Market Talk – May 10, 2021

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ASIA:

The Chinese yuan advanced to its strongest level since 2018 as it defied attempts by the central bank to slow its gains amid an improving outlook for China’s economy. The currency rose as much as 0.3% to 6.4114 a dollar, the strongest since June 2018, after breaching its previous year-to-date high of 6.4245 reached in January. The move follows a slump in the greenback on Friday after U.S. jobs data missed economists’ estimates. The yuan’s ascent comes even after the central bank tried to cap its gains by setting the daily fix at a weaker-than-expected level on Monday. China’s currency has climbed 1.8% this year to outperform all its Asian peers, and a rapid appreciation threatens to erode the competitiveness of the nation’s exports.

China has begun gradually reducing its debt-to-GDP ratio without compromising support for the nation’s post-pandemic economic recovery, the central bank has said in a new report. The non-financial leverage ratio stood at 276.8 per cent at the end of March, 2.6 percentage points lower than the end of December, following a fall of 1.6 percentage points in the fourth quarter, the People’s Bank of China (PBOC) said.

The European Union and India agreed to resume stalled free-trade negotiations and seek closer cooperation to combat climate change at a virtual summit on Saturday, as concerns about China bring Brussels and New Delhi closer. India’s Prime Minister Narendra Modi spoke to EU chief executive Ursula von der Leyen on Monday about reviving the trade talks, which have been stalled since 2013. A 2020 study by the European Parliament put the potential benefits of a trade deal with India for the EU at up to 8.5 billion euros ($10 billion).

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 increased 160.52 points or 0.55% to 29,518.34
  • Shanghai decreased 9.12 points or 0.27% to 3,427.99
  • Hang Seng decreased 14.99 points or -0.05% to 28,595.66
  • ASX 200 increased 92.00 points or 1.30% to 7,172.80
  • Kospi increased 52.10 points or 1.63% to 3,249.30
  • SENSEX increased 295.94 points or 0.60% to 49,502.41
  • Nifty50 increased 119.20 points or 0.80% to 14,942.35

 

 

The major Asian currency markets had a mixed day today:

  • AUDUSD increased 0.00298 or 0.38% to 0.78723
  • NZDUSD increased 0.00189 or 0.26% to 0.72973
  • USDJPY increased 0.14 or 0.13% to 108.72
  • USDCNY decreased 0.0034 or -0.05% to 6.41063

 

Precious Metals:

  • Gold increased 10.29 USD/t oz. or 0.56% to 1,840.77
  • Silver increased 0.10 USD/t. oz or 0.35% to 27.526

 

Some economic news from last night:

Australia:

NAB Business Confidence (Apr) increased from 17 to 26

NAB Business Survey (Apr) increased from 25 to 32

Retail Sales (MoM) (Mar) increased from -0.8% to 1.3%

Retail Sales (QoQ) (Q1) decreased from 2.5% to -0.5%

 

Some economic news from today:

Indonesia:

Consumer Confidence (Apr) increased from 93.4 to 101.5

 

 

EUROPE/EMEA:

The National Institute of Economic and Social Research (NIESR) said Britain’s economy is on track to suffer more than £700bn of lost output caused by Covid-19, made worse by the government’s mishandling of the health emergency and Brexit. UK’s leading economics think tank also said that the UK was facing worse permanent damage than other rich nations due to a “poor Covid-19 response” from Boris Johnson’s government. The UK’s oldest independent economic research institute said the level of GDP was on track to be almost 4% lower in 2025 than it would have been without the pandemic. Equivalent to £1,350 per person a year, it said the cumulative loss of economic output would be worth £727bn over the five-year period.

BlackRock has raised $940m (€773m) in a first close of a diversified private debt fund designed for UK pension schemes. The fund aims to provide investors with a yield premium relative to liquid credit markets, reliable income, and capital preservation. Private debt is becoming a more significant part of investor portfolios. UK public pension pools Border to Coast, Brunel Pension Partnership and London CIV all recently announced new private debt arrangements.

The UAE economy performed better than expected in 2020 despite the current global challenges brought about by the COVID-19 pandemic, said UAE Minister of Economy, following the issuance of the preliminary results of the country’s economic performance by the Federal Competitiveness

and Statistics Centre. The preliminary results of the UAE’s economic performance for 2020 revealed that the country’s macroeconomic indicators had seen a relatively limited decline in the gross domestic product and in the non-oil GDP last year by 6.1 per cent and 6.2 per cent, respectively, at constant (real) prices compared to 2019. This is comparatively low decline considering that the slump in major global economies reached several times lower.

 

The major Europe stock markets had a mixed day:

  • CAC 40 increased 0.48 points or 0.01% to 6,385.99
  • FTSE 100 decreased 6.03 points or -0.08% to 7,123.68
  • DAX 30 increased 0.76 points or 0.00% to 15,400.41

 

 

The major Europe currency markets had a mixed day today:

  • EURUSD increased 0.00047 or 0.04% to 1.21677
  • GBPUSD increased 0.01583 or 1.13% to 1.41426
  • USDCHF decreased 0.00165 or -0.18% to 0.89875

 

Some economic news from Europe today:

Norway:

Core CPI YTD (Apr) decreased from 2.7% to 2,0%

Core Inflation (MoM) (Apr) increased from 0.3% to 0.4%

CPI (YoY) (Apr) decreased from 3.1% to 3.0%

CPI (MoM) (Apr) increased from -0.3% to 0.3%

PPI (YoY) (Apr) increased from 18.4% to 22.5%

UK:

Halifax House Price Index (YoY) increased from 6.5% to 8.2%

Halifax House Price Index (MoM) (Apr) increased from 1.1% to 1.4%

Euro Zone:

Sentix Investor Confidence (May) increased from 13.1 to 21.0

 

US/AMERICAS:

Chicago Federal Reserve President Charles Evans is staying firm on his monetary policy stance until there is a notable uptick in employment and inflation. Evans admitted numerous sectors are experiencing “growing pains” as the US “rests” its economy. He stated that he hopes April’s poor jobs report was simply a one-month lull and that the US will begin to add jobs rapidly. “To average 2% you’ve got to be above 2% for some period of time. So inflation rates of 2.5% don’t bother me as long as it’s consistent with averaging 2% over some period of time,” Evans commented on the Fed’s inflation target, noting it would take time for the data to settle.

Richmond Federal Reserve President Thomas Barkin believes price pressure will create inflation in 2021 before reversing in 2022. “Inflation is a recurring phenomenon. Prices go up this year, prices go up next year. I think it’s fair to argue the question of whether the combination of supply chain constraints and stimulus-driven price increases actually revert next year,” Barkin stated. Barkin is also paying close attention to labor data stating he would like to see more substantial growth.

The Federal Reserve noted in its Financial Stability Report that asset inflation is becoming a cause for concern. Federal Reserve Chairman Jerome Powell stated that valuations are proper so long as interest rates remain low. However, the report released last week shows that high asset prices reflected in low Treasury yields may be vulnerable to significant declines should risk appetite fall.”

US Market Closings:

  • Dow declined 34.94 points or -0.1% to 34,742.82
  • S&P 500 declined 44.17 points or -1.04% to 4,188.43
  • Nasdaq declined 350.38 points or -2.55% to 13,401.86
  • Russell 2000 declined 58,93 points or -2.59% to 2,212.7

 

Canada Market Closings:

  • TSX Composite declined 110.86 points or -0.57% to 19,361.88
  • TSX 60 declined 5.62 points or -0.48% to 1,155.97

 

Brazil Market Closing:

  • Bovespa declined 129.08 points or -0.11% to 121,909.03

 

ENERGY:

 

The oil markets had a mixed day today:

 

  • Crude Oil decreased 0.2 USD/BBL or -0.31% to 64.7000
  • Brent decreased 0.14 USD/BBL or -0.21% to 68.1400
  • Natural gas decreased 0.02 USD/MMBtu or -0.68% to 2.9380
  • Gasoline increased 0.0072 USD/GAL or 0.34% to 2.1341
  • Heating oil increased 0.0023 USD/GAL or 0.11% to 2.0129

 

  • Top commodity gainers: Rubber (1.86%), Coal (2.45%), Palladium (2.19%) and Aluminum (1.98%)
  • Top commodity losers: Wheat (-3.56%), Lumber (-3.41%), Palm Oil (-1.74%), and Cotton (-2.10%)

The above data was collected around 12:03 EST on Monday.

 

BONDS:

 

Japan 0.0880%(+0bp), US 2’s 0.15%(+0.004%), US 10’s 1.5701%(-0.89bps); US 30’s 2.2946%(+0.02%), Bunds -0.2130% (+1bp), France 0.165% (-0.3bp), Italy 0.885% (-3.3bp), Turkey 17.30% (+1bp), Greece 0.991% (-2bp), Portugal 0.498% (-1.1bp); Spain 0.472% (-2bp) and UK Gilts 0.789% (+1.4bp).

 

  • US 3-Month Bill Auction remain the same at 0.015%
  • US 6-Month Bill Auction remain the same at 0.035%
  • French 3-Month BTF Auction decreased from -0.630% to -0.636%
  • French 6-Month BTF Auction decreased from -0.627% to -0.638%
  • French 12-Month BTF Auction decreased from -0.619% to -0.628%

 

« Market Talk – May 7, 2021



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