Market Talk – May 20, 2022

ASIA:

China is trying once again to lift the spirits of its huge tech industry after a bruising regulatory offensive that has weakened some of its biggest businesses at a time of stalling economic growth. In a rare public display of support for the private sector, Vice Premier Liu He said Tuesday that the government would “properly manage” the relationship between the government and the market, and back tech companies to list in both domestic and foreign markets. Liu is a top economic adviser to President Xi Jinping.

A UN report predicts India is still the fastest-growing major economy even as the Ukraine conflict impacts the global gross domestic product (GDP). India is projected to grow by 6.4 percent in 2022, slower than last year’s 8.8 percent, due to higher inflationary pressures and uneven recovery of the labor market curbing private consumption and investment, the UN report shows. The UN Department of Economic and Social Affairs said in its World Economic Situation and Prospects (WESP) report released on Wednesday that the war in Ukraine has upended the fragile economic recovery from the pandemic, triggering a devastating humanitarian crisis in Europe, increasing food and commodity prices and globally exacerbating inflationary pressures.

The major Asian stock markets had a green day today:

  • NIKKEI 225 increased 336.19 points or 1.27% to 26,739.03
  • Shanghai increased 49.60 points or 1.60% to 3,146.57
  • Hang Seng increased 596.56 points or 2.96% to 20,717.24
  • ASX 200 increased 81.10 points or 1.15% to 7,145.60
  • Kospi increased 46.95 points or 1.81% to 2,639.29
  • SENSEX increased 1,534.16 points or 2.91% to 54,326.39
  • Nifty50 increased 456.75 points or 2.89% to 16,266.15

The major Asian currency markets had a negative day today:

  • AUDUSD decreased 0.00206 or -0.29% to 0.70260
  • NZDUSD decreased 0.00076 or -0.12% to 0.63851
  • USDJPY decreased 0.059 or -0.05% to 127.825
  • USDCNY decreased 0.0177 or -0.26% to 6.70699

Precious Metals:

  • Gold increased 0.09 USD/t oz. or 0.00% to 1,841.81
  • Silver decreased 0.202 USD/t. oz or -0.92% to 21.693
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Some economic news from last night:

China:

PBoC Loan Prime Rate remain the same at 3.70%

Japan:

CPI, n.s.a (MoM) (Apr) remain the same at 0.4%

National Core CPI (YoY) (Apr) increased from 0.8% to 2.1%

National CPI (YoY) (Apr) increased from 1.2% to 2.5%

South Korea:

PPI (YoY) (Apr) increased from 9.0% to 9.2%

PPI (MoM) (Apr) decreased from 1.5% to 1.1%

New Zealand:

Credit Card Spending (YoY) decreased from 3.5% to 1.1%

Exports (Apr) decreased from 6.48B to 6.31B

Imports (Apr) decreased from 7.06B to 5.73B

Trade Balance (YoY) (Apr) increased from -9,300M to -9,120M

Trade Balance (MoM) (Apr) increased from -581M to 584M

Some economic news from today

India:

Bank Loan Growth increased from 11.1% to 11.9%

Deposit Growth decreased from 9.8% to 9.7%

FX Reserves, USD decreased from 595.95B to 593.28B

EUROPE/EMEA:

The ECB will soon hike rates for the first time in more than a decade, a member of the central bank’s governing council told when speaking to CNBC. The ECB has been in the spotlight for its less aggressive stance on monetary policy compared to other central banks. However, expectations of a rate rise have grown in recent months amid continuous increases in inflation, with market players now pointing to at least four rate hikes before the end of the year. Headline inflation in the 19-member region reached 7.5% in April, surpassing the 7.4% reached in March.

Consumer confidence in the UK has fallen to the lowest level since records began in 1974 amid growing concern over the cost-of-living crisis. Stoking fears that Britain is heading for a recession caused by the squeeze on family budgets, the latest monthly snapshot showed consumers are now gloomier about their prospects than they were during the 2008 financial crisis. The headline UK consumer confidence index, a measure of how people view their personal finances and the wider economic outlook, dropped by two percentage points to -40 in May, surpassing the previous record low of -39 set in July 2008 when the global banking system was imploding. UK inflation rose to 9% in April, the highest level since the early 1980s, as hard-pressed families come under mounting pressure from soaring energy bills, record petrol prices, and the rising cost of weekly shopping.

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The major Europe stock markets had a green day:

  • CAC 40 increased 12.53 points or 0.20% to 6,285.24
  • FTSE 100 increased 87.24 points or 1.19% to 7,389.98
  • DAX 30 increased 99.61 points or 0.72% to 13,981.91

The major Europe currency markets had a mixed day today:

  • EURUSD decreased 0.00249 or -0.24% to 1.05559
  • GBPUSD increased 0.00242 or 0.19% to 1.24896
  • USDCHF increased 0.00348 or 0.36% to 0.97518

Some economic news from Europe today:

UK:

Core Retail Sales (YoY) (Apr) decreased from -0.2% to -6.1%

Core Retail Sales (MoM) (Apr) increased from -0.9% to 1.4%

Retail Sales (MoM) (Apr) increased from -1.2% to 1.4%

Retail Sales (YoY) (Apr) decreased from 1.3% to -4.9%

Germany:

German PPI (YoY) (Apr) increased from 30.9% to 33.5%

German PPI (MoM) (Apr) decreased from 4.9% to 2.8%

Swiss:

Industrial Production (QoQ) increased from 7.3% to 7.9%

Euro Zone:

Consumer Confidence (May) increased from -22.0 to -21.1

US/AMERICAS:

Former Chief Economist Larry Harris believes that the US is heading into a recession. “It’s very hard to stop inflation without a recession,” Harris stated. “Rising interest rates choke off spending by increasing the cost of financing.” The markets seem to be anticipating a similar sentiment with large sell offs in recent weeks. Rising fuel prices, government spending, supply chain shortages, and the wage-price spiral are all creating the perfect storm for the next recession. “There will be a day of reckoning, the question is how soon,” the former SEC chief said.

Related:  Market Talk - July 21, 2022

Initial jobless claims in the US reached their lowest level since 1969, according to the Labor Department. Jobless claims for the week ending on May 14 fell to 218,000. This is certainly a welcome figure compared to the April 2020 high of 6.137 million amidst the pandemic. Continuing claims, collected from the week prior, dropped by 25,000 to 1.317 million.

Amid controversy, the US Senate voted to approve the large $40 billion Ukrainian aid bill. Congress authorized $14 billion in aid for Ukraine earlier in the year, and this surpasses President Biden’s initial request for $33 billion.

US Market Closings:

  • Dow advanced 7.45 points or 0.02% to 31,260.58
  • S&P 500 advanced 0.58 of a point or 0.01% to 3,901.37
  • Nasdaq declined 33.88 points or -0.3% to 11,354.62
  • Russell 2000 declined 2.96 points or -0.17% to 1,773.27

Canada Market Closings:

  • TSX Composite advanced 15.69 points or 0.08% to 20,197.61
  • TSX 60 advanced 2.14 points or 0.18% to 1,222.49

Brazil Market Closing:

  • Bovespa advanced 1,482.66 points or 1.39% to 108,487.88

ENERGY:

The oil markets had a mixed day today:

  • Crude Oil increased 0.2 USD/BBL or 0.18% to 112.410
  • Brent decreased 0.56 USD/BBL or -0.50% to 111.48
  • Natural gas decreased 0.271 USD/MMBtu or -3.26% to 8.0360
  • Gasoline decreased 0.0142 USD/GAL or -0.37% to 3.8175
  • Heating oil decreased 0.0278 USD/GAL or -0.73% to 3.7642

The above data was collected around 12:37 EST on Friday

  • Top commodity gainers: Methanol (3.15%) and Canola (2.78%), Aluminum (1.39%), Lean Hogs (2.09%)
  • Top commodity losers: Lumber (-4.13%), Palladium (-2.94%), Cotton (-3.75%) and Natural Gas (-3.26%)

The above data was collected around 12:49 EST on Friday.

BONDS:

Japan 0.241%(+0.1bp), US 2’s 2.57% (-0.041%), US 10’s 2.7829% (-5.41bps); US 30’s 2.99% (-0.058%), Bunds 0.928% (-1.2bp), France 1.460% (-0.5bp), Italy 2.999% (+9.4bp), Turkey 23.61% (+0bp), Greece 3.698% (+15.6bp), Portugal 2.149% (+5.4bp); Spain 2.081% (+2.9bp) and UK Gilts 1.8720% (+0.4bp).

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