Market Talk – September 30, 2020

ASIA:

China’s factory activity extended solid growth in September, a private survey showed as the nation’s crucial exports engine revved up on improving overseas demand and underlined a steady economic recovery from the coronavirus shock. The official manufacturing Purchasing Manager’s Index (PMI) rose to 51.5 in September from 51.0 in August, according to data from the National Bureau of Statistics (NBS) on Wednesday, remaining above the 50-point mark that separates growth from contraction for the seventh month. The official PMI, which largely focuses on big and state-owned firms, also showed the sub-index for new export orders stood at 50.8 in September, improving from 49.1 a month earlier and snapping eight months of declines.

Abu Dhabi state fund Mubadala Investment Co is in advanced talks to invest up to $1 billion in the retail division of India’s Reliance Industries Ltd. as investor interest in the Indian company surges, Reuters reported. Reliance Retail is on a fund-raising spree and has secured around $1.8 billion in the past few weeks from KKR & Co and Silver Lake Partners.

Rosneft and Saudi Aramco are unlikely to bid in the privatization of Indian refiner Bharat Petroleum Corp as low oil prices and weak demand curb their investment plans. Russia’s Rosneft had expressed an interest in buying the federal government’s 53.29% stake in Bharat Petroleum (BPCL) when its chief executive Igor Sechin visited New Delhi in February, while India’s trade minister has said that Saudi oil giant Aramco was enthusiastic about the stake sale. India’s government, which is looking to finance welfare schemes and bridge a fiscal deficit that has already topped the annual target, had aimed to raise $8 billion to $10 billion through the sale of its stake in BPCL.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 decreased 353.98 points or -1.50% to 23,185.12
  • Shanghai decreased 6.31 points or -0.20% to 3,218.05
  • Hang Seng increased 183.52 points or 0.79% to 23,459.05
  • ASX 200 decreased 136.20 points or -2.29% to 5,815.90
  • Kospi increased 19.81 points or 0.86% to 2,327.89
  • SENSEX increased 94.71 points or 0.25% to 38,067.93
  • Nifty50 increased 25.15 points or 0.22% to 11,247.55

The major Asian currency markets had a mixed day today:

  • AUDUSD increased 0.00275 or 0.39% to 0.71685
  • NZDUSD increased 0.00221 or 0.33% to 0.66197
  • USDJPY decreased 0.14 or -0.13% to 105.54
  • USDCNY decreased 0.03555 or -0.52% to 6.78178

Precious Metals:

  • Gold decreased 2.49 USD/t oz. or -0.13% to 1,895.20
  • Silver decreased 0.39 USD/t. oz or -1.61% to 23.785

Some economic news from last night:

China:

Caixin Manufacturing PMI (Sep) decreased from 53.1 top 53.0

Chinese Composite PMI (Sep) increased from 54.5 to 55.1

Manufacturing PMI (Sep) increased from 51.0 to 51.5

Non-Manufacturing PMI (Sep) increased from 55.2 to 55.9

Japan:

Industrial Production (MoM) (Aug) decreased from 8.7% to 1.7%

Industrial Production forecast 1m ahead (MoM) (Sep) increased from 4.0% to 5.7%

Industrial Production forecast 2m ahead (MoM) (Oct) increased from 1.9% to 2.9%

Retail Sales (YoY) (Aug) increased from -2.9% to -1.9%

Australia:

Building Approvals (MoM) (Aug) decreased from 12.0% to -1.6%

Housing Credit (Aug) remain the same at 0.2%

Private House Approvals (Aug) decreased from 8.5% to 4.8%

Private Sector Credit (MoM) (Aug) increased from -0.1% to 0.0%

New Zealand:

Building Consents (MoM) (Aug) increased from -4.6% to 0.3%

ANZ Business Confidence (Sep) increased from -41.8 to -28.5

NBNZ Own Activity (Sep) increased from -17.5% to -5.4%

Singapore:

Bank Lending (Aug) decreased from 678.7B to 677.9B

Indonesia:

M2 Money Supply (YoY) (Aug) increased from 10.50% to 13.30%

Some economic news from today:

Hong Kong:

M3 Money Supply (Aug) increased from 5.7% to 12.1%

Retail Sales (YoY) (Aug) increased from -23.1% to -13.1%

India:

Federal Fiscal Deficit (Aug) increased from 8,213.49B to 8,703.47B

Balance of Payments (USD) (Q2) increased from 18.800B to 19.846B

Current Account (USD) (Q2) increased from 0.60B to 19.80B

Trade Balance (USD) (Q2) increased from -35.000B to -10.017B

Infrastructure Output (YoY) (Aug) decreased from -8.0% to -8.5%

Foreign Debt (USD) (Q2) decreased from 558.5B to 554.5B

Japan:

Coincident Indicator (MoM) increased from 1.8% to 3.9%

Construction Orders (YoY) (Aug) increased from -22.9% to 28.5%

Housing Starts (YoY) (Aug) increased from -11.3% to -9.1%

Leading Index increased from 84.4 to 86.7

 

EUROPE/EMEA:

The UK economy posted its biggest quarterly fall on record between April and June this year, officially entering a recession, but a final reading of total activity on Wednesday showed the decline was less severe than originally thought. Gross domestic product fell by 19.8% in the second quarter, the biggest fall on record, according to data from the Office for National Statistics. The figure is marginally lower than the previous second-quarter estimate of a 20.4% drop. Having posted two successive quarterly falls, the UK officially met the technical definition of a recession. First-quarter GDP figures also showed a steeper contraction of 2.5%, revised from a previous estimate of a 2.2% decline.

World Bank President David Malpass said on Tuesday he is seeking board approval for a $12 billion coronavirus vaccine financing plan to help poor and developing countries secure a sufficient share of vaccine doses when they become available in the coming months. Malpass told Reuters in an interview that the initiative, part of $160 billion in coronavirus aid financing pledged by the multilateral lender, is aimed at helping countries procure and distribute vaccines early to healthcare and other essential workers and expand global production. He said the board was expected to consider the plan in early October.

The major Europe stock markets had a negative day:

  • CAC 40 decreased 28.63 points or -0.59% to 4,803.44
  • FTSE 100 decreased 31.40 points or -0.53% to 5,866.10
  • DAX 30 decreased 65.09 points or -0.51% to 12,760.73

 

The major Europe currency markets had a mixed day today:

  • EURUSD decreased 0.00287 or -0.24% to 1.17129
  • GBPUSD increased 0.0037 or 0.29% to 1.29022
  • USDCHF increased 0.00271 or 0.29% to 0.92216

 

Some economic news from Europe today:

UK:

Business Investment (QoQ) (Q2) decreased from -0.3% to -26.5%

Business Investment (YoY) (Q2) decreased from 0.8% to -26.1%

Current Account (Q2) increased from -20.8B to -2.8B

GDP (YoY) (Q2) decreased from -1.7% to -21.5%

GDP (QoQ) (Q2) decreased from -2.2% to -19.8%

Nationwide HPI (YoY) (Sep) increased from 3.7% to 5.0%

Nationwide HPI (MoM) (Sep) decreased from 2.0% to 0.9%

Germany:

German Import Price Index (MoM) (Aug) decreased from 0.3% to 0.1%

German Import Price Index (YoY) (Aug) increased from -4.6% to -4.0%

German Retail Sales (MoM) (Aug) increased from -0.2% to 3.1%

German Retail Sales (YoY) (Aug) decreased from 5.0% to 3.7%

German Unemployment Change (Sep) increased from -9K to -8K

German Unemployment Rate (Sep) decreased from 6.4% to 6.3%

German Unemployment (Sep) decreased from 2,915M to 2,907M

German Unemployment n.s.a. (Sep) decreased from 2,955M to 2,847M

Norway:

Credit Indicator (YoY) (Aug) increased from 4.5% to 4.7%

Central Bank Currency Purchase (Oct) increased from -2,000.0M to -1,600.0M

France:

French Consumer Spending (MoM) (Aug) increased from -0.9% to 2.3%

French CPI (MoM) decreased from -0.1% to -0.5%

French CPI (YoY) decreased from 0.2% to 0.1%

French HICP (MoM) decreased from -0.1% to -0.6%

French HICP (YoY) decreased from 0.2% to 0.0%

French PPI (MoM) (Aug) decreased from 0.4% to 0.1%

Swiss:

KOF Leading Indicators (Sep) increased from 110.2 to 113.8

ZEW Expectations (Sep) decreased from 45.6 to 26.2

Spain:

Spanish Current account (Jul) decreased from 2.04B to 1.45B

Italy:

Italian CPI (YoY) (Sep) remain the same at -0.5%

Italian CPI (MoM) (Sep) decreased from 0.3% to -0.6%

Italian HICP (YoY) (Sep) decreased from -0.5% to -0.9%

Italian HICP (MoM) (Sep) increased from -1.3% to 1.0%

US/AMERICAS:

Nearly 28.7 million people tuned in to the first 2020 US presidential debate last night between President Donald Trump and former Vice President Joe Biden. President Trump declared that the left was allowing their cities to fall into financial ruin, and the moderator asked Joe Biden if he would call upon Democratic governors, such as Portland’s, to restore “law and order.” Biden accused Trump of destroying the economy, while Trump accused Biden of pandering to China who he believes caused the economic fallout due to the coronavirus. The men are set to meet again on October 7 in Salt Lake City.

A quarter of women are considering leaving the workforce due, a new report by Lean In and McKinsey & Company suggests. Facebook COO Sheryl Sandberg called the report “the most alarming” data she has seen. “I think what’s happening is this report confirms what people have suspected, but we haven’t really had the data, which is that the coronavirus is hitting women incredibly hard and really risks undoing the progress we’ve made for women in the workforce,” Sandberg commented to reporters at CNBC. The study suggests that women are spending 20 additional hours per week tending to the household, and the extra burden on caring for children while attempting to work remotely is causing many women to reconsider their role in the workforce.

Over 40 people have died as fires continue to ravage the West Coast of the US. Over 70,000 California residents were forced to flee, according to the Red Cross, and fires spanning five million acres have spread across Oregon, California, and Washington.

Chief Financial Officer of Huawei Meng Wanzhou is set to appear in a Canadian court this Wednesday to determine whether she will be extradited to the US. Canadian government lawyer Robert Frater accused Wanzhou’s lawyers of prolonging the court proceedings as they will not succeed. “As expressed consistently, Huawei has confidence in Meng’s innocence and we trust in the Canadian judicial system to reach that conclusion,” Huawei Canada said in a statement to the Global Times.

US Market Closings:

  • Dow advanced 329.04 points or 1.2% to 27,781.7
  • S&P 500 advanced 27.53 points or 0.83% to 3,363.00
  • Nasdaq advanced 82.26 points or 0.74% to 11,167.51
  • Russell 2000 advanced 2.96 points or 0.2% to 1,507.69

Canada Market Closings:

  • TSX Composite declined 90.14 points or -0.56% to 16,121.38
  • TSX 60 declined 6.5 points or -0.67% to 967.27

Brazil Market Closing:

  • Bovespa advanced 1,024.82 points or 1.1% to 94,605.17

ENERGY:

The oil markets had a mixed day today:

  • Crude Oil increased 0.58 USD/BBL or 1.48% to 39.8600
  • Brent decreased 0.2 USD/BBL or -0.49% to 40.8300
  • Natural gas increased 0.009 USD/MMBtu or 0.36% to 2.5240
  • Gasoline increased 0.0003 USD/GAL or 0.03% to 1.1889
  • Heating oil increased 0.0261 USD/GAL or 2.36% to 1.1325

The above data was collected around 12:42 EST on Wednesday

  • Top commodity gainers: Ethanol (5.30%), Wheat (6.23%), Cheese (16.14%), and Milk (18.04%)
  • Top commodity losers: Silver (-1.61%), Bitumen (-1.94%), Palm Oil (-1.34%), and Cocoa (-2.24%)

The above data was collected around 12:50 EST on Wednesday.

BONDS:

Japan 0.02%(+0bp), US 2’s 0.13% (+0bps), US 10’s 0.69%(+5bps); US 30’s 1.48%(+7bps), Bunds -0.55% (-1bp), France -0.27% (+0bp), Italy 0.88% (+4bp), Turkey 12.93% (-16bp), Greece 1.13% (+11bp), Portugal 0.28% (+4bp); Spain 0.28% (+12bp) and UK Gilts 0.23% (+5bp).

 

  • German 5-Year Bobl Auction decreased from -0.690% to -0.730%