Market Talk – January 5, 2021

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ASIA:

China’s economic growth could reach as high as 9 percent next year, and its rapid rebound from the coronavirus pandemic may help the economy overtake the US to become the world’s largest later this decade, analysts said. Nomura and China International Capital Corporation put China’s gross domestic product growth for 2021 at 9 percent. Expectations over China’s economic outlook have turned bullish in recent weeks, with the world’s second-largest economy leading the global recovery from the impact of the coronavirus with its robust export growth, strong government spending and a low infection rate.

India’s factory sector ended a rough 2020 on a stronger note as manufacturers boosted production to meet rising demand, a private survey showed on Monday, although the employment situation worsened as firms continued to reduce headcounts. The Nikkei Manufacturing Purchasing Managers’ Index, compiled by IHS Markit, rose slightly to 56.4 in December from November’s 56.3, above the 50-level separating growth from contraction for a fifth month. Rising demand, however, failed to improve conditions in the labor market, with manufacturers continuing to cut jobs.

Fiat Chrysler Automobiles NV (FCA) said on Tuesday it will invest $250 million to grow its presence in India with the launch of four new sport-utility vehicles (SUVs) under its Jeep brand over the next two years. The investment will be made to locally manufacture a mid-size, three-row SUV, assemble the Jeep Wrangler and Jeep Grand Cherokee vehicles in the country and launch a new version of its Jeep Compass SUV, FCA said in a statement. FCA currently has less than a 1% share of India’s passenger vehicle market.

Japan’s economy is expected to make its sharpest rebound in decades this year, with consumption set to pick up toward the end of 2021 as the impact of the COVID-19 pandemic on the broader economy eases, Japan Times reported. The world’s third-largest economy is projected to grow 3.42% in the next fiscal year, which will run to March 2022, after shrinking 5.37% this fiscal year, according to an average of forecasts by 35 economists polled by the Japan Center for Economic Research. If the estimate is borne out, it would see a turnaround from the economy’s worst contraction to its highest growth since fiscal 1995, when comparative date became available.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 decreased 99.75 points or -0.37% to 27,158.63
  • Shanghai increased 25.72 points or 0.73% to 3,528.68
  • Hang Seng increased 177.05 points or 0.64% to 27,649.86
  • ASX 200 decreased 2.30 points or -0.03% to 6,681.90
  • Kospi increased 46.12 points or 1.57% to 2,990.57
  • SENSEX increased 260.98 points or 0.54% to 48,437.78
  • Nifty50 increased 66.60 points or 0.47% to 14,199.50

The major Asian currency markets had a mixed day today:

  • AUDUSD increased 0.0099 or 1.29% to 0.77660
  • NZDUSD increased 0.00797 or 1.11% to 0.72541
  • USDJPY decreased 0.43 or -0.42% to 102.72
  • USDCNY decreased 0.01957 or -0.30% to 6.43394

Precious Metals:

  • Gold increased 6.69 USD/t oz. or 0.34% to 1,948.97
  • Silver increased 0.39 USD/t. oz or 1.43% to 27.600

Some economic news from last night:

Japan:

Monetary Base (YoY) increased from 16.5% to 18.3%

Australia:

ANZ Job Advertisements (MoM) decreased from 13.9% to 9.2%

Some economic news from today:

Singapore:

Retail Sales (YoY) (Nov) increased from -8.5% to -1.9%

Retail Sales (MoM) (Nov) increased from 0.2% to 7.3%

New Zealand:

GlobalDairyTrade Price Index increased from 1.3% to 3.9%

South Korea:

FX Reserves – USD (Dec) increased from 436.38B to 443.10B

EUROPE/EMEA:

Britain offered a 4.6-billion-pound ($6.2 billion) support package for businesses on Tuesday to soften an expected recession caused by a surge in COVID-19 cases that has prompted a third national lockdown. Prime Minister Boris Johnson announced the lockdown on Monday, saying a highly contagious coronavirus variant risked overwhelming the health service within 21 days. Economists at J.P. Morgan predicted a hefty 2.5% fall in output for the first three months of 2021 as an impact of the current lockdown.

The French economy will rebound next year as coronavirus restrictions are lifted although not as fast as previously expected, the central bank forecast on Monday. After contracting about 9% this year, the euro zone’s second-biggest economy will post growth around 5% in 2021 and 2022 before easing to slightly more than 2% in 2023, the Bank of France forecast in its quarterly outlook.

The German government and the country’s 16 federal states have agreed to extend a strict lockdown until Jan. 31 in an effort to bring coronavirus infections under control, Bild newspaper reported on Monday. Speaking after the Bild report, a government source told Reuters: “All but two federal states support (a lockdown extension until) Jan. 31. However, the formal decision will be made on Tuesday.

The major Europe stock markets had a mixed day:

  • CAC 40 decreased 24.36 points or -0.44% to 5,564.60
  • FTSE 100 increased 40.37 points or 0.61% to 6,612.25
  • DAX 30 decreased 75.52 points or -0.55% to 13,651.22

 

 

The major Europe currency markets had a mixed day today:

  • EURUSD increased 0.00391 or 0.32% to 1.22912
  • GBPUSD increased 0.00581 or 0.43% to 1.36230
  • USDCHF decreased 0.00266 or -0.30% to 0.87864

 

Some economic news from Europe today:

Spain:

Spanish Consumer Confidence increased from 55.7 to 63.1

Spanish Unemployment Change increased from 25.3K to 36.8K

Swiss:

CPI (MoM) (Dec) increased from -0.2% to -0.1%

CPI (YoY) (Dec) decreased from -0.7% to -0.8%

Germany:

German Retail Sales (MoM) (Nov) decreased from 2.6% to 1.9%

German Retail Sales (YoY) (Nov) decreased from 8.6% to 5.6%

German Unemployment Change (Dec) increased from -40K to -37K

German Unemployment Rate (Dec) remain the same at 6.1%

German Unemployment (Dec) decreased from 2.813M to 2.776M

German Unemployment n.s.a. (Dec) increased from 2.699M to 2.707M

Euro Zone:

M3 Money Supply (YoY) (Nov) increased from 10.5% to 11.0%

Loans to Non Financial Corporations (Nov) increased from 6.8% to 6.9%

Private Sector Loans (YoY) decreased from 3.2% to 3.1%

US/AMERICAS:

Manufacturing in the US advanced to its most active level in 2.5 years last month. According to the Institute for Supply Management (ISM), December’s reading came in at 60.7, up from 57.5 a month prior. According to Reuters, manufacturing composes 11.9% of the US economy and a large expansion signals strengthening conditions.

Drug prices are also on the rise in the US, after more than 500 pharmaceuticals saw an increase entering into the new year. According to research firm 46brooklyn, most of the increases were below 10% with the median increase coming in at 4.8%. The Trump administration attempted to cut down on price hiking for pharmaceuticals but the average drug cost continues to rise. “With price increases losing their impact, launch prices will be the primary driver of US drug list price inflation,” stated the president of 46brooklyn.

In a sudden turn of events, the NYSE has declined to delist three Chinese telecommunication companies. The original goal of delisting the companies was to weaken China’s military as the companies in question are state-funded. In a brief statement, the NYSE noted the reversal but said it would engage in “further consultation with relevant regulatory authorities.” Foreign Ministry spokesperson Hua Chunying previously called the attempted delisting a “serious violation of market competition principles and international trade rules the US side always prides itself on.”

Millions of Americans will receive a second round of stimulus checks this week. Individuals earning under $75,000 and couples earning under $150,000 will receive $600 each, and an additional $600 for each child filed as a dependent. The IRS is distributing checks based on 2019 generated income, and those who opted to receive direct deposits on their tax returns will likely see the stimulus check first. Americans who did not receive their first stimulus check may file for a recovery rebate credit when filing their 2020 taxes.

US Market Closings:

  • Dow advanced 167.71 points or 0.55% to 30,391.6
  • S&P 500 advanced 26.21 points or 0.71% to 3,726.86
  • Nasdaq advanced 120.51 points or 0.95% to 12,818.96
  • Russell 2000 advanced 33.19 points or 1.71% to 1,979.11

Canada Market Closings:

  • TSX Composite advanced 154.74 points or 0.88% to 17,682.51
  • TSX 60 advanced 9.42 points or 0.01% to 1,048.78

Brazil Market Closing:

  • Bovespa advanced 521.5 points or 0.44% to 119,376.21

ENERGY

Oil surged past $50 a barrel for the first time since February after Saudi Arabia pledged to voluntarily cut output by an extra 1 million barrels a day while most of the OPEC+ alliance agreed to hold output steady, Bloomberg reported. OPEC+ faces a complex demand outlook as the group decides how to move forward with its output plan month by month. There are signs that parts of the world’s economies are staging a comeback, with a measure of US manufacturing expanding last month at the fastest pace since 2018. But other areas of the demand recovery that had seemed constant are showing some signs of wavering.

The oil markets had a green day today:

  • Crude Oil increased 2.31 USD/BBL or 4.85% to 49.9300
  • Brent increased 2.51 USD/BBL or 4.91% to 53.6000
  • Natural gas increased 0.119 USD/MMBtu or 4.61% to 2.7000
  • Gasoline increased 0.0771 USD/GAL or 5.62 % to 1.4500
  • Heating oil increased 0.06 USD/GAL or 3.86% to 1.5185

The above data was collected around 16:22 EST on Tuesday

 

  • Top commodity gainers: Brent (4.91%), Gasoline (5.62%), Cheese (5.41%) and Milk (4.86%)
  • Top commodity losers: Coffee (-1.19%), Rice (-2.33%), Cocoa (-1.49%), and Bitumen (-2.44%)

The above data was collected around 16:28 EST on Tuesday.

BONDS:

Japan 0.01%(-1bp), US 2’s 0.12%(+0.008%), US 10’s 0.95%(+3bps); US 30’s 2.00%(+0.04%), Bunds -0.58% (+2bp), France -0.34% (+2bp), Italy 0.54% (+2bp), Turkey 12.78% (+15bp), Greece 0.62% (-1bp), Portugal 0.02% (-0bp); Spain 0.04% (+1bp) and UK Gilts 0.21% (+4bp).

 

« Market Talk – January 4, 2021



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