Market Talk – August 22, 2022

ASIA:

China cut its benchmark interest rate and cut its benchmark mortgage loan by a wider margin on Monday, adding to last week’s easing measures as Beijing ramps up efforts to revive an economy battered by an asset crisis and a resurgence of COVID-19 cases. The People’s Bank of China (PBOC) is walking a tightrope in its efforts to revive growth. Too much stimulus could increase inflationary pressures and the flight of venture capital as the Federal Reserve and other economies aggressively raise interest rates. The one-year prime rate (LPR) was cut by 5 basis points (bps) to 3.65% on Monday at the central bank’s monthly fix, while the five-year LPR was cut by 15 basis points to 4.30%. The LPR cut came after the PBOC last week surprised markets by cutting the medium-term lending facility (MLF) rate and another short-term liquidity tool, as a raft of recent data showed the economy was losing momentum amid slowing global growth and rising borrowing costs. in many developed countries.

India has sufficient wheat stocks and there is no plan to import the grain, the government clarified on Sunday after some media reported that India was planning to import wheat. Local wheat prices jumped to a record 24,453 rupees ($305.97) per tonne on Friday. That was up nearly 16% from recent lows that followed the government’s surprise export ban on May 14, ending hopes that India could fill a market gap left by a grain shortage in Ukraine. The rise in local prices prompted traders to speculate that India would allow imports to boost supplies that have dwindled after a heat wave hit production.

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The major Asian stock markets had a mixed day today:

  • NIKKEI 225 decreased 135.83 points or -0.47% to 28,794.50
  • Shanghai increased 19.72 points or 0.61% to 3,277.79
  • Hang Seng decreased 116.05 points or -0.59% to 19,656.98
  • ASX 200 decreased 67.60 points or -0.95% to 7,046.90
  • Kospi decreased 30.19 points or -1.21% to 2,462.50
  • SENSEX decreased 872.28 points or -1.46% to 58,773.87
  • Nifty50 decreased 267.75 points or -1.51% to 17,490.70

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.00026 or -0.04% to 0.68738
  • NZDUSD decreased 0.00024 or -0.04% to 0.61676
  • USDJPY increased 0.553 or 0.40% to 137.445
  • USDCNY increased 0.03207 or 0.47% to 6.86667

Precious Metals:

l Gold decreased 12.64 USD/t oz. or -0.72% to 1,735.19

l Silver decreased 0.060 USD/t. oz or -0.32% to 18.965

Some economic news from last night:

China:

PBoC Loan Prime Rate decreased from 3.70% to 3.65%

Some economic news from today:

Hong Kong:

CPI (YoY) (Jul) increased from 1.80% to 1.90%

EUROPE/EMEA:

Britain saw its biggest drop in output in more than 300 years in 2020 as it faced the brunt of the COVID-19 pandemic while shrinking more than any other major economy, updated official data showed on Monday. Gross domestic product fell by 11.0% in 2020, the statistics office said. This was a bigger fall than any of the previous ONS estimates and the biggest fall since 1709, according to historical data hosted by the Bank of England. The ONS’s original estimates already suggested that in 2020 Britain would suffer the biggest drop in output since the ‘Great Freeze’ of 1709. However, the ONS recently revised the scale of the fall to 9.3%, the biggest fall since just after the world war. One.

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Germany has a good chance of getting through the coming winter without taking drastic measures, but still faces difficult times and must prepare for Russia to further tighten gas supplies, Economy Minister Robert Habeck said on Monday. Eurostat also said earlier this year that Belgium had the highest energy inflation in the European Union and the federal government cut VAT on electricity amid measures to lower consumer bills. In Belgium, a household using 2,000 kWh a year now faces a bill of about €570 a year with Ecopower, half the cheapest commercial provider, according to the Flemish regulator’s calculator.

The major Europe stock markets had a negative day:

l CAC 40 decreased 117.09 points or -1.80% to 6,378.74

l FTSE 100 decreased 16.58 points or -0.22% to 7,533.79

l DAX 30 decreased 313.95 points or -2.32% to 13,230.57

The major Europe currency markets had a mixed day today:

  • EURUSD decreased 0.00978 or -0.97% to 0.99411
  • GBPUSD decreased 0.00632 or -0.53% to 1.17635
  • USDCHF increased 0.00553 or 0.58% to 0.96443

US/AMERICAS:

A Redfin analysis determined that Americans are flocking to suburban centers outside the city, but doing so is costing them a premium. Jersey City, New Jersey, saw rental prices rise 66.25% in the last year from $3,308 to $5,500. Second on the list is Boston, Massachusetts, where rental costs have reached $4,878 from $4,164 a year prior. California towns saw a dramatic spike in rental prices as Palo Alto increased 31.34% YoY, Glendale 36.32% YoY, Santa Monica 15.07% YoY, and San Diego 25.85% YoY.

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Airport disruptions are causing travel congestion across the country after nearly 8,000 flights leaving from the US were delayed this Sunday. An additional 2,300 flights were delayed this Monday, with an additional 500 cancelations.  Transportation Secretary Pete Buttigieg is blaming the airlines for a lack of transparency after calling the delays “unacceptable.”

US Market Closings:

  • Dow declined 641.22 points or -1.9% to 33,065.52
  • S&P 500 declined 90.13 points or -2.13% to 4,138.35
  • Nasdaq declined 323.64 points or -2.55% to 12,381.57
  • Russell 2000 declined 41.6 points or -1.23% to 1,915.74

Canada Market Closings:

  • TSX Composite declined 136.46 points or -0.68% to 19,974.92
  • TSX 60 declined 7.26 points or -0.6% to 1,210.67

Brazil Market Closing:

  • Bovespa declined 995.68 points or -0.89% to 110,500.53

ENERGY:

The oil markets had a mixed day today:

l Crude Oil decreased 0.270 USD/BBL or -0.30% to 90.500

l Brent increased 0.114 USD/BBL or 0.12% to 96.834

l Natural gas increased 0.4394 USD/MMBtu or 4.71% to 9.7754

l Gasoline decreased 0.1328 USD/GAL or -4.40% to 2.8847

l Heating oil increased 0.0727 USD/GAL or 1.96% to 3.7732

The above data was collected around 16:03 EST on Monday

l Top commodity gainers: Natural Gas (4.71%), Soybeans(2.57%), Coffee (3.87%) and Canola (3.47%)

l Top commodity losers: Palladium (-6.22%), Lumber(-3.81%), Platinum (-2.52%) and Gasoline (-4.40%)

The above data was collected around 16:14 EST on Monday.

BONDS:

Japan 0.219%(+2bp), US 2’s 3.32% (+0.058%), US 10’s 3.0294% (+4.04bps); US 30’s 3.23% (+0.006%), Bunds 1.301% (+6.7bp), France 1.8920% (+8.5bp), Italy 3.6270% (+13.8bp), Turkey 13.94% (-235bp), Greece 3.781% (+8.9bp), Portugal 2.412% (+11.6bp); Spain 2.506% (+12.8bp) and UK Gilts 2.5160% (+10.4bp).

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