Market Talk – August 17, 2022

ASIA:

Japan’s imports jumped to a record amount in July, boosted by global fuel inflation and a weak yen, outweighing exports and deepening the trade deficit, in a sign of a further worsening in the terms of trade for the export-oriented economy. Ministry of Finance data showed on Wednesday exports grew 19.0% in July from a year earlier, posting 17 straight months of gains led by U.S.-bound shipments of cars and China-bound chip-related shipments, beating expectations for a 18.2% gain. Imports rose 47.2% in July year-on-year to a record 10.2 trillion yen ($76.06 billion), driven by costs of crude oil, coal and liquid natural gas. That beat expectations for a 45.7% rise and overwhelmed exports, bringing the trade deficit to 1.4368 trillion yen in July. It marked a full straight year of monthly trade deficits, the longest streak since the 32-month run of shortfalls to February 2015. The yen’s 23.1% fall from a year earlier added to higher import costs, the data showed.

India’s wholesale inflation rose 13.93% from a year earlier in July, helped by lower food price increases, but remained in double digits for the 16th month, amid expectations that the central bank will raise key interest rates again next month. Inflation based on the wholesale price index, which is similar to producer prices, rose at a lower-than-expected 14.20% in a Reuters poll in July, compared with 15.18% the previous month. Wholesale food prices, which contributed about a quarter of the WPI index, rose 9.41% in July from 12.41% in June, although fruit prices rose 29.44% and vegetable prices 18.25%, the data showed. The May WPI inflation rate was surprisingly revised to a record 16.63% y-o-y from the earlier estimate of 15.88%. Consumer inflation in India fell to 6.71% in July, separate data released last week showed, easing for a third straight month, helped by slower increases in food and fuel prices.

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The major Asian stock markets had a mixed day today:

  • NIKKEI 225 increased 353.86 points or 1.23% to 29,222.77
  • Shanghai increased 14.64 points or 0.45% to 3,292.53
  • Hang Seng increased 91.93 points or 0.46% to 19,922.45
  • ASX 200 increased 22.30 points or 0.31% to 7,127.70
  • Kospi decreased 17.05 points or -0.67% to 2,516.47
  • SENSEX increased 417.92 points or 0.70% to 60,260.13
  • Nifty50 increased 119.00 points or 0.67% to 17,944.25

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.00941 or -1.34% to 0.69260
  • NZDUSD decreased 0.00693 or -1.09% to 0.62737
  • USDJPY increased 1.142 or 0.85% to 135.397
  • USDCNY increased 0.00569 or 0.08% to 6.79759

Precious Metals:

l Gold decreased 13.03 USD/t oz. or -0.73% to 1,762.51

l Silver decreased 0.308 USD/t. oz or -1.53% to 19.810

Some economic news from last night:

Japan:

Adjusted Trade Balance decreased from -1.95T to -2.31T

Exports (YoY) (Jul) decreased from 19.3% to 19.0%

Imports (YoY) (Jul) increased from 46.1% to 47.2%

Trade Balance (Jul) decreased from -1,398.5B to -1,436.8B

Australia:

Wage Price Index (QoQ) (Q2) remain the same at 0.7%

New Zealand:

RBNZ Interest Rate Decision increased from 2.5% to 3.0%

PPI Input (QoQ) (Q2) decreased from 3.4% to 3.1%

Some economic news from today:

Hong Kong:

Unemployment Rate (Jul) decreased from 4.7% to 4.3%

EUROPE/EMEA:

Consumer price inflation in Britain jumped to 10.1% in July, the most since February 1982, becoming the first major wealthy economy to post double-digit price growth as rising food costs intensified pressure on household budgets. Despite warning this month that a recession was likely, the BoE raised its key rate by 0.5% to 1.75% – the first half-point increase since 1995. Inflation peaked at 13.3% in October, when further regulated energy prices for households. grow. Citi economist Benjamin Nabarro said he now expects inflation to peak above 15% early next year after the latest data. Two-year UK government bond yields – which are sensitive to interest rate expectations – hit their highest levels since 2008 and investors pegged BoE rates at 3.75% around March 2023, up from 3.25% previously.

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The major Europe stock markets had a negative day:

  • CAC 40 decreased 64.26 points or -0.97% to 6,528.32
  • FTSE 100 decreased 20.31 points or -0.27% to 7,515.75
  • DAX 30 decreased 283.41 points or -2.04% to 13,626.71

The major Europe currency markets had a mixed day today:

  • EURUSD decreased 0.00062 or -0.06% to 1.01671
  • GBPUSD decreased 0.00568 or -0.47% to 1.20426
  • USDCHF increased 0.00367 or 0.39% to 0.95297

Some economic news from Europe today:

UK:

CPI (MoM) (Jul) decreased from 0.8% to 0.6%

CPI (YoY) (Jul) increased from 9.4% to 10.1%

PPI Input (MoM) (Jul) decreased from 1.8% to 0.1%

Euro Zone:

Employment Change (YoY) decreased from 2.9% to 2.4%

Employment Change (QoQ) decreased from 0.6% to 0.3%

Employment Overall (Q2) increased from 162,977.9K to 163,412.6K

GDP (YoY) (Q2) decreased from 4.0% to 3.9%

GDP (QoQ) (Q2) decreased from 0.7% to 0.6%

US/AMERICAS:

The Federal Reserve indicated in their minutes report that their hawkish sentiment is not going to wane anytime soon. Last month, the central bank approved a 75 bps hike to combat inflation. “With inflation remaining well above the Committee’s objective, participants judged that moving to a restrictive stance of policy was required to meet the Committee’s legislative mandate to promote maximum employment and price stability,” the minutes stated. Participants believe a 2.25%-2.5% range for rates is “neutral,” and indicated they would feel comfortable raising rates again at the September meeting. The central bank will likely not reverse course until inflation is “firmly” at their 2% target.

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US Market Closings:

  • Dow declined 171.29 points or -0.5% to 33,980.72
  • S&P 500 declined 31.14 points or -0.72% to 4,274.06
  • Nasdaq declined 164.43 points or -1.25% to 12,938.12
  • Russell 2000 declined 33.22 points or -1.64% to 1,987.31

Canada Market Closings:

  • TSX Composite declined 88.53 points or -0.44% to 20,181.44
  • TSX 60 declined 4.41 points or -0.36% to 1,221.33

Brazil Market Closing:

  • Bovespa advanced 195.38 points or 0.17% to 113,707.76

ENERGY:

The oil markets had a mixed day today:

l Crude Oil increased 1.155 USD/BBL or 1.34% to 87.685

l Brent increased 1.091 USD/BBL or 1.18% to 93.431

l Natural gas decreased 0.0672 USD/MMBtu or -0.72% to 9.2618

l Gasoline increased 0.0182 USD/GAL or 0.63% to 2.9189

l Heating oil increased 0.1027 USD/GAL or 2.95% to 3.5829

The above data was collected around 13:15 EST on Wednesday

l Top commodity gainers: Heating Oil (2.95%), Crude Oil(1.34%), Soybeans (1.46%) and Cocoa (3.60%)

l Top commodity losers: Zinc (-4.10%), Cotton (-3.17%), Oat (-3.74%) and Orange Juice (-2.60%)

The above data was collected around 13:24 EST on Wednesday.

BONDS:

Japan 0.184%(+1.4bp), US 2’s 3.32% (+0.074%), US 10’s 2.9059% (+8.19bps); US 30’s 3.16% (+0.046%), Bunds 1.0880% (+10.9bp), France 1.6640% (+12.4bp), Italy

3.3140% (+17.9bp), Turkey 16.31% (-3bp), Greece 3.513% (+18.4bp), Portugal 2.167% (+16.7bp); Spain 2.258% (+16bp) and UK Gilts 2.2890% (+16.3bp).

Original Article

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