Market Talk – August 12, 2022

ASIA:

India’s consumer inflation eased to 6.71% in July, easing for a third straight month, helped by slower increases in food and fuel prices and adding to expectations that the central bank may rein in the pace of interest rate hikes next month. The year-on-year figure, published by the Office for National Statistics on Friday, was slightly below the 6.78% forecast by economists in a Reuters poll. However, it remained above the central bank’s tolerance band of 2-6% for the seventh consecutive month. Economists said they expect the Reserve Bank of India (RBI) to raise its key interest rate by at least 25 basis points next month as inflation is likely to remain above its tolerance band during this calendar year.

Singapore cut its economic growth forecast for this year yesterday after the economy contracted in the second quarter from the previous three months due to rising inflation and tighter monetary policy, the government said. Moves by central banks around the world to tighten borrowing costs to deal with skyrocketing prices have weighed on global demand for Singapore’s exports, with the government painting a bleak picture for the rest of the year. Singapore’s economy is expected to grow by 3.0 to 4.0 percent this year, up from an earlier forecast of 3 to 5 percent, the Commerce Department said in a statement.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 increased 727.65 points or 2.62% to 28,546.98
  • Shanghai decreased 4.78 points or -0.15% to 3,276.89
  • Hang Seng increased 93.19 points or 0.46% to 20,175.62
  • ASX 200 decreased 38.50 points or -0.54% to 7,032.50
  • Kospi increased 4.16 points or 0.16% to 2,527.94
  • SENSEX increased 130.18 points or 0.22% to 59,462.78
  • Nifty50 increased 39.15 points or 0.22% to 17,698.15

The major Asian currency markets had a mixed day today:

  • AUDUSD increased 0.00102 or 0.14% to 0.71126
  • NZDUSD increased 0.00126 or 0.20% to 0.64476
  • USDJPY increased 0.453 or 0.34% to 133.550
  • USDCNY decreased 0.00651 or -0.10% to 6.73709

Precious Metals:

l Gold increased 8.16 USD/t oz. or 0.46% to 1,797.61

l Silver increased 0.293 USD/t. oz or 1.44% to 20.584

Some economic news from last night:

China:

China Thomson Reuters IPSOS PCSI (Aug) decreased from 71.52 to 69.85

Related:  Market Talk - July 12, 2022

Japan:

Thomson Reuters IPSOS PCSI (Aug) increased from 37.39 to 38.31

Foreign Bonds Buying increased from 37.8B to 827.0B

Foreign Investments in Japanese Stocks increased from -120.9B to 61.0B

India:

Thomson Reuters IPSOS PCSI (MoM) (Aug) decreased from 63.73 to 63.65

South Korea:

Thomson Reuters IPSOS PCSI (MoM) (Aug) decreased from 40.57 to 38.43

Export Price Index (YoY) (Jul) decreased from 23.7% to 16.3%

Import Price Index (YoY) (Jul) decreased from 33.6% to 27.9%

Australia:

HIA New Home Sales (MoM) decreased from 1.9% to -13.1%

Thomson Reuters IPSOS PCSI (MoM) (Aug) decreased from 53.02 to 52.38

New Zealand:

Business NZ PMI (Jul) increased from 50.0 to 52.7

FPI (MoM) (Jul) increased from 1.2% to 2.1%

Some economic news from today:

China:

M2 Money Stock (YoY) (Jul) increased from 11.4% to 12.0%

New Loans (Jul) decreased from 2,810.0B to 679.0B

Outstanding Loan Growth (YoY) (Jul) decreased from 11.2% to 11.0%

Chinese Total Social Financing (Jul) decreased from 5,170.0B to 756.1B

Hong Kong:

GDP (QoQ) (Q2) increased from -2.9% to 1.0%

GDP (YoY) (Q2) increased from -1.4% to -1.3%

India:

Bank Loan Growth increased from 14.0% to 14.5%

Deposit Growth increased from 8.4% to 9.1%

Exports (USD) (Jul) increased from 35.24B to 36.27B

FX Reserves, USD decreased from 573.88B to 572.98B

Imports (USD) (Jul) increased from 66.26B to 66.27B

Trade Balance (Jul) increased from -31.02B to -30.00B

CPI (YoY) (Jul) decreased from 7.01% to 6.71%

Cumulative Industrial Production (Jun) decreased from 12.90% to 12.70%

Industrial Production (YoY) (Jun) decreased from 19.6% to 12.3%

Manufacturing Output (MoM) (Jun) decreased from 20.6% to 12.5%

EUROPE/EMEA:

The International Monetary Fund has warned European governments against interfering with the region’s worsening energy crisis with broad financial support, saying instead that consumers should bear the brunt of higher prices to encourage energy savings and help a wider transition to green energy. The IMF said on Wednesday that governments should seek to protect the most vulnerable households with targeted support, but noted that existing policies aimed at easing rising costs for all consumers would hurt European economies – many of which are already on the brink of recession – and deter the energy transition . Until now, European policymakers have imposed sweeping price controls, subsidies and tax cuts to soften the blow of rising energy prices that have hit the continent hard after Russia’s war in Ukraine and a wider supply glut. Fully offsetting the rise in living costs for the bottom 20% of households would cost governments a comparably lower 0.4% of GDP on average over the whole of 2022, the company said. Doing so for the bottom 40% would cost 0.9%, he added.

Related:  Market Talk - May 27, 2022

The major Europe stock markets had a green day:

l CAC 40 increased 9.19 points or 0.14% to 6,553.86

l FTSE 100 increased 34.98 points or 0.47% to 7,500.89

l DAX 30 increased 101.34 points or 0.74% to 13,795.85

The major Europe currency markets had a mixed day today:

  • EURUSD decreased 0.00611 or -0.59% to 1.02574
  • GBPUSD decreased 0.00618 or -0.51% to 1.21302
  • USDCHF increased 0.00101 or 0.11% to 0.94171

Some economic news from Europe today:

UK:

NIESR Monthly GDP Tracker increased from -0.1% to 0.0%

Business Investment (QoQ) (Q2) increased from -0.6% to 3.8%

GDP (QoQ) (Q2) decreased from 0.8% to -0.1%

GDP (YoY) (Q2) decreased from 8.7% to 2.9%

GDP (MoM) decreased from 0.4% to -0.6%

Industrial Production (MoM) (Jun) decreased from 1.3% to -0.9%

Manufacturing Production (MoM) (Jun) decreased from 1.7% to -1.6%

Monthly GDP 3M/3M Change decreased from 0.4% to -0.1%

Trade Balance (Jun) decreased from -20.67B to -22.85B

Trade Balance Non-EU (Jun) decreased from -9.60B to -12.29B

France:

French CPI (YoY) increased from 5.8% to 6.1%

French CPI (MoM) (Jul) decreased from 0.7% to 0.3%

French HICP (MoM) (Jul) decreased from 0.9% to 0.3%

French HICP (YoY) (Jul) increased from 6.5% to 6.8%

Spain:

Spanish CPI (MoM) (Jul) decreased from 1.9% to -0.3%

Spanish CPI (YoY) (Jul) increased from 10.2% to 10.8%

Spanish HICP (MoM) (Jul) decreased from 1.9% to -0.6%

Spanish HICP (YoY) (Jul) increased from 10.0% to 10.7%

Italy:

Italian Trade Balance (Jun) decreased from -0.062B to -2.166B

Italian Trade Balance EU (Jun) increased from 0.20B to 0.84B

Euro Zone:

Industrial Production (YoY) (Jun) increased from 1.6% to 2.4%

Related:  Market Talk - August 10, 2022

Industrial Production (MoM) (Jun) decreased from 2.1% to 0.7%

US/AMERICAS:

The Federal Reserve will not end its hawkish policy anytime soon, despite a softer inflation reading for July. Richmond Federal Reserve President Thomas Barkin told CNBC that the central bank that more evidence is needed to determine if inflation is indeed waning. “I’d like to see a period of sustained inflation under control, and until we do that I think we’re just going to have to continue to move rates into restrictive territory,” Barkin told CNBC. Furthermore, he said that they want to see inflation running at the 2% target “for a period of time.”

Mexico’s central bank voted to raise rates by three-quarters of a percentage point to 8.5%. This is the highest interest rate for the nation since 2008 when the current government aquired power. Inflation now sits at 8.15%; the highest level in over 20 years.

US Market Closings:

  • Dow advanced 424.38 points or 1.27% to 33,761.05
  • S&P 500 advanced 72.88 points or 1.73% to 4,280.15
  • Nasdaq advanced 267.27 points or 2.09% to 13,047.19
  • Russell 2000 advanced 41.36 points or 2.09% to 2,016.62

Canada Market Closings:

  • TSX Composite advanced 187.93 points or 0.94% to 20,179.81
  • TSX 60 advanced 11.34 points or 0.94% to 1,217.99

Brazil Market Closing:

  • Bovespa advanced 3,046.32 points or 2.78% to 112,764.26

ENERGY:

The oil markets had a mixed day today:

l Crude Oil decreased 1.928 USD/BBL or -2.04% to 92.412

l Brent decreased 1.333 USD/BBL or -1.34% to 98.267

l Natural gas decreased 0.1241 USD/MMBtu or -1.40% to 8.7499

l Gasoline decreased 0.0192 USD/GAL or -0.63% to 3.0523

l Heating oil increased 0.0529 USD/GAL or 1.52% to 3.5369

The above data was collected around 13:05 EST on Friday

l Top commodity gainers: Heating Oil (1.52%), Palm Oil(3.35%), Coffee (1.56%) and Cotton (3.26%)

l Top commodity losers: Cocoa (-2.37%), Aluminum (-3.45%), Zinc (-2.55%) and Soybeans (-3.95%)

The above data was collected around 13:15 EST on Friday.

BONDS:

Japan 0.195%(-0.2bp), US 2’s 3.26% (+0.030%), US 10’s 2.8603% (-2.77bps); US 30’s 3.13% (-0.047%), Bunds 0.9810% (+1.4bp), France 1.5340% (+0.3bp), Italy 3.0620% (+3.9bp), Turkey 16.10% (+7bp), Greece 3.239% (+7bp), Portugal 2.018% (+4.8bp); Spain 2.117% (+4.5bp) and UK Gilts 2.1020% (+4.3bp).

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