Market Talk – July 12, 2022

ASIA:

India is set to surpass China as the world’s most populous country in 2023, with each counting more than 1.4 billion residents this year, a United Nations report said on Monday, warning that high fertility would challenge economic growth. The world’s population, estimated to reach 8 billion by Nov. 15 this year, could grow to 8.5 billion in 2030, and 10.4 billion in 2100, as the pace of mortality slows, said the report released on World Population Day. The world’s population was growing at its slowest pace since 1950, having fallen below 1% in 2020, UN estimates showed. In 2021, the average fertility of the world’s population stood at 2.3 births per woman over a lifetime, having fallen from about 5 births in 1950. Global fertility is projected to decline further to 2.1 births per woman by 2050.

India’s annual consumer inflation eased slightly to 7.01% in June from 7.04% the previous month, remaining painfully high and beyond the central bank’s tolerance band for the sixth month in a row as it battles to rein in price rises. June’s print was lower than the 7.04% forecast by economists in a Reuters poll, but higher than 6.26% in the year earlier period, data released by the National Statistics Office showed on Tuesday.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 decreased 475.64 points or -1.77% to 26,336.66
  • Shanghai decreased 32.12 points or -0.97% to 3,281.47
  • Hang Seng decreased 279.46 points or -1.32% to 20,844.74
  • ASX 200 increased 4.10 points or 0.06% to 6,606.30
  • Kospi decreased 22.51 points or -0.96% to 2,317.76
  • SENSEX decreased 508.62 points or -0.94% to 53,886.61
  • Nifty50 decreased 157.70 points or -0.97% to 16,058.30

The major Asian currency markets had a mixed day today:

  • AUDUSD increased 0.00295 or 0.44% to 0.67681
  • NZDUSD increased 0.0025 or 0.41% to 0.61350
  • USDJPY decreased 0.634 or -0.46% to 136.746
  • USDCNY increased 0.00978 or 0.15% to 6.73498

Precious Metals:

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l Gold decreased 7.16 USD/t oz. or -0.41% to 1,726.51

l Silver decreased 0.100 USD/t. oz or -0.52% to 18.984

Some economic news from last night:

Japan:

PPI (YoY) (Jun) decreased from 9.3% to 9.2%

PPI (MoM) (Jun) increased from 0.1% to 0.7%

South Korea:

M2 Money supply (May) increased from 7.40% to 8.60%

Australia:

Westpac Consumer Sentiment (Jul) increased from -4.5% to -3.0%

NAB Business Confidence (Jun) decreased from 6 to 1

NAB Business Survey (Jun) decreased from 15 to 13

New Zealand:

External Migration & Visitors (May) decreased from 70.10% to 26.30%

Permanent/Long-Term Migration (May) decreased from 64 to -828

Some economic news from today:

India:

CPI (YoY) (Jun) decreased from 7.04% to 7.01%

Cumulative Industrial Production (May) increased from 11.30% to 12.90%

Industrial Production (YoY) (May) increased from 7.1% to 19.6%

Manufacturing Output (MoM) (May) increased from 6.3% to 20.6%

EUROPE/EMEA:

The Bank of England’s independence will be put to the ultimate test as it seeks to bring inflation back down to its 2% target from more than 9%, Governor Andrew Bailey said on Tuesday. The cost-of-living squeeze is a big political issue in the contest to replace Boris Johnson as prime minister, and some Conservative lawmakers believe the BoE was too slow to raise rates and wrong to continue asset purchases until last December.

Russia and Myanmar are to deepen their defense cooperation after a meeting in Moscow between Myanmar’s military leader, Min Aung Hlaing, and top Russian defense officials, Russia’s Defence Ministry said on Tuesday. The ministry said in a statement that the meeting had taken place on Monday, and that Hlaing was in Russia on a private visit. The BoE has raised interest rates five times since December as it tries to stop the surge in inflation from becoming embedded in Britain’s economy, and it is expected to increase them again at its August monetary policy meeting.

The major Europe stock markets had a green day:

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l CAC 40 increased 47.90 points or 0.80% to 6,044.20

l FTSE 100 increased 13.27 points or 0.18% to 7,209.86

l DAX 30 increased 73.04 points or 0.57% to 12,905.48

The major Europe currency markets had a mixed day today:

  • EURUSD increased 0.00132 or 0.13% to 1.00562
  • GBPUSD increased 0.0008 or 0.07% to 1.19025
  • USDCHF decreased 0.00136 or -0.14% to 0.98154

Some economic news from Europe today:

Germany:

German ZEW Current Conditions (Jul) decreased from -27.6 to -45.8

German ZEW Economic Sentiment (Jul) decreased from -28.0 to -53.8

Euro Zone:

ZEW Economic Sentiment (Jul) increased from -28.0 to 51.1

US/AMERICAS:

Small business owners are bracing for tougher times ahead according to a new survey published by the National Federation of Independent Business. The Small Business Optimism Index in the US dropped to 89.5 in June. The index has been beneath the 48-year average of 98 since June 2022, largely impacted by inflationary fears. Around 34% of respondents said that price increases were hurting their businesses. An additional 94% of businesses said that they could not find qualified employees to fill positions, despite 48% increasing pay in June and 28% planning to do so within the next three months. The latest Labor Department data supports this fear as there were 11.3 million job openings in the US as of May and far less available workers.

Boeing is beginning to recover after it was announced that the company delivered 51 planes in June. This brings the total number of jets sold to 216 for the first half of the year, marking a 38% increase from the same time period in 2021.

The Bank of Canada will deliberate tomorrow to determine the direction of monetary policy. Inflation in Canada reached a 39-year high in May after touching 7.7%, which is far above the 2% target that the central bank has aimed to achieve. The markets are pricing in a 75 basis point move for tomorrow. In June, the central bank raised rates by half a percentage point, but decision-makers are expected to act more aggressively as inflation continues to rise. All central banks are now hoping for a soft landing where their policies are effective without triggering a recession.

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US Market Closings:

  • Dow declined 188.82 points or -0.61% to 30,985.02
  • S&P 500 declined 35.29 points or -0.92% to 3,819.14
  • Nasdaq declined 107.87 points or -0.95% to 11,264.73
  • Russell 2000 declined 3.83 points or -0.22% to 1,728.18

Canada Market Closings:

  • TSX Composite declined 138.16 points or -0.73% to 18,678.64
  • TSX 60 declined 8.3 points or -0.73% to 1,135.97

Brazil Market Closing:

  • Bovespa advanced 58.75 points or 0.06% to 98,271.21

ENERGY:

Global benchmark Brent crude tumbled $7 on Tuesday to settle below $100 a barrel for the first time in three months on a strengthening dollar, demand-sapping COVID-19 curbs in top crude importer China, and rising fears of a global economic slowdown. Brent crude futures settled $7.61, or 7.1% lower, at $99.49 a barrel, its lowest since April 11. U.S. West Texas Intermediate crude was down $8.25, or 7.9%, at $95.84, also the lowest in three months.

The oil markets had a negative day today:

l Crude Oil decreased 7.76 USD/BBL or -7.46% to 96.330

l Brent decreased 7.26 USD/BBL or -6.78% to 99.84

l Natural gas decreased 0.191 USD/MMBtu or -2.97% to 6.2350

l Gasoline decreased 0.1977 USD/GAL or -5.71% to 3.2645

l Heating oil decreased 0.1243 USD/GAL or -3.30% to 3.6438

The above data was collected around 13:57 EST on Tuesday

l Top commodity gainers: Coal (1.67%), Feeder Cattle (2.74%)

l Top commodity losers: Crude Oil (-7.46%), Brent (-6.78%), Orange Juice (-10.96%) and Oat (-30.13%)

The above data was collected around 14:06 EST on Tuesday.

BONDS:

Japan 0.238%(-0.6bp), US 2’s 3.05% (-0.023%), US 10’s 2.9687% (-2.23bps); US 30’s 3.14% (-0.035%), Bunds 1.134% (-11.6bp), France 1.6450% (-13.2bp), Italy 3.1970% (-10.1bp), Turkey 18.15% (+0bp), Greece 3.467% (-15.7bp), Portugal 2.274% (-7.1bp); Spain 2.283% (-5.5bp) and UK Gilts 2.0650% (-11.3bp).

Original Article

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