Market Talk – June 6, 2022

ASIA:

Global markets fell sharply on Monday as fears over rising inflation and a slowdown in China’s export growth fueled worries about the health of the world economy. Analysts said the slowdown showed that the world’s second largest economy was suffering from the lockdowns in big cities such as Shanghai, which have affected factory production and snarled up logistics chains. The Chinese premier, Li Keqiang, warned on Saturday that China’s employment situation was “complex and grave”, and called on government departments and regions to prioritize measures to support and retain jobs. That reinforced worries that China’s lockdowns are having a serious economic impact. Emerging market stocks hit their lowest level since June 2020, as China’s slowing economy added to pressures from rising global interest rates, and the ongoing disruption from the Ukraine war.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 increased 154.32 points or 0.56% to 27,915.89
  • Shanghai increased 40.91 points or 1.28% to 3,236.37
  • Hang Seng increased 571.77 points or 2.71% to 21,653.90
  • ASX 200 increased 32.50 points or -0.45% to 7,206.30
  • Kospi closed
  • SENSEX decreased 93.91 points or -0.17% to 55,675.32
  • Nifty50 decreased 14.75 points or -0.09% to 16,569.55

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.00144 or -0.20% to 0.71915
  • NZDUSD decreased 0.00171 or -0.26% to 0.64878
  • USDJPY increased 1.147 or 0.88% to 131.961
  • USDCNY increased 0.00434 or 0.07% to 6.65703
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Precious Metals:

  • Gold decreased 9.24 USD/t oz. or -0.50% to 1,841.53
  • Silver increased 0.171 USD/t. oz or 78% to 22.081

Some economic news from last night:

China:

Caixin Services PMI (May) increased from 36.2 to 41.4

Hong Kong:

Manufacturing PMI (May) increased from 51.7 to 54.9

Australia:

MI Inflation Gauge (MoM) increased from -0.1% to 1.1%

ANZ Job Advertisements (MoM) increased from -2.0% to 0.4%

EUROPE/EMEA:

Barclays on Monday raised its Brent crude price forecasts by $11 per barrel for 2022 and $23 for 2023, citing a larger and sustained disruption in Russian supply following sanctions by the European Union. The British bank sees Brent prices averaging $111 this year and next, while it sees U.S. West Texas Intermediate (WTI) at $108 for the same period. On Monday benchmark Brent crude futures were trading around $120 a barrel, while WTI futures stood at $119.

Commodities prices weakened, with copper prices hitting their lowest since mid-December in London at $9,160 (£7,440) a tonne. Aluminium, zinc, nickel, lead and tin prices also dropped, on concerns that China’s restrictions are hitting manufacturing output.

The major Europe stock markets had a green day:

  • CAC 40 increased 63.48 points or 0.98% to 6,548.78
  • FTSE 100 increased 75.27 points or 1.00% to 7,608.22
  • DAX 30 increased 193.72 points or 1.34% to 14,653.81
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The major Europe currency markets had a mixed day today:

  • EURUSD decreased 0.00293 or -0.27% to 1.06897
  • GBPUSD increased 0.00476 or 0.38% to 1.25354
  • USDCHF increased 0.00867 or 0.90% to 0.97116

US/AMERICAS:

The Biden Administration announced it will suspend tariffs on solar panels, causing energy stocks to surge in midday trading. The suspension will last 24 months under the Defense Production Act and will span to Malaysia, Vietnam, Thailand, and Cambodia. Tariffs on solar products from Taiwan and China will remain in place.

Due to the rising cost of living, Social Security benefits will rise 5.9% in 2022, but could rise by 8% by 2023. The COLA projection will be officially announced later in the year, and is already expected to be over double the initial forecast due to inflation. “Looking at the CPI-W trends that we’re seeing so far this year, it is likely we’re going to have a COLA closer to 8% than 3.8%,” stated Stephen Goss, chief actuary at the Social Security Administration. Inflations level through the summer will determine the final cost. An 8% increase would mark the highest spike in benefits since 1981 when it was increased by 11.2%.

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US Market Closings:

  • Dow advanced 16.08 points or 0.05% to 32,915.78
  • S&P 500 advanced 12.89 points or 0.31% to 4,121.43
  • Nasdaq advanced 48.64 points or 0.4% to 12,061.37
  • Russell 2000 advanced 6.83 points or 0.36% to 1,889.89

Canada Market Closings:

  • TSX Composite advanced 28.36 points or 0.14% to 20,819.09
  • TSX 60 advanced 1.07% or 0.09% to 1,257.79

Brazil Market Closing:

  • Bovespa declined 916.41 points or -0.82% to 110,185.91

ENERGY:

The oil markets had a mixed day today:

Crude Oil decreased 0.61 USD/BBL or -0.51% to 118.260

Brent decreased 0.4 USD/BBL or -0.33% to 119.32

Natural gas increased 0.826 USD/MMBtu or 9.69% to 9.3490

Gasoline decreased 0.038 USD/GAL or -0.89% to 4.2142

Heating oil increased 0.0789 USD/GAL or 1.84% to 4.3592

The above data was collected around 15:07 EST on Monday

  • Top commodity gainers: Natural Gas (9.69%), Steel (3.02%),  Wheat (5.48%) and Bitumen (2.51%)
  • Top commodity losers: Lumber (-1.19%), Rhodium (-1.32%), Feeder Cattle (-1.14%) and Copper (-1.01%)

The above data was collected around 15:12 EST on Monday

BONDS:

Japan 0.240%(+0.5bp), US 2’s 2.73% (+0.076%), US 10’s 3.0343% (+9.38bps); US 30’s 3.18% (+0.089%), Bunds 1.328% (+5.8bp), France 1.8400% (+4bp), Italy 3.407% (+0.4bp), Turkey 21.86% (+0bp), Greece 3.882% (+14.5bp), Portugal 2.545% (+6.4bp); Spain 2.523% (+9.3bp) and UK Gilts 2.2480% (+8.8bp).

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