Market Talk – June 9, 2022

ASIA:

US Commerce Secretary Gina Raimondo said on Sunday that President Joe Biden had asked his team to look at the option of lifting some tariffs on China that were put into place by former President Donald Trump to combat the current high inflation. Biden has said he is considering removing some of the tariffs imposed on hundreds of billions of dollars worth of Chinese goods by his predecessor in 2018 and 2019 amid a bitter trade war between the world’s two largest economies.

India is considering restricting imports of refrigerators to promote local manufacturing according to a report published by Reuters, potentially freezing out shipments from Samsung Electronics Co and LG Electronics Inc in the $5 billion market. The report said the government was considering mandating that importers seek a license from the authorities, replacing the existing free-import regime. The government estimates India’s refrigerator market at more than $5 billion, with foreign companies such as Samsung and LG competing with domestic majors including the Tata conglomerate’s Voltas Ltd.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 increased 12.24 points or 0.04% to 28,246.53
  • Shanghai decreased 24.84 points or -0.76% to 3,238.95
  • Hang Seng decreased 145.54 points or -0.66% to 21,869.05
  • ASX 200 decreased 101.40 points or -1.42% to 7,019.70
  • Kospi decreased 0.71 points or -0.03% to 2,625.44
  • SENSEX increased 427.79 points or 0.78% to 55,320.28
  • Nifty50 increased 121.85 points or 0.74% to 16,478.10

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.00902 or -1.25% to 0.70998
  • NZDUSD decreased 0.00548 or -0.85% to 0.63912
  • USDJPY decreased 0.142 or -0.11% to 134.287
  • USDCNY increased 0.00167 or 0.02% to 6.69936

Precious Metals:

l Gold decreased 4.86 USD/t oz. or -0.26% to 1,848.40

l Silver decreased 0.292 USD/t. oz or -1.33% to 21.741

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Some economic news from last night:

China:

Exports (YoY) (May) increased from 3.9% to 16.9%

Trade Balance (USD) (May) increased from 51.12B to 78.76B

Japan:

Foreign Bonds Buying increased from -1,137.7B to -840.8B

Foreign Investments in Japanese Stocks decreased from -12.3B to -122.2B

M3 Money Supply (May) increased from 2,046.1T to 2,056.1T

Some economic news from today:

Japan:

Machine Tool Orders (YoY) decreased from 25.0% to 23.7%

India:

Bank Loan Growth increased from 11.9% to 12.1%

Deposit Growth decreased from 9.7% to 9.3%

EUROPE/EMEA:

The number of UK workers on payrolls rose by 121,000 in the first three months of the year to 29.5 million, leaving the unemployment rate at its lowest since 1974, the Office for National Statistics said. The jobless rate dropped to 3.7 percent from 3.8 percent and the 1.257 million people out of work was less than the 1.295 million job vacancies on offer for the first time on record. The Bank of England is watching the strength of Britain’s labor market warily, as it fears that higher-than-normal pay growth is a key channel through which the current energy-driven surge in inflation might become entrenched. On Monday, Bank of England Governor Andrew Bailey advised people, particularly those on higher incomes, not to ask for a pay rise this year, during a meeting with MPs at the Treasury Select Committee.

Economic growth in the UK will grind to a halt next year with only Russia, hobbled by western sanctions, performing worse among the G20 leading economies, the OECD forecast on Wednesday. The Paris-based organization’s forecast highlighted the effects of high UK inflation still squeezing household and corporate incomes in 2023 alongside a further round of tax increases as the main drivers of the country’s expected weak economic activity. The OECD forecast that the UK economy would record growth of 3.6 percent in 2022, although much of that reflected recovery from coronavirus at the end of last year.

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The major Europe stock markets had a negative day:

n CAC 40 decreased 90.17 points or -1.40% to 6,358.46

n FTSE 100 decreased 116.79 points or -1.54% to 7,476.21

l DAX 30 decreased 247.19 points or -1.71% to 14,198.80

The major Europe currency markets had a mixed day today:

  • EURUSD decreased 0.00994 or -0.93% to 1.06185
  • GBPUSD decreased 0.00395 or -0.31% to 1.25012
  • USDCHF increased 0.00145 or 0.15% to 0.98022

Some economic news from Europe today:

France:

French Non-Farm Payrolls (QoQ) (Q1) remain the same at 0.3%

France Thomson Reuters IPSOS PCSI (Jun) decreased from 44.23 to 43.90

UK:

Thomson Reuters IPSOS PCSI (Jun) increased from 43.7 to 46.8

Italy:

Italy Thomson Reuters IPSOS PCSI (Jun) increased from 41.73 to 41.93

Germany:

Germany Thomson Reuters IPSOS PCSI (Jun) increased from 46.88 to 48.60

Euro Zone:

Deposit Facility Rate (Jun) remain the same at -0.50%

ECB Marginal Lending Facility remain the same at 0.25%

ECB Interest Rate Decision (Jun) remain the same at 0.00%

US/AMERICAS:

The US Labor Department reported the jobless claims rose to 229,000 during the week ending on June 4, marking an increase of 27,000 from the week prior. The figure was seasonally adjusted to cover the Memorial Day holiday. Initial claims have not reached this level since January 15, 2022. Continuing claims remained stagnant at 1.3 million. However, the four-week moving average slightly declined to 1.32 million, which is the lowest number of claims on record since January 1970.

Analysts agree – American is heading into a recession. A recent survey by CFOs gathering their macroeconomic views pointed to a bearish outlook for the markets. Over 40% of CFOs believe inflation is the main risk to their business. Around 23% point to the Federal Reserves hawkish policies as the biggest risk, while 14% expressed their main concern was the Russia-Ukraine war impacting the supply chain. Only 54% polled expressed confidence in the Federal Reserve. About 77% of CFOs believe the economy will fall into a recession during the first half of 2023, but they foresee conditions improving thereafter.

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US Market Closings:

  • Dow declined 638.11 points or 1.94% to 32,272.79
  • S&P 500 declined 97.95 points or -2.38% to 4,017.82
  • Nasdaq declined 332.04 points or -2.75% to 11,754.23
  • Russell 2000 declined 40.15 points or 2.12% to 1,850.86

Canada Market Closings:

  • TSX Composite declined 228.54 points or -1.1% to 20,563.89
  • TSX 60 declined 12.88 points or -1.03% to 1,241.63

Brazil Market Closing:

  • Bovespa declined 1,273.96 points or -1.18% to 107,093.71

ENERGY:

The oil markets had a mixed day today:

l Crude Oil decreased 0.99 USD/BBL or -0.81% to 121.120

l Brent decreased 0.8 USD/BBL or -0.65% to 122.78

l Natural gas increased 0.233 USD/MMBtu or 2.68% to 8.9320

l Gasoline increased 0.0386 USD/GAL or 0.91% to 4.2605

l Heating oil increased 0.0976 USD/GAL or 2.26% to 4.4119

The above data was collected around 15:26 EST on Thursday

l Top commodity gainers: Natural Gas (2.68%), Soybeans (1.67%), Heating Oil (2.26%) and Cotton (4.19%)

l Top commodity losers: Aluminum (-2.02%), Palm Oil (-3.97%), Orange Juice (-3.63%) and Platinum (-3.62%)

The above data was collected around 15:37 EST on Thursday.

BONDS:

Japan 0.249%(+0.4bp), US 2’s 2.82% (+0.044%), US 10’s 3.0474% (+2.04bps); US 30’s 3.17% (-0.003%), Bunds 1.439% (+8.4bp), France 1.9910% (+11.7bp), Italy 3.687% (+21.9bp), Turkey 24.32% (-46bp), Greece 4.096% (+0bp), Portugal 2.670% (+16.3bp); Spain 2.651% (+17.2bp) and UK Gilts 2.3250% (+7.8bp).

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