Market Talk – September 6, 2022

ASIA:

India’s dominant services industry grew faster than expected in August thanks to a solid expansion in demand and a continued easing in cost pressures, encouraging firms to hire at the quickest pace in more than 14 years, a private survey showed. Driven by strong growth in services and manufacturing activity, Asia’s third-largest economy expanded at its fastest annual pace in a year during the April-to-June quarter.

India’s minister of petroleum and natural gas, Hardeep Singh Puri, said most of his country’s crude oil supplies in the near future will come from the Gulf countries, including Saudi Arabia and Iraq, as it seeks a secure and affordable energy base. Crude oil imports from Saudi Arabia by the world’s third biggest oil importer and consumer rose in July by more than 25% after Saudi Arabia lowered the official selling price in June and July compared with May. Saudi Arabia stayed at the No. 3 spot among India’s suppliers. India’s imports from Russian oil rose by 4.7 times, or more than 400,000 barrels per day, in April-May, but fell in July.

Japan’s household spending grew for a second straight month in July despite a resurgence in COVID-19 cases, but inflationary pressures from the yen’s slump to a 24-year-low have cast doubt over a revival in consumption. From falling real wages to shrinking service sector activity, data this week has shown private consumption stalling, undermining some of the gains made in April-June. Household spending rose 3.4% in July from a year earlier, government data showed on Tuesday. Compared with a month earlier, spending decreased 1.4% in July, bigger than the forecast 0.6% fall. The month-on-month spending drop could be because consumers felt less confident visiting shops due to rising coronavirus cases, a government official told reporters.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 increased 6.90 points or 0.02% to 27,626.51
  • Shanghai increased 43.53 points or 1.36% to 3,243.45
  • Hang Seng decreased 22.97 points or -0.12% to 19,202.73
  • Kospi increased 6.34 points or 0.26% to 2,410.02
  • ASX 200 decreased 25.70 points or -0.38% to 6,826.50
  • SENSEX decreased 48.99 points or -0.08% to 59,196.99
  • Nifty50 decreased 10.20 points or -0.06% to 17,655.60
Related:  Market Talk - June 9, 2022

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.00741 or -1.09% to 0.67385
  • NZDUSD decreased 0.0055 or -0.90% to 0.60400
  • USDJPY increased 2.571 or 1.83% to 142.944
  • USDCNY increased 0.02741 or 0.39% to 6.96881

Precious Metals:

Gold decreased 7.1 USD/t oz. or -0.41% to 1,703.11

Silver decreased 0.082 USD/t. oz or -0.45% to 18.080

Some economic news from last night:

Japan:

Average Cash Earnings (YoY) decreased from 2.0% to 1.8%

Household Spending (MoM) (Jul) decreased from 1.5% to -1.4%

Household Spending (YoY) (Jul) decreased from 3.5% to 3.4%

Overall wage income of employees (Jul) decreased from 2.0% to 1.8%

Overtime Pay (YoY) (Jul) decreased from 5.80% to 4.70%

Australia:

Current Account (Q2) increased from 2.8B to 18.3B

Net Exports Contribution (Q2) increased from -1.7% to 1.0%

Some economic news from today:

Australia:

RBA Interest Rate Decision (Sep) increased from 1.85% to 2.35%

New Zealand:

GlobalDairyTrade Price Index increased from -2.9% to 4.9%

EUROPE/EMEA:

Siemens Energy has launched a 1 billion euro ($991 million) mandatory convertible bond to help fund its planned takeover bid for wind turbine maker Siemens Gamesa (SGREN.MC), it said on Tuesday. Siemens Energy in May announced a 4.05 billion euro deal to buy the remaining third in Siemens Gamesa it does not already own, hoping it can get a better handle on operational problems at the division that way. Outstanding notes will be converted into Siemens Energy shares at maturity on Sept. 14, 2025, and will have a maximum conversion premium of 15-20% above the reference price and a coupon of 5.125-5.625% per year, the company said.

Liz Truss will become Britain’s next prime minister with the economy on the brink of recession, according to data that showed private sector activity fell last month as businesses battled rising costs. The latest picture from S&P Global and the Chartered Institute of Procurement and Supply (Cips) revealed a “significant and accelerated” decline in manufacturing in August, along with weaker activity in the UK’s dominant services sector. Cost pressures facing businesses remained at extremely high levels amid rising energy and fuel prices as Russia’s war in Ukraine further pushes up costs in the wholesale market, according to a monthly health check from S&P Global and Cips. Unlike households, businesses do not benefit from the energy price cap. The monthly S&P/Cips PMI fell to 49.6 in August from 52.1 in July. Any value above 50 indicates growth in private sector activity.

Related:  Market Talk - June 21, 2022

The major Europe stock markets had a green day:

  • CAC 40 increased 11.39 points or 0.19% to 6,104.61
  • FTSE 100 increased 13.01 points or 0.18% to 7,300.44
  • DAX 30 increased 110.66 points or 0.87% to 12,871.44

The major Europe currency markets had a mixed day today:

  • EURUSD decreased 0.00416 or -0.42% to 0.99082
  • GBPUSD decreased 0.00238 or -0.21% to 1.15364
  • USDCHF increased 0.00523 or 0.53% to 0.98483

Some economic news from Europe today:

Germany:

German Factory Orders (MoM) (Jul) decreased from -0.3% to -1.1%

German IHS S&P Global Construction PMI (Aug) decreased from 43.7 to 42.6

France:

French IHS S&P Global Construction PMI (MoM) decreased from 48.6 to 48.2

Italy:

Italian IHS S&P Global Construction PMI (MoM) decreased from 46.2 to 41.2

UK:

Construction PMI (Aug) increased from 48.9 to 49.2

Euro Zone:

IHS S&P Global Construction PMI (MoM) decreased from 45.7 to 44.2

US/AMERICAS:

Ukrainian President Zelensky rang the opening bell, albeit remotely, at the NYSE this Tuesday morning. This comes after Russia announced it would cut off gas exports to the West. Zelensky used this time to commend his troops as well as the United States for supporting them through sanctions and donations. The US has sent around $12.9 billion to Ukraine since February.

Related:  The 1970s Bear Market Analog Looks Intact

CVS Health acquired Signify in an $8 billion deal at $30.50 per share in cash. CVS Health CEO Karen Lynch said in a statement said that it will “strengthen [the company’s] ability to expand and develop new product offerings in a multi-payor approach.” Signify offers services in 50 states and provides both virtual and in-person health services to 2.5 million people. CVS outbid both Amazon and UnitedHealth in this deal that is expected to close in Q1 of 2023.

US Market Closings:

  • Dow declined 173.14 points or -0.55% to 31,145.3
  • S&P 500 declined 16.07 points or -0.41% to 3,908.19
  • Nasdaq declined 85.95 points or -0.74% to 11,544.91
  • Russell 2000 declined 17.42 points or -0.96% to 1,792.32

Canada Market Closings:

  • TSX Composite declined 182.58 points or -0.95% to 19,088.27
  • TSX 60 declined 11.45 points or -0.98% to 1,153.43

Brazil Market Closing:

  • Bovespa declined 2,439.58 points or -2.17% to 109,763.77

ENERGY:

The oil markets had a negative day today:

  • Crude Oil decreased 1.99 USD/BBL or -2.24% to 86.799
  • Brent decreased 2.686 USD/BBL or -2.81% to 93.054
  • Natural gas decreased 0.4125 USD/MMBtu or -4.72% to 8.3361
  • Gasoline decreased 0.0198 USD/GAL or -0.80% to 2.4593
  • Heating oil decreased 0.0945 USD/GAL or -2.56% to 3.5984

The above data was collected around 12:55 EST on Tuesday

  • Top commodity gainers: Cocoa (1.41%), Corn (3.71%), Rhodium (1.45%) and Lean Hogs (1.17%)
  • Top commodity losers: Natural Gas (-4.72%), Palm Oil (-3.04%), Rubber (-2.77%) and Brent (-2.81%)

The above data was collected around 13:02 EST on Tuesday.

BONDS:

Japan 0.240%(+1bp), US 2’s 3.51% (+0.077%), US 10’s 3.3416% (+11.63bps); US 30’s 3.48% (+0.115%), Bunds 1.624% (+5.8bp), France 2.222% (+3.5bp), Italy 3.963% (+2.8bp), Turkey 11.43% (-102bp), Greece 4.173% (-10.7bp), Portugal 2.726% (+4.4bp); Spain 2.829% (+5.4bp) and UK Gilts 3.0930% (+15.2bp).

Original Article

Leave a Comment