Market Talk – August 29, 2022

ASIA:

Profits at China’s industrial firms sank in July, reversing previous gains as fresh COVID-19 curbs dragged down demand and squeezed factory margins, while power shortages due to heatwaves threatened production. Profits at China’s industrial firms fell 1.1% in January-July from a year earlier, wiping out the 1.0% growth logged during the first six months, the National Bureau of Statistics said on Saturday. In July, China’s industrial output growth slowed to 3.8% on-year from 3.9% in June. Factory production and activities in major manufacturing hubs like Shenzhen and Tianjin were hit in the month as fresh COVID curbs were imposed.

India likely saw strong double-digit economic growth last quarter, but economists polled by Reuters expected the pace to more than halve this quarter and slow further by the end of the year as interest rates rise. Growth is forecast to slow sharply this quarter to an annualized 6.2% from the median forecast of 15.2% in Q2, supported mainly by year-over-year statistical comparisons rather than new momentum, before slowing further to 4, 5% in October to December. The median expectation for growth in 2022 was 7.2%, according to an Aug. 22-26 Reuters poll, but economists said the solid growth rate masked how quickly the economy is expected to slow in the coming months.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 decreased 762.42 points or -2.66% to 27,878.96
  • Shanghai increased 4.50 points or 0.14% to 3,240.73
  • Hang Seng decreased 146.82 points or -0.73% to 20,023.22
  • Kospi decreased 54.14 points or -2.18% to 2,426.89
  • ASX 200 decreased 138.60 points or -1.95% to 6,965.50
  • SENSEX decreased 861.25 points or -1.46% to 57,972.62
  • Nifty50 decreased 246.00 points or -1.40% to 17,312.90
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The major Asian currency markets had a green day today:

  • AUDUSD increased 0.00117 or 0.17% to 0.69033
  • NZDUSD increased 0.00236 or 0.38% to 0.61566
  • USDJPY increased 1.256 or 0.91% to 138.776
  • USDCNY increased 0.0218 or 0.32% to 6.91610

Precious Metals:

l Gold increased 3.63 USD/t oz. or 0.21% to 1,740.49

l Silver decreased 0.016 USD/t. oz or -0.08% to 18.864

Some economic news from last night:

Australia:

Retail Sales (MoM) (Jul) increased from 0.2% to 1.3%

Some economic news from today:

Japan:

Coincident Indicator (MoM) decreased from 4.1% to 3.7%

Leading Index (MoM) increased from -0.6% to -0.3%

Leading Index decreased from 101.2 to 100.9

EUROPE/EMEA:

Economists at Goldman Sachs have sharply cut forecasts for UK growth and expect a recession to start later this year as the impact of high inflation on household disposable incomes hits consumption. Goldman expects a recession to begin in the fourth quarter of 2022 and forecasts that the economy will shrink by 0.6% in 2023. Britain’s energy bills will rise by 80% from October to an average of £3,549 ($4,188) a year, the regulator said on Friday, the latest example of what politicians have called a “cost-of-living crisis”.

Belgium backed the introduction of price caps for EU gas and electricity hubs, as well as suspending trade in the event of “irrational market behaviour,” according to a memo seen by Reuters on Monday. The 27-member EU is looking for ways to deal with soaring energy prices, including discussions on price caps for markets spooked by Russia’s invasion of Ukraine and cuts to gas supplies to Europe. Eurostat said earlier this year that Belgium has the highest energy inflation in the EU and the government in Brussels has tinkered with taxes and tariffs to ease consumer pain. She also called for reforms of the EU energy market. The Belgian government also mentioned that with LNG terminals and pipelines connecting Europe and the world, wholesale prices in Europe should not be significantly higher than in the US Henry Hub or Asia’s JKM.

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The major Europe stock markets had a negative day:

  • CAC 40 decreased 51.98 points or -0.83% to 6,222.28
  • FTSE 100 closed
  • DAX 30 decreased 78.48 points or -0.61% to 12,892.99

The major Europe currency markets had a mixed day today:

  • EURUSD increased 0.00364 or 0.37% to 0.99993
  • GBPUSD decreased 0.00219 or -0.19% to 1.17165
  • USDCHF increased 0.00246 or 0.25% to 0.96876

US/AMERICAS:

The move toward electric vehicle production in the US has led to numerous companies investing in expansion. LG Energy Solution and Honda Motor announced plans to invest $4.4 billion into a new electric battery production plant. The companies issued a joint statement in which they said they expect to begin production by 2025.

The Bank of Canada announced plans to introduce new policymakers outside the central bank. Deputy Governor Time Lane, set to retire in September, will be replaced by an unknown candidate under a two-year policy. Governor Tiff Macklem said the bank must “adapt and evolve,” and is calling for multiple outsiders to offer their perspectives.

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US Market Closings:

  • Dow declined 184.41 points or -0.57% to 32,098.99
  • S&P 500 declined 27.05 points or -0.67% to 4,030.61
  • Nasdaq declined 124.04 points or -1.02% to 12,017.67
  • Russell 2000 declined 16.89 points or -0.89% to 1,882.94

Canada Market Closings:

  • TSX Composite declined 37.17 points or -0.19% to 19836.12
  • TSX 60 declined 2.15 points or -0.18% to 1,198.56

Brazil Market Closing:

  • Bovespa advanced 24.26 points or 0.02% to 112,323.12

ENERGY:

The oil markets had a mixed day today:

l Crude Oil increased 2.821 USD/BBL or 3.03% to 95.881

l Brent increased 2.866 USD/BBL or 2.84% to 103.856

l Natural gas increased 0.0634 USD/MMBtu or 0.68% to 9.3594

l Gasoline decreased 0.0063 USD/GAL or -0.22% to 2.8450

l Heating oil decreased 0.0317 USD/GAL or -0.79% to 3.9759

The above data was collected around 12:09 EST on Monday

l Top commodity gainers: Crude Oil (3.03%), Brent (2.84%), Wheat (4.87%) and Lean Hogs (1.83%)

l Top commodity losers: Lumber (-2.44%), Canola (-1.55%), Copper (-2.17%) and Soybeans (-1.70%)

The above data was collected around 12:17 EST on Monday.

BONDS:

Japan 0.240%(+2bp), US 2’s 3.43% (+0.032%), US 10’s 3.1211% (+8.61bps); US 30’s 3.26% (+0.059%), Bunds 1.503% (+10.5bp), France 2.122% (+11.3bp), Italy 3.8090% (+11.8bp), Turkey 12.94% (+0bp), Greece 4.048% (+7.4bp), Portugal 2.629% (+13.3bp); Spain 2.722% (+12.6bp) and UK Gilts 2.6320% (+2.6bp).

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