Market Talk – October 16, 2020

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ASIA:

Chinese cotton mills have been told to stop using Australian cotton, deepening fears that Australian produce is being specifically targeted by the Chinese government. Chinese processors set import quotas each year by the Chinese Communist Party but have been verbally warned by the National Development Reform Commission that they will have their intake cut next year if they continue to import Australian product. China buys about two-thirds of Australia’s annual cotton exports, which can be worth more than $2 billion a year. Australia’s Trade Minister Simon Birmingham condemned the move on Friday, issuing his strongest statement on China’s actions since diplomatic tensions with Beijing started deteriorating in 2018.

India has decided not to mandate secondary listings for domestic firms that float shares on a foreign stock exchange as it prepares to announce a new policy within weeks, government sources told Reuters. India is close to drawing up rules for companies to directly float overseas without first having to list shares at home, as a way to help startups attain higher valuations and access capital more easily.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 decreased 96.60 points or -0.41% to 23,410.63
  • Shanghai increased 4.18 points or 0.13% to 3,336.36
  • Hang Seng increased 228.25 points or 0.94% to 24,386.79
  • ASX 200 decreased 33.50 points or -0.54% to 6,176.80
  • Kospi decreased 19.68 points or -0.83% to 2,341.53
  • SENSEX increased 254.57 points or 0.64% to 39,982.98
  • Nifty50 increased 82.10 points or 0.70% to 11,762.45

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.00029 or -0.04% to 0.70863
  • NZDUSD increased 0.00099 or 0.15% to 0.66112
  • USDJPY increased 0.03 or 0.03% to 105.41
  • USDCNY decreased 0.01653 or -0.25% to 6.69517

Precious Metals:

  • Gold decreased 4.97 USD/t oz. or -0.26% to 1,902.85
  • Silver decreased 0.043 USD/t. oz or -0.18% to 24.267

Some economic news from last night:

China:

China Thomson Reuters IPSOS PCSI (Oct) increased from 66.69 to 78.79

Japan:

Thomson Reuters IPSOS PCSI (Oct) increased from 36.72 to 39.54

South Korea:

Export Price Index (YoY) (Sep) increased from -6.7% to -6.2%

Import Price Index (YoY) (Sep) decreased from -10.5% to -11.5%

Unemployment Rate (Sep) increased from 3.2% to 3.9%

Singapore:

Non-Oil Exports (MoM) (Sep) decreased from 10.50% to -11.30%

Non-Oil Exports (YoY) (Sep) decreased from 7.70% to 5.90%

Trade Balance decreased from 5.800B to 3.100B

New Zealand:

Business NZ PMI (Sep) increased from 50.7 to 54.0

RBNZ Offshore Holdings (Sep) decreased from 41.90% to 41.70%

Some economic news from today:

China:

FDI (Sep) increased from 2.60% to 5.20%

India:

FX Reserves, USD increased from 545.64B to 551.51B

EUROPE/EMEA:

Business leaders have warned Boris Johnson that Britain’s economy is ill-prepared for a no-deal Brexit while companies face severe disruption from the coronavirus pandemic. Business groups called for an urgent resolution in the Brexit talks after the prime minister told UK businesses to get ready for trading with the EU on terms “that are more like Australia’s” – code for leaving without a deal and relying on World Trade Organization terms.

According to a CNN Business analysis based on forecasts from Citi and the Institute for Fiscal Studies, a no Brexit deal could cost UK economy USD 25 billion in 2021 compared to a scenario where a limited free trade deal is agreed. That would put the country even further behind on its efforts to recover from the historic shock triggered by the pandemic. According to Mujtaba Rahman, managing director for Europe at Eurasia Group, a political risk consultancy, fishing rights and the framework for resolving future disputes remain key sticking points for both sides.

The major Europe stock markets had a green day:

  • CAC 40 increased 98.44 points or 2.04% to 4,935.86
  • FTSE 100 increased 87.06 points or 1.49% to 5,919.58
  • DAX 30 increased 205.24 points or 1.62% to 12,908.99

The major Europe currency markets had a green day today:

  • EURUSD increased 0.00122 or 0.10% to 1.17193
  • GBPUSD increased 0.00195 or 0.15% to 1.29216
  • USDCHF increased 0.00097 or 0.11% to 0.91555

Some economic news from Europe today:

UK:

Car Registration (YoY) (Sep) increased from -5.8% to -4.4%

Car Registration (MoM) (Sep) increased from -50.1% to 276.1%

Italy:

Italian Car Registration (MoM) (Sep) increased from -35.0% to 75.8%

Italian Car Registration (YoY) (Sep) increased from -0.4% to 9.5%

Italian CPI (YoY) (Sep) decreased from -0.5% to -0.6%

Italian CPI (MoM) (Sep) decreased from -0.6% to -0.7%

Italian CPI Ex Tobacco (MoM) (Sep) increased from -0.7% to -0.6%

Italian HICP (YoY) (Sep) decreased from -0.9% to -1.0%

Italian HICP (MoM) (Sep) decreased from 1.0% to 0.9%

Italian Trade Balance (Aug) decreased from 9.689B to 3.928B

Italian Trade Balance EU (Aug) decreased from 3.00B to 0.35B

Germany:

German Car Registration (MoM) (Sep) increased from -20.3% to 5.6%

German Car Registration (YoY) (Sep) increased from -20.0% to 8.4%

France:

French Car Registration (YoY) (Sep) increased from -19.8% to -3.0%

French Car Registration (MoM) (Sep) increased from -42.1% to 62.4%

Euro Zone:

Core CPI (MoM) (Sep) remain the same at 0.2%

Core CPI (YoY) (Sep) remain the same at 0.2%

CPI (YoY) (Sep) remain the same at -0.3%

CPI (MoM) (Sep) increased from -0.4% to 0.1%

CPI ex Tobacco (YoY) (Sep) decreased from -0.3% to -0.5%

CPI ex Tobacco (MoM) (Sep) increased from -0.4% to 0.1%

HICP ex Energy & Food (YoY) (Sep) remain the same at 0.4%

HICP ex Energy and Food (MoM) (Sep) increased from -0.5% to 0.1%

Trade Balance (Aug) decreased from 27.7B to 14.7B

US/AMERICAS:

Consumer spending is on the rise in the US after advancing 1.9% in September. As consumer spending accounts for two-thirds of America’s GDP, numerous analysts’ look at this figure to gauge current economic conditions and therefore the Dow saw notable gains in early morning trading after the figures were released. Analysts had anticipated a rise of only 0.4% for September. Yes, some are anticipating a huge spike in spending for the third-quarter once it is announced at the end of the month–the Atlanta Federal Reserve optimistically anticipates Q3 consumer spending growth to increase by 35.2%.

International Monetary Fund (IMF) Managing Director Kristalina Georgieva is encouraging the US to send out a second round of stimulus aid. We have to recognize that in the first round of action that was done very effectively and of course, it would be highly desirable that the fiscal lever is also put in place,” Georgieva said. President Trump had been advocating a second round of stimulus checks, but the Republicans and Democrats reached a stalemate after weeks of unproductive budget allocation discussions.

Despite a loophole allowing Canadians to fly into the US, the Canadian government reaffirmed their stance that the border is closed to their southern neighbor. “The US is not in a place where we would feel comfortable reopening those borders,” Prime Minister Justin Trudeau stated. “We will continue to make sure that Canadian safety is top of mind when we move forward. We see the cases in the United States and elsewhere around the world, and we need to continue to keep these border controls in place,” he stated.

US Market Closings:

  • Dow advanced 112.11 points or 0.39% to 28,606.31
  • S&P 500 advanced 0.47 of a point or 0.01% to 3,483.81
  • Nasdaq declined 42.31 points or -0.36% to 11,671.55
  • Russell 2000 declined 5.07 points or -0.31% to 1,633.81

Canada Market Closings:

  • TSX Composite declined 62.28 points or -0.38% to 16,438.75
  • TSX 60 declined 3.96 points or -0.4% to 982.67

Brazil Market Closings:

  • Bovespa declined 744.94 points or -0.75% to 98,309.12

ENERGY:

The oil markets had a mixed day today:

  • Crude Oil decreased 0.1 USD/BBL or -0.24% to 40.8600
  • Brent decreased 0.19 USD/BBL or -0.44% to 42.9700
  • Natural gas increased 0.07 USD/MMBtu or 2.52% to 2.8440
  • Gasoline decreased 0.015 USD/GAL or -1.27% to 1.1656
  • Heating oil decreased 0.0112 USD/GAL or -0.94% to 1.1769

The above data was collected around 13:11 EST on Friday

  • Top commodity gainers: Natural Gas (2.52%), Rubber (2.97%), Sugar (1.90%), and Bitumen (21.85%)
  • Top commodity losers: Coffee (-2.01%), Rice (-1.00%), Orange Juice (-1.58%), and Gasoline (-1.27%)

The above data was collected around 13:18 EST on Friday.

BONDS:

Japan 0.02%(-1bp), US 2’s 0.14% (+0bps), US 10’s 0.74%(+1bps); US 30’s 1.53%(+2bps), Bunds -0.62% (-1bp), France -0.35% (-1bp), Italy 0.66% (-4bp), Turkey 13.32% (+2bp), Greece 0.82% (-1bp), Portugal 0.12% (-4bp); Spain 0.12% (+3bp) and UK Gilts 0.18% (-1bp).

 

« Market Talk – October 15, 2020



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