.0

New Zealand:

RBNZ Interest Rate Decision remain the same at 0.25%

Some economic news from today:

Japan:

All Industries Activity Index (MoM) decreased from 6.8% to 1.3%

Singapore:

CPI (YoY) (Aug) remain the same at -0.4%

EUROPE/EMEA:

The recovery from the economic slump caused by Covid-19 weakened in the UK and the eurozone this month, with data indicating that although many parts of the economy continued to reopen, consumer confidence remains low. The Flash UK Composite PMI data, a one-stop measure of private sector activity, dropped to 55.7 for September, still comfortably above the 50.0 reading that separates expansion from contraction, but a decline to a three-month low from 59.1 in August. In the eurozone, the 50.1 reading was only marginally above neutral threshold and also at a three-month low from 51.9 in August.

The European Union has called for a compulsory system across the bloc to manage migration, after years of division over how to respond to a big influx of migrants and refugees. The German-backed pact would require all 27 EU countries to take part. Member states would either agree to take in asylum seekers or take charge of sending back those refused asylum.

Saudi Arabia has banned flights to and from India amid a surge in coronavirus cases, according to an official document. In a circular issued on Tuesday, Saudi Arabia’s General Authority of Civil Aviation (GACA) said it was “suspending travel to and from the following countries: (India, Brazil and Argentina) including any person who has been in any of the mentioned countries above in the last 14 days prior to their arrival to the Kingdom.”

The major Europe stock markets had a green day:

  • CAC 40 increased 29.42 points or 0.62% to 4,802.26
  • FTSE 100 increased 69.80 points or 1.20% to 5,899.26
  • DAX 30 increased 48.58 points or 0.39% to 12,642.97

The major Europe currency markets had a mixed day today:

  • EURUSD decreased 0.00322 or -0.28% to 1.16754
  • GBPUSD increased 0.00128 or 0.10% to 1.27514
  • USDCHF increased 0.00349 or 0.38% to 0.92334

Some economic news from Europe today:

Germany:

GfK German Consumer Climate (Oct) increased from -1.7 to -1.6

German Composite PMI (Sep) decreased from 54.4 to 53.7

German Manufacturing PMI (Sep) increased from 52.2 to 56.6

German Services PMI (Sep) decreased from 52.5 to 49.1

Norway:

Unemployment Rate (Jul) remain the same at 5.2%

Spain:

Spanish GDP (QoQ) (Q2) decreased from -5.2% to -17.8%

Spanish GDP (YoY) (Q2) decreased from -4.2% to -21.5%

France:

French Manufacturing PMI (Sep) increased from 49.8 to 50.9

French Markit Composite PMI (Sep) decreased from 51.6 to 48.5

French Services PMI (Sep) decreased from 51.5 to 47.5

UK:

Composite PMI decreased from 59.1 to 55.7

Manufacturing PMI decreased from 55.2 to 54.3

Services PMI decreased from 58.8 to 55.1

Euro Zone:

Manufacturing PMI (Sep) increased from 51.7 to 53.7

Markit Composite PMI (Sep) decreased from 51.9 to 50.1

Services PMI (Sep) decreased from 50.5 to 47.6

US/AMERICAS:

Federal Reserve Vice Chair Richard Clarida said the prospect of a rate hike will not be considered until inflation is closer to the 2% target. “Rates will be at the current level, which is basically zero, until actual observed PCE inflation has reached 2%,” Clarida told Bloomberg reporters this Wednesday morning. He noted that the Fed would be comfortable maintaining low rates even after their inflation target was met. Employment is another major factor, as the Fed  will “not even begin thinking about lifting” rates until “market indicators [are] consistent with maximum employment.”

President Trump asked world leaders at the United Nation summit on Tuesday to hold China responsible as they “unleashed this plague onto the world.” The US president avowed China lied about the spread of the disease, and the World Health Organization (WHO) helped the nation to promote false information such as initially saying the disease could not carry person-to-person. Chinese President Xi, who spoke in a prerecorded presentation, urged nations to continue following the advice of the WHO and accused the US of politicizing the issue.

Dr. Anthony Fauci announced today that a coronavirus vaccine could be available as soon as November. However, there will not be enough dosages until March or April of 2021. Currently, there is no effective coronavirus vaccine although numerous companies have been fast-tracking the process through “Operation Warpspeed.”

House Democrats and President Donald Trump are astonishingly in agreement that the government should provide a second round of stimulus checks. The Republican Senate proposed a coronavirus relief bill a few weeks ago, but it would not include direct stimulus payments. Treasury Secretary Steven Mnuchin is urging his party to reconsider their position, saying, “We obviously can’t pass a bill in the Senate without bipartisan support.” Larry Kudlow, director of the National Economic Council, also voiced support for bipartisan cooperation. “I wish we could break the stalemate, because even though I think the economy is improving nicely, I think it could use some help in some key targeted places,” Kudlow stated.

US Market Closings:

  • Dow declined 525.05 points or -1.92% to 26,763.13
  • S&P 500 declined 78.65 points or -2.37% to 3,236.92
  • Nasdaq declined 330.65 points or -3.02% to 10,632.99
  • Russell 2000 declined 45.5 points or -3.04% to 1,451.46

Canada Market Closings:

  • TSX Composite declined 325.78 points or -2.02% to 15,817.11
  • TSX 60 declined 16.94 points or -1.75% to 950.82

Brazil Market Closing:

  • Bovespa declined 1,558.72 points or -1.6% to 95,734.82

ENERGY:

The oil markets had a green day today:

  • Crude Oil increased 0.27 USD/BBL or 0.68% to 39.8700
  • Brent increased 0.05 USD/BBL or 0.12% to 41.7700
  • Natural gas increased 0.262 USD/MMBtu or 14.24% to 2.1020
  • Gasoline increased 0.0003 USD/GAL or 0.03% to 1.1739
  • Heating oil increased 0.0103 USD/GAL or 0.94% to 1.1078

The above data was collected around 11:52 EST on Wednesday.

  • Top commodity gainers: Natural Gas (14.24%), Rubber (6.81%), Lumber (5.01%), and Palladium (1.89%)
  • Top commodity losers: Tin (-1.88%), Orange Juice (-4.65%), Copper (-2.70%), and Silver (-5.62%)

The above data was collected around 11:58 EST on Wednesday.

BONDS:

Japan 0.00%(-1bp), US 2’s 0.14% (+0bps), US 10’s 0.68%(+1bps); US 30’s 1.44%(+2bps), Bunds -0.51% (-0bp), France -0.24% (+0bp), Italy 0.83% (-2bp), Turkey 13.66% (+18bp), Greece 0.99% (-6bp), Portugal 0.23% (-2bp); Spain 0.22% (+4bp) and UK Gilts 0.21% (+2bp).