Market Talk – June 30, 2022

ASIA:

China’s factory and service sectors snapped three months of activity decline in June, business surveys showed on Thursday, as authorities lifted a strict COVID lockdown in Shanghai, reviving output and consumer spending. The official manufacturing purchasing managers’ index (PMI) rose to 50.2 in June from 49.6 in May, the National Bureau of Statistics (NBS) said. While activity has sped up since various COVID lockdowns imposed since March have been rolled back, headwinds persist, including a still subdued property market, soft consumer spending and fear of any recurring waves of infections.

Japan’s factory output posted the biggest monthly drop in two years in May as China’s COVID-19 lockdowns and semiconductor and other parts shortages hit manufacturers, adding more pressure on an economy struggling to mount a strong recovery. Factory output slumped a seasonally adjusted 7.2% in May from the previous month, official data showed on Thursday, as production of items such as cars as well as electrical and general-purpose machinery dropped sharply. The data comes a day after Toyota Motor Corp, the world’s largest automaker by sales, said it missed its already downgraded global production target for May.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 decreased 411.56 points or -1.54% to 26,393.04
  • Shanghai increased 37.10 points or 1.10% to 3,398.62
  • Hang Seng decreased 137.10 points or -0.62% to 21,859.79
  • ASX 200 decreased 132.10 points or -1.97% to 6,568.10
  • Kospi decreased 45.35 points or -1.91% to 2,332.64
  • SENSEX decreased 8.03 points or -0.02% to 53,018.94
  • Nifty50 decreased 18.85 points or -0.12% to 15,780.25

The major Asian currency markets had a mixed day today:

  • AUDUSD increased 0.00332 or 0.48% to 0.69107
  • NZDUSD increased 0.00309 or 0.50% to 0.62479
  • USDJPY decreased 0.905 or -0.66% to 135.636
  • USDCNY decreased 0.01242 or -0.19% to 6.69438

Precious Metals:

l Gold decreased 8.64 USD/t oz. or -0.48% to 1,808.47

l Silver decreased 0.351 USD/t. oz or -1.69% to 20.358

Some economic news from last night:

China:

Chinese Composite PMI (Jun) increased from 48.4 to 54.1

Manufacturing PMI (Jun) increased from 49.6 to 50.2

Non-Manufacturing PMI (Jun) increased from 47.8 to 54.7

Japan:

Foreign Bonds Buying decreased from -489.5B to -1,600.6B

Foreign Investments in Japanese Stocks increased from -941.6B to -429.7B

Industrial Production (MoM) (May) decreased from -1.5% to -7.2%

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Industrial Production forecast 1m ahead (MoM) (Jun) increased from 4.8% to 12.0%

Industrial Production forecast 2m ahead (MoM) (Jul) decreased from 8.9% to 2.5%

South Korea:

Manufacturing BSI Index (Jul) decreased from 85 to 82

Industrial Production (MoM) (May) increased from -3.3% to 0.1%

Industrial Production (YoY) (May) increased from 3.5% to 7.3%

Retail Sales (MoM) increased from -0.2% to -0.1%

Australia:

Housing Credit (May) remain the same at 0.6%

Private Sector Credit (MoM) (May) remain the same at 0.8%

New Zealand:

ANZ Business Confidence (Jun) decreased from -55.6 to -62.6

NBNZ Own Activity (Jun) decreased from -4.7% to -9.1%

Singapore:

Bank Lending decreased from 841.6B to 839.8B

Some economic news from today:

Japan:

Construction Orders (YoY) (May) decreased from 30.5% to 19.5%

Housing Starts (YoY) (May) decreased from 2.4% to -4.3%

Hong Kong:

M3 Money Supply (May) decreased from 1.2% to -0.1%

Retail Sales (YoY) (May) decreased from 11.7% to -1.7%

India:

Federal Fiscal Deficit (May) increased from 748.46B to 2,039.21B

M3 Money Supply decreased from 8.6% to 7.8%

Foreign Debt (USD) (Q1) increased from 614.9B to 620.7B

Infrastructure Output (YoY) (May) increased from 9.3% to 18.1%

EUROPE/EMEA:

Credit rating agency Fitch downgraded its view on sovereign debt on Thursday on concerns about the rise in global borrowing costs and the potential for a flurry of new defaults. Fitch, which monitors over 100 countries, said the Ukraine-Russia war was stoking problems such as higher inflation, trade disruptions, and weaker economies which are all now hurting sovereign credit conditions. The number of countries seeing their credit ratings cut has begun to rise again this year as the pressures have built. The rating agency also said that while commodity exporters will benefit from higher prices, those who have to import the bulk of their energy or food will suffer.

Hungary expects to sign an agreement with the European Union by the autumn over 22 billion euros ($23 billion) of development funds under the bloc’s 2021-2027 budget, the country’s economic development minister Marton Nagy said on Thursday. Agreement over the funds has been delayed by Prime Minister Viktor Orban’s many battles with the EU, such as over migration, human rights, and his stance on Russia, but he is under growing pressure to strike a deal, with the Hungarian currency hitting new lows and inflation surging. The European Commission said on Wednesday it had “no updates” on granting Hungary access to 15.5 billion euros in COVID-19 economic stimulus funds. The EU executive also said it was analyzing Budapest’s response to concerns it had raised over Hungary’s public procurement system.

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The major Europe stock markets had a negative day:

l CAC 40 decreased 108.62 points or -1.80% to 5,922.86

l FTSE 100 decreased 143.04 points or -1.96% to 7,169.28

l DAX 30 decreased 219.58 points or -1.69% to 12,783.77

The major Europe currency markets had a mixed day today:

  • EURUSD increased 0.00388 or 0.37% to 1.04837
  • GBPUSD increased 0.00507 or 0.42% to 1.21787
  • USDCHF decreased 0.00102 or -0.11% to 0.95418

Some economic news from Europe today:

UK:

Business Investment (QoQ) (Q1) decreased from -0.5% to -0.6%

Business Investment (YoY) (Q1) decreased from 8.5% to 8.3%

Current Account (Q1) decreased from -7.3B to -51.7B

GDP (YoY) (Q1) increased from 6.6% to 8.7%

GDP (QoQ) (Q1) decreased from 1.3% to 0.8%

Nationwide HPI (MoM) (Jun) decreased from 0.9% to 0.3%

Nationwide HPI (YoY) (Jun) decreased from 11.2% to 10.7%

Germany:

German Import Price Index (MoM) (May) decreased from 1.8% to 0.9%

German Import Price Index (YoY) (May) decreased from 31.7% to 30.6%

German Retail Sales (YoY) (May) decreased from -0.4% to -3.6%

German Retail Sales (MoM) (May) increased from -5.4% to 0.6%

German Unemployment Change (Jun) increased from -4K to 133K

German Unemployment Rate (Jun) increased from 5.0% to 5.3%

German Unemployment (Jun) increased from 2.284M to 2.417M

German Unemployment n.s.a. (Jun) increased from 2.260M to 2.363M

Swiss:

Retail Sales (YoY) (May) increased from -5.5% to -1.6%

KOF Leading Indicators (Jun) decreased from 97.7 to 96.9

France:

French Consumer Spending (MoM) (May) increased from -0.7% to 0.7%

French CPI (YoY) increased from 5.2% to 5.8%

French CPI (MoM) remain the same at 0.7%

French HICP (MoM) remain the same at 0.8%

French HICP (YoY) increased from 5.8% to 6.5%

Italy:

Italian Monthly Unemployment Rate (May) decreased from 8.3% to 8.1%

Italian PPI (YoY) (May) decreased from 35.3% to 34.6%

Italian PPI (MoM) (May) increased from 0.2% to 0.6%

Spain:

Spanish Current account (Apr) decreased from 0.29B to -0.48B

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Euro Zone:

Unemployment Rate (May) decreased from 6.7% to 6.6%

US/AMERICAS:

Another inflation measure favored by the Fed rose in May, according to the Commerce Department. Core personal consumption expenditures spiked 4.7% YoY. Although this marks a 0.2 percentage point decline from April, the levels are at a high not seen since the 1980s. Headline inflation naturally rose higher after rising 6.3% YoY and 0.6% from the month prior.

Personal income in the US increased 0.5% in May, surpassing most estimates of 0.4%. However, disposable income declined 0.1% for the month and 3.3% YoY. Adjusted for inflation, spending fell 0.4% for the month. Good inflation spiked 9.6% and services rose 4.7%. The  personal savings rate rose 0.2 of a percentage point on a monthly basis, and 5.4% from the year prior.

Jobless claims in the US declined by 2,000 positions to 231,000 for the week ending on June 25. Continuing claims also slightly declined after coming in at 1.33 million.

US Market Closings:

  • Dow declined 253.88 points or -0.82% to 30,775.43
  • S&P 500 declined 33.45 points or -0.88% to 3,785.38
  • Nasdaq declined 149.16 points or -1.33% to 11,028
  • Russell 2000 declined 11.38 points or -0.66% to 1,707.99

Canada Market Closings:

  • TSX Composite decreased 217.28 points or -1.14% to 18,861.36
  • TSX 60 decreased 13.66 poinyd or -1.18% to 1,146.43

Brazil Market Closing:

  • Bovespa decreased 1,079.63 points or -1.08% to 98,541.95

ENERGY:

The oil markets had a negative day today:

l Crude Oil decreased 3.63 USD/BBL or -3.31% to 106.150

l Brent decreased 1.44 USD/BBL or -1.24% to 114.82

l Natural gas decreased 0.904 USD/MMBtu or -13.91% to 5.5940

l Gasoline decreased 0.1666 USD/GAL or -4.35% to 3.6604

l Heating oil decreased 0.1312 USD/GAL or -3.25% to 3.9055

The above data was collected around 14:12 EST on Thursday

l Top commodity gainers: Canola (3.31%), Lumber (2.59%), Feeder Cattle (1.82%) and Sugar (1.51%)

l Top commodity losers: Zinc (-5.88%), Wheat (-4.67%), Natural Gas (-13.91%) and Gasoline (-4.35%)

The above data was collected around 14:18 EST on Thursday.

BONDS:

Japan 0.225%(-0.5bp), US 2’s 2.94% (-0.116%), US 10’s 2.9870% (-10.6bps); US 30’s 3.13% (-0.078%), Bunds 1.355% (-14.9bp), France 1.9570% (-10.6bp), Italy 3.392% (-10.9bp), Turkey 18.54% (+8bp), Greece 3.599% (-6.5bp), Portugal 2.460% (-11.5bp); Spain 2.454% (-14.2bp) and UK Gilts 2.2410% (-13.9bp).

Original Article

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