Market Talk – September 25, 2020

ASIA:

Major carmakers are suing the US government over import taxes it has imposed on Chinese parts. Tesla is the latest auto firm to object to customs duties introduced by the Trump administration and is demanding refunds. The US and China have imposed border taxes on each other’s goods and services as part of a trade war. A number of lawsuits were reportedly filed by carmakers in the past few days in the New York-based Court of International Trade. Mercedes Benz, in its filing, accused US of “prosecution of an unprecedented, unbounded, and unlimited trade war impacting over $500bn in imports from the People’s Republic of China.

Vodafone Group said on Friday it had won an international arbitration case against the Indian government, ending one of the most high-profile disputes in the country involving a $2 billion tax claim. An international arbitration tribunal in The Hague ruled that India’s imposition of a tax liability on Vodafone, as well as interest and penalties, were in a breach of an investment treaty agreement between India and the Netherlands, Reuters reported. India had claimed a total of USD 3.79 billion including about USD 2 billion in tax, as well as interest and penalties. The ruling brings an end to one of the most controversial disputes in India under international treaty agreements that it enters into with countries to protect foreign investments.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 increased 116.80 points or 0.51% to 23,204.62
  • Shanghai decreased 3.76 points or -0.12% to 3,219.42
  • Hang Seng decreased 75.65 points or -0.32% to 23,235.42
  • ASX 200 increased 89.00 points or 1.51% to 5,964.90
  • Kospi increased 6.09 points or 0.27% to 2,278.79
  • SENSEX increased 835.06 points or 2.28% to 37,388.66
  • Nifty50 increased 244.70 points or 2.26% to 11,050.25

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.00388 or -0.55% to 0.70174
  • NZDUSD decreased 0.00189 or -0.29% to 0.65330
  • USDJPY increased 0.16 or 0.15% to 105.60
  • USDCNY increased 0.01856 or 0.27% to 6.83285

Precious Metals:

  • Gold decreased 6.89 USD/t oz. or -0.37% to 1,861.15
  • Silver decreased 0.233 USD/t. oz or -1.00% to 22.972

Some economic news from last night:

Japan:

Corporate Services Price Index (CSPI) (YoY) decreased from 1.1% to 1.0%

South Korea:

Consumer Confidence (Sep) decreased from 88.2 to 79.4

Some economic news from today:

India:

Bank Loan Growth decreased from 5.5% to 5.3%

Deposit Growth increased from 10.9% to 12.0%

FX Reserves, USD increased from 541.66B to 545.04B

Singapore:

Industrial Production (YoY) (Aug) increased from -7.6% to 13.7%

Industrial Production (MoM) (Aug) increased from 2.3% to 13.9%

EUROPE/EMEA:

The UK government borrowed £35.9bn in August as tackling the economic fallout of the pandemic took its toll on the public finances, official figures show. The difference between spending and tax income – was £30.5bn more than it borrowed in August last year. The increase meant that the borrowing figure hit its highest amount for August since records began in 1993. The amount collected by the central government in taxes dropped to £37.3bn in August, which is £7.5bn less than a year before.

Fur sales could be banned after Brexit under plans being considered by the Department for Environment of UK ministry. The UK was the first country in Europe to ban fur farming in 2000, but sales of some furs are still legal in this country and across the EU. The move to an outright ban is reportedly being spearheaded by the Tory peer Zac Goldsmith, minster at the Department for Environment, Food and Rural Affairs, and also a close friend of Boris Johnson’s partner, Carrie Symonds.

The global economy could be headed for a brighter future than was thought just a few months ago, according to an official with the International Monetary Fund (IMF), with better economic data from China than was expected and other economies improving, too. The IMF is set to release its latest World Economic Outlook on Oct. 13. In June, the IMF cut its 2020 global outlook forecasts further than they had been earlier in the pandemic, with forecasts that the global economy would contract 4.9 percent compared to the 3 percent decline predicted in April, Reuters reported.

The major Europe stock markets had a mixed day:

  • CAC 40 decreased 32.96 points or -0.69% to 4,729.66
  • FTSE 100 increased 19.89 points or 0.34% to 5,842.67
  • DAX 30 decreased 137.37 points or -1.09% to 12,469.20

The major Europe currency markets had a mixed day today:

  • EURUSD decreased 0.00491 or -0.42% to 1.16257
  • GBPUSD decreased 0.00487 or -0.38% to 1.27051
  • USDCHF increased 0.00275 or 0.30% to 0.92935

Some economic news from Europe today:

UK:

Public Sector Net Borrowing (Aug) increased from 14.72B to 35.20B

Public Sector Net Cash Requirement (Aug) increased from 16.491B to 25.693B

Spain:

Spanish PPI (YoY) increased from -4.8% to -3.5%

France:

France Jobseekers Total decreased from 3,792.5K to 3,621.5K

Italy:

Italian Business Confidence (Sep) increased from 87.1 to 92.1

Italian Consumer Confidence (Sep) increased from 101.0 to 103.4

Euro Zone:

M3 Money Supply (YoY) (Aug) decreased from 10.1% to 9.5%

Loans to Non Financial Corporations (Aug) remain the same at 7.1%

Private Sector Loans (YoY) remain the same at 3.0%

US/AMERICAS:

House Democrats proposed a new coronavirus relief bill that would cost the US $2.4 trillion, which is nearly $600 million less than their original plan. The bill would include direct stimulus payments, a situation dividing the Republicans, as well as additional Paycheck Protection Program (PPP) funds.

President Trump vaguely announced that seniors enrolled in Medicare will receive a $200 pre-paid card to use for prescription medication. As 33 million Americans are currently enrolled in Medicare, according to Bloomberg news, the plan would cost the US $6.6 billion. President Trump has long lobbied for lowering drug costs, and said he believes this plan would allow the government time to restructure the current policy.

States across the US are considering raising taxes on the wealthy. New Jersey Gov. Phil Murphy recently raised taxes from 8.97% to 10.75% on anyone earning over $1 million annually. New York, California, Illinois, Massachusetts, Maryland, Wisconsin, Hawaii, Oklahoma, and Vermont are now looking into similar measures. New York Democratic Gov. Andrew Cuomo is hesitant about implementing a “millionaire’s tax” as 46% of the state’s income taxes come from the 1%.

The coronavirus continues to plague Brazil’s tourism industry, as the country announced that they will be canceling their annual historic Carnival festival in Rio. The last Carnival attracted 2.1 million visitors from around the world and grossed 4 billion reais ($725 million). The country was also forced to cancel their second-largest tourism event of the year, New Years Eve, in which million travel to Copacabana beach.

US Market Closings:

  • Dow advanced 358.52 points or 1.34% to 27,173.96
  • Nasdaq advanced 241.3 points or 2.26% to 10,913.56
  • S&P 500 advanced 51.87 points or 1.6% to 3,298.46
  • Russell 2000 advanced 23.09 points or 1.59% to 1,474.91

Canada Market Closings:

  • TSX Composite advanced 153.09 points or 0.96% to 16,065.35
  • TSX 60 advanced 9.96 points or 1.04% to 966.18

Brazil Market Closing:

  • Bovespa declined 12.69 points or -0.01% to 96,999.38

ENERGY:

The oil markets had a mixed day today:

  • Crude Oil decreased 0.07 USD/BBL or -0.17% to 40.2400
  • Brent decreased 0.03 USD/BBL or -0.07% to 41.9100
  • Natural gas increased 0.006 USD/MMBtu or 0.27% to 2.2130
  • Gasoline increased 0.0137 USD/GAL or 1.15% to 1.2075
  • Heating oil increased 0.0062 USD/GAL or 0.56% to 1.1226

The above data was collected around 12:58 EST on Friday.

  • Top commodity gainers: Lean Hogs (3.24%), Coffee (2.38%), Lumber (5.01%), and Aluminum (2.35%)
  • Top commodity losers: Tin (-2.19%), Bitumen (-2.89%), Zinc (-1.95%), and Coal (-1.88%)

The above data was collected around 13:03 EST on Friday.

BONDS:

Japan -0.01%(-1bp), US 2’s 0.13% (-1bps), US 10’s 0.66%(-1bps); US 30’s 1.39%(-1bps), Bunds -0.51% (-1bp), France -0.23% (+0bp), Italy 0.87% (-0bp), Turkey 12.50% (-45bp), Greece 0.91% (-10bp), Portugal 0.26% (+1bp); Spain 0.22% (+4bp) and UK Gilts 0.19% (-3bp).

  • Italian 6-Month BOT Auction decreased from -0.330% to -0.392%