Market Talk – September 14, 2021

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ASIA:

China’s sprawling real estate developer, Evergrande, has the distinction of being the world’s most debt-saddled property developer and has been on life support for months. The rating agency Fitch said this week that default “appears probable.” Moody’s, another ratings agency, said Evergrande is out of cash and time. Evergrande is faced with more than $300 billion in debt, hundreds of unfinished residential buildings, and angry suppliers who have shut down construction sites. The company has even started to pay overdue bills by handing over unfinished properties.

China’s factory gate inflation hit a 13-year high in August driven by soaring raw materials prices despite Beijing’s attempts to cool them, putting more pressure on manufacturers in the world’s second-largest economy. The producer price index (PPI) rose 9.5% from a year earlier in August, the National Bureau of Statistics (NBS) said on Thursday, faster than the 9.0% increase tipped in a Reuters poll and the 9.0% reported in July. That was the fastest pace since August 2008.

India’s retail inflation eased to a four-month low in August on softer food prices as supply-side constraints eased following the lifting of pandemic-related restrictions, which may allow the central bank to focus further on economic recovery. Consumer prices rose 5.30% in August from the same month last year, lower than July’s 5.59% annual inflation rate and below a Reuters poll forecast of 5.60%, data released by the Ministry of Statistics showed on Thursday. In April, retail inflation stood at 4.29%. Food prices, which account for nearly half of the inflation basket, rose 3.11% year-on-year in August from 3.96% a month before. RBI governor said the central bank would return to targeting 4% inflation, but the timing of that was not yet decided.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 increased 222.73 points or 0.73% to 30,670.10
  • Shanghai decreased 52.77 points or -1.42% to 3,662.60
  • Hang Seng decreased 311.58 or -1.21% to 25,502.23
  • ASX 200 increased 12.10 points or 0.16% to 7,437.30
  • Kospi increased 20.97 points or 0.67% to 3,148.83
  • SENSEX increased 69.33 points or 0.12% to 58,247.09
  • Nifty50 increased 24.70 points or 0.14% to 17,380.00

 

 

The major Asian currency markets had a negative day today:

  • AUDUSD decreased 0.00354 or -0.48% to 0.73320
  • NZDUSD decreased 0.00078 or -0.11% to 0.71084
  • USDJPY decreased 0.32 or -0.29% to 109.67
  • USDCNY decreased 0.00849 or -0.13% to 6.43394

 

Precious Metals:

  • Gold increased 12.53 USD/t oz. or 0.70% to 1,806.02
  • Silver increased 0.124 USD/t. oz or 0.52% to 23.840

 

Some economic news from last night:

Australia:

House Price Index (QoQ) (Q2) increased from 5.4% to 6.7%

NAB Business Confidence (Aug) increased from -7 to -5

NAB Business Survey (Aug) increased from 10 to 14

South Korea:

M2 Money supply (Jul) increased from 9.40% to 9.90%

Export Price Index (YoY) (Aug) increased from 17.4% to 18.6%

Import Price Index (YoY) (Aug) increased from 19.5% to 21.6%

 

Some economic news from today:

India:

WPI Food (YoY) (Aug) decreased from 3.09% to -1.29%

WPI Fuel (YoY) (Aug) increased from 26.02% to 26.09%

WPI Inflation (YoY) (Aug) increased from 11.16% to 11.39%

WPI Manufacturing Inflation (YoY) (Aug) increased from 11.20% to 11.39%

Exports (USD) (Aug) increased from 33.14B to 33.28B

Imports (USD) (Aug) increased from 47.01B to 47.09B

Trade Balance (Aug) increased from -13.87B to -13.81B

Japan:

Capacity Utilization (MoM) (Jul) decreased from 6.2% to -3.4%

Industrial Production (MoM) (Jul) decreased from 6.5% to -1.5%

Indonesia:

Car Sales (YoY) (Aug) decreased from 163.55% to 123.50%

 

 

EUROPE/EMEA:

BOE Governor Andrew Bailey recently said that the Monetary Policy Committee (MPC) was split 4:4 on the question of conditions were met for hiking borrowing costs. The UK economy benefited from the return to normal in the spring and perhaps from “Freedom Day” – the loosening of most restrictions back in July. On the other hand, jobless claims dropped by only 58,600 in August, less than expected. The more recent data suggests growth is slowing, but the last word belongs to inflation, which the BOE is mandated to keep in check. Economists expect the headline Consumer Price Index (CPI) to leap to 2.9% YoY in August from 2% in July – a dramatic change. The bank’s target is 2% CPI, and any move outside the 1-3% band requires a formal explanation from the governor.

The German economy will pick up steam in the third quarter, but business activity will cool again in the final three months of the year, the economy ministry said on Monday. Europe’s largest economy grew by 1.6% on the quarter from April to June, a weaker rebound than in many other European countries, as supply shortages for semiconductors and other intermediate goods held back the recovery from the pandemic. It added that the spread of new coronavirus mutations and their influence on the infection dynamics could cloud the economic outlook.

 

The major Europe stock markets had a mixed day:

  • CAC 40 decreased 23.96 points or -0.36% to 6,652.97
  • FTSE 100 decreased 34.37 points or -0.49% to 7,034.06
  • DAX 30 increased 21.57 points or 0.14% to 15,722.99

 

 

The major Europe currency markets had a mixed day today:

  • EURUSD increased 0.00135 or 0.11% to 1.18234
  • GBPUSD increased 0.00074 or 0.05% to 1.38464
  • USDCHF decreased 0.0029 or -0.31% to 0.91935

 

Some economic news from Europe today:

UK:

Average Earnings ex Bonus (Jul) decreased from 7.3% to 6.8%

Average Earnings Index +Bonus (Jul) decreased from 8.8% to 8.3%

Claimant Count Change (Aug) decreased from -48.9K to -58.6K

Employment Change 3M/3M (MoM) (Jul) increased from 95K to 183K

Unemployment Rate (Jul) decreased from 4.7% to 4.6%

Swiss:

PPI (YoY) (Aug) increased from 3.3% to 4.4%

PPI (MoM) (Aug) increased from 0.5% to 0.7%

Spain:

Spanish CPI (MoM) (Aug) increased from –0.8% to 0.5%

Spanish CPI (YoY) (Aug) increased from 2.9% to 3.3%

Spanish HICP (YoY) (Aug) increased from 2.9% to 3.3%

Spanish HICP (MoM) (Aug) increased from -1.2% to 0.4%

Norway:

Norges Bank regional network Survey decreased from 1.88 to 1.65

US/AMERICAS:

The US Labor Department announced that consumer prices increased by 5.3% in August on an annualized basis. On a monthly basis, prices rose by just 0.3%, indicating that inflation may be cooling down. The numbers were fairly on par with analysts’ expectations of 5.3% YoY and 0.3% MoM. The CPI rose 0.1% when not factoring in food and energy prices that have become volatile in recent time. Still, the 5.3% annual rise brings inflation to its highest level in 13 years.

Based on CPI data released today, the Senior Citizens League has adjusted their projected cost-of-living for Social Security to 6%-6.1%. In comparison, the cost of living projected for 2021 was 1.3%, amounting $1,543 per month.  The Social Security Administration will announce the official cost-of-living adjustment for 2022 at the end of October after factoring in September’s CPI data.

The Biden Administration is offering the aviation manufacturers $482 million to compensate for losses that occurred during the pandemic. According to the Transportation Department, the money will benefit 313 companies and is expected to secure 22,500 jobs. Over 100,000 aerospace employees lost their jobs amid the pandemic when travel came to a halt. As fears of the delta variant spread, airlines are noticing an uptick in flight cancelations, and the industry remains volatile. The money will come from the $1.9 trillion package that President Biden signed in March 2021, and is not a part of the new proposed multi-trillion dollar package.

US Market Closings:

  • Dow declined 292.06 points or -0.84% to 34,577.57
  • S&P 500 declined 25.68 points or -0.57% to 4,443.05
  • Nasdaq declined 67.82 points or -0.45% to 15,037.76
  • Russell 2000 declined 30.83 points or -1.38% to 2,209.95

 

Canada Market Closings:

  • TSX Composite declined 113.16 points or -0.55% to 20,553.25
  • TSX 60 declined 8.06 points or -0.65% to 1,228.46

 

Brazil Market Closing:

  • Bovespa declined 223.17 points or -0.19% to 116,180.55

 

ENERGY:

 

The oil markets had a green day today:

 

  • Crude Oil increased 0.11 USD/BBL or 0.16% to 70.5500
  • Brent increased 0.16 USD/BBL or 0.22% to 73.6700
  • Natural gas increased 0.031 USD/MMBtu or 0.59% to 5.2620
  • Gasoline increased 0.0139 USD/GAL or 0.64% to 2.1744
  • Heating oil increased 0.0009 USD/GAL or 0.04% to 2.1590

 

The above data was collected around 12:01 EST on Tuesday

 

  • Top commodity gainers: Wheat (1.93%) and Canola (1.52%), Corn (1.56%) and Live Cattle (1.88%)
  • Top commodity losers: Palladium (-5.42%), Aluminum (-2.24%), Lumber (-2.49%), and Methanol (-1.84%)

 

The above data was collected around 12:08 EST on Tuesday.

 

BONDS:

 

Japan 0.046%(+0.20bp), US 2’s 0.207%(-0.01%), US 10’s 1.2853%(-4.06bps); US 30’s 1.8612%(-0.04%),Bunds -0.3350% (-0.7bp), France -0.0110% (-0.9bp), Italy 0.6536% (-3.64bp), Turkey 16.51% (-4bp), Greece 0.7750% (+1.30bp), Portugal 0.222% (-0.6bp); Spain 0.325% (-1.42bp) and UK Gilts 0.7420% (-0.60bp).

 

« Market Talk – September 13, 2021



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