Market Talk – September 24, 2020

ASIA:

ByteDance has applied for a tech export license in China as it races to seal a deal with Oracle Corp and Walmart Inc with hopes will end the US’ government plans to ban its TikTok video-streaming app on security grounds, Reuters reported. The Beijing-based firm submitted the application to Beijing’s municipal commerce bureau and is awaiting a decision, it said on its Toutiao online news platform on Thursday, without referring to ongoing talks over its US operations.

India’s central bank on Thursday declined to accept any bids to purchase government bonds under open market operations (OMO). Last week, the central bank had offered to go for an outright purchase of government bonds worth INR 100 billion as part of the planned OMO. While it received bids worth only INR 66.5 billion, the central bank accepted none of the bids. The central bank had offered to purchase long-term securities maturing between 2026 and 2031.

Harley-Davidson Inc said on Thursday it would discontinue its sales and manufacturing operations in India, effectively abandoning the world’s biggest motorcycle market after a decade of unsuccessful efforts to gain a foothold. The move involves $75 million in restructuring costs, some 70 redundancies and the closure of its Bawal plant, walking away from a market worth about 17 million bike and scooter sales a year. (bit.ly/3mPHZnx) It will retain only a scaled-down sales office in Gurgaon, south of New Delhi. The departure is also the latest setback for Prime Minister Narendra Modi’s strategy to encourage domestic manufacturing that would keep more of the fruits of a gigantic home consumer market in India.

The major Asian stock markets had a negative day today:

  • NIKKEI 225 decreased 258.67 points or -1.11% to 23,087.82
  • Shanghai decreased 56.53 points or -1.72% to 3,223.18
  • Hang Seng decreased 431.44 points or -1.82% to 23,311.07
  • ASX 200 decreased 48.00 points or -0.81% to 5,875.90
  • Kospi decreased 60.54 points or -2.59% to 2,272.70
  • SENSEX decreased 1,114.82 points or -2.96% to 36,553.60
  • Nifty50 decreased 326.3 points or -2.93% to 10,805.55

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.00163 or -0.23% to 0.70496
  • NZDUSD increased 0.0006 or 0.10% to 0.65505
  • USDJPY increased 0.03 or 0.03% to 105.40
  • USDCNY decreased 0.00184 or -0.03% to 6.82525

Precious Metals:

  • Gold increased 6.93 USD/t oz. or 0.37% to 1,870.48
  • Silver increased 0.36 USD/t. oz or 1.57%% to 23.230

Some economic news from last night:

New Zealand:

Exports (Aug) decreased from 5.04B to 4.41B

Imports (Aug) increased from 4.59B to 4.76B

Trade Balance (MoM) (Aug) decreased from 447M to -353M

Trade Balance (YoY) (Aug) increased from 50M to 1,340M

Some economic news from today:

Japan:

BoJ Core CPI (YoY) remain  the same at 0.0%

Hong Kong:

Trade Balance increased from -29.8B to -14.6B

Exports (MoM) (Aug) increased from -3.0% to -2.3%

Imports (MoM) (Aug) decreased from -3.4% to -5.7%

India:

M3 Money Supply increased from 12.6% to 13.4%

EUROPE/EMEA:

UK Finance Minister Rishi Sunak has announced a new emergency package of measures to contain unemployment, replacing the country’s furlough scheme which is due to expire next month. The Job Support Scheme will directly top up the wages of employees working fewer hours due to suppressed business demand, enabling workers to keep their jobs on shorter hours rather than being made redundant. It will run for six months from November. Employees must work at least one-third of their normal hours and be paid for that work as normal, but the government will increase wages covering the remaining two-thirds of the pay. The scheme will target all small and medium-sized businesses across the UK, though larger companies may be eligible if they have experienced a fall in turnover during the crisis.

UK oil production fell 3% on the year in July to 1.03 million b/d, and was 4% lower over the first seven months, at 1.09 million b/d, as cancelled maintenance kept volumes “comparatively stable,” despite COVID-19, the Department for Business, Energy & Industrial Strategy said on Sept. 24. The statistical release also showed the UK exported more crude and natural gas liquids than it imported for a fourth month in a row in July, albeit the difference narrowed, with exports exceeding imports by just 4%, at 2.85 million mt.

French President Emmanuel Macron, in a September 22 UN General Assembly (UNGA) speech, made continued French military involvement contingent upon Mali’s restoration of civilian rule. Macron was also clear that France has a low tolerance level for popular demonstrations against France or francophone West African states that might be tempted by anti-French rhetoric.

The major Europe stock markets had a negative day today:

  • CAC 40 decreased 39.64 points or -0.83% to 4,762.62
  • FTSE 100 decreased 76.48 points, or -1.30% to 5,822.78
  • DAX 30 decreased 36.40 points or -0.29% to 12,606.57

The major Europe currency markets had a green day today:

  • EURUSD increased 0.00177 or 0.15% to 1.16731
  • GBPUSD increased 0.0024 or 0.19% to 1.27395
  • USDCHF increased 0.00239 or 26% to 0.92639

Some economic news from Europe today:

France:

French Business Survey (Sep) increased from 92 to 96

Swiss:

SNB Interest Rate Decision remain the same at -0.75%

Germany:

German Business Expectations (Sep) increased from 97.2 to 97.7

German Current Assessment (Sep) increased from 87.9 to 89.2

German Ifo Business Climate Index (Sep) increased from 92.5 to 93.4

Norway:

Interest Rate Decision remain the same at 0.00%

Italy:

Italian Trade Balance Non-EU decreased from 6.69B to 3.27B

UK:

CBI Distributive Trades Survey (Sep) increased from -6 to 11

Steel Production (Metric Ton) (Aug) decreased from 587.00K to 566.40K

Euro Zone:

ECB LTRO decreased from 1,308.4B to 174.5B

US/AMERICAS:

Weekly jobless claims in the US reached 870,000, surpassing analysts’ expectations of 850,000, and signaling the slow labor recovery. Companies slowly reopening, mixed with the lack of additional federal unemployment benefits, are gradually bringing Americans back to the workforce. Federal Reserve Chairman Jerome Powell noted on Wednesday that more aid is needed to help those out of work. “We’ve come a long way pretty quickly, and that’s great. But there’s a long way to go. So I just would say we need to stay with it, all of us. The recovery will go faster if there’s support coming both from Congress and from the Fed,” Powell stated.

IHS Markit released their Composite PMI Output Index, retracted to a reading of 54.4 this month from 54.6 in August. Any reading above 50 still constitutes as growth, but the data shows that the manufacturing and services sectors are slowly healing.

Governor Gavin Newsom of California vowed to end gasoline-powered car sales by 2032. “By 2035, in the next 15 years, we will eliminate in the state of California the sales of internal combustion engines. We will move forward to green and decarbonize our vehicle fleet here in the state of California,” Newman stated. The third-largest US state sells around two million cars per year, and critics in both the petrochemical and auto industries are concerned what this new ruling could have on their futures. Additionally, zero emission cars are still considered a luxury to many and unaffordable for the average American.

The Organization for Economic Cooperation and Development expects the world economy to contract by -4.5% in 2020. Their forecast has improved from their last expectation of a -7.6% contraction. “The world is facing an acute health crisis in the most dramatic slowdown since the second World War. The end is not yet in sight,” OECD Chief Economist Laurence Boone stated.

US Market Closings:

  • Dow advanced 52.31 points or 0.2% to 26,815.44
  • S&P 500 advanced 9.67 points or 0.3% to 3,246.59
  • Nasdaq advanced 39.29 points or 0.37% to 10,672.27
  • Russell 2000 advanced 0.36 points or 0.02% to 1,451.82

Canada Market Closings:

  • TSX Composite advanced 95.15 points or 0.6% to 15,912.26
  • TSX 60 advanced 5.4 points or 0.57% to 956.22

Brazil Market Closing:

  • Bovespa advanced 1,277.25 points or 1.33% to 97,012.07

ENERGY:

The oil markets had a mixed day today:

  • Crude Oil increased 0.25 USD/BBL or 0.63% to 40.1800
  • Brent increased 0.01 USD/BBL or 0.02% to 41.7800
  • Natural gas decreased 0.004 USD/MMBtu or -0.18% to 2.1820
  • Gasoline increased 0.0248 USD/GAL or 2.13% to 1.1917
  • Heating oil increased 0.0187 USD/GAL or 1.71% to 1.1138
  • Top commodity gainers: Silver (1.57%), Gasoline (2.13%), Heating Oil (1.71%), and Platinum (1.30%)
  • Top commodity losers: Tin (-2.36%), Zinc (-1.79%), Lumber (-4.77%), and Bitumen (-3.91%)

The above data was collected around 16:43 EST on Thursday.

BONDS:

Japan 0.00%(+0bp), US 2’s 0.13% (-0bps), US 10’s 0.67%(-0bps);US 30’s 1.40%(-2bps), Bunds -0.51% (-0bp), France -0.25% (-0bp), Italy 0.86% (+3bp), Turkey 12.95% (-71bp), Greece 0.90% (-10bp), Portugal 0.26% (+2bp), Spain 0.22% (+6bp) and UK Gilts 0.21% (-1bp).