Market Talk – September 7, 2022

ASIA:

US Trade Representative Katherine Tai suggested on Wednesday that punitive tariffs on Chinese imports will not drop until Beijing adopts more market-oriented trade and economic principles. Speaking at a discussion organized by the Carnegie Endowment for International Peace, Tai elaborated on US President Joe Biden’s economic strategy with regard to China, characterizing it as the result of an “awakening” to different histories and principles of governance that have prevented Beijing from accepting what Washington expects from members of the World Trade Organization . While Biden maintains Trump-era tariffs on Chinese goods, industry experts say punitive taxes don’t carry the same weight they once did, calling them “totally political, not economic.” The four-year expiration date on some of Washington’s punitive tariffs on Chinese imports came and went on Tuesday, leaving a 25 percent tariff on about $16 billion worth of goods in place despite ambivalence from the administration of US President Joe Biden.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 decreased 196.21 points or -0.71% to 27,430.30
  • Shanghai increased 2.85 points or 0.09% to 3,246.29
  • Hang Seng decreased 158.43 points or -0.83% to 19,044.30
  • Kospi decreased 33.56 points or -1.39% to 2,376.46
  • ASX 200 decreased 97.20 points or -1.42% to 6,729.30
  • SENSEX decreased 168.08 points or -0.28% to 59,028.91
  • Nifty50 decreased 31.20 points or -0.18% to 17,624.40

The major Asian currency markets had a mixed day today:

  • AUDUSD increased 0.00160 or 0.24% to 0.67494
  • NZDUSD increased 0.00190 or 0.31% to 0.60557
  • USDJPY increased 0.988 or 0.69% to 144.090
  • USDCNY decreased 0.00080 or -0.01% to 6.96880

Precious Metals:

l Gold increased 14.01 USD/t oz. or 0.82% to 1,715.16

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l Silver increased 0.287 USD/t. oz or 1.59% to 18.340

Some economic news from last night:

China:

Exports (YoY) (Aug) decreased from 18.0% to 7.1%

Imports (YoY) (Aug) decreased from 2.3% to 0.3%

Trade Balance (USD) (Aug) decreased from 101.26B to 79.39B

Australia:

AIG Services Index (Aug) increased from 51.7 to 53.3

GDP (QoQ) (Q2) increased from 0.7% to 0.9%

GDP (YoY) (Q2) increased from 3.3% to 3.6%

GDP Capital Expenditure (Q2) decreased from 0.7% to 0.2%

GDP Chain Price Index (Q2) decreased from 4.9% to 4.3%

GDP Final Consumption (Q2) decreased from 2.3% to 1.3%

Some economic news from today:

China:

FX Reserves (USD) (Aug) decreased from 3.104T to 3.055T

Hong Kong:

Foreign Reserves (USD) (Aug) decreased from 441.80B to 431.80B

Japan:

Coincident Indicator (MoM) (Jul) decreased from 3.3% to 1.4%

Leading Index (MoM) (Jul) decreased from -0.3% to -0.7%

Leading Index decreased from 100.3 to 99.6

EUROPE/EMEA:

Bank of England Governor Andrew Bailey and other top central bank officials spoke to lawmakers on Wednesday about last month’s decision to raise interest rates to the highest since 2008 in the face of double-digit inflation. The central bank accelerated the pace of growth in borrowing costs in an effort to limit damage to the world’s fifth-largest economy from a jump in inflation above 10%, even as it expects a recession to begin later this year. The BoE forecast in August that inflation would top 13%, and some economists said it could top 20% if gas prices – pushed up by Russia’s invasion of Ukraine – remain high. BoE governor Andrew Bailey, who also spoke to parliament’s finance committee, said Truss’s impending announcement would provide useful clarity to markets.

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The major Europe stock markets had a mixed day:

  • CAC 40 increased 1.31 points or 0.02% to 6,105.92
  • FTSE 100 decreased 62.61 points or -0.86% to 7,237.83
  • DAX 30 increased 44.53 points or 0.35% to 12,915.97

The major Europe currency markets had a mixed day today:

  • EURUSD increased 0.00939 or 0.95% to 0.99929
  • GBPUSD increased 0.00005 or 0.00% to 1.15129
  • USDCHF decreased 0.00598 or -0.61% to 0.97832

Some economic news from Europe today:

UK:

Halifax House Price Index (YoY) decreased from 11.8% to 11.5%

Halifax House Price Index (MoM) (Aug) increased from -0.1% to 0.4%

Germany:

German Industrial Production (MoM) (Jul) decreased from 0.8% to -0.3%

France:

French Reserve Assets Total (Aug) increased from 241,892.0M to 242,728.0M

Italy:

Italian Retail Sales (MoM) (Jul) increased from -1.1% to 1.3%

Italian Retail Sales (YoY) (Jul) increased from 1.3% to 4.2%

Euro Zone:

Employment Change (QoQ) (Q2) decreased from 0.7% to 0.4%

Employment Change (YoY) (Q2) decreased from 3.1% to 2.7%

Employment Overall (Q2) increased from 163,412.6K to 164,098.0K

GDP (QoQ) (Q2) increased from 0.5% to 0.8%

GDP (YoY) (Q2) decreased from 5.4% to 4.1%

US/AMERICAS:

The demand for mortgages is on the decline in the US as rates continue to rise. Applications fell by 1% for the week but declined by 23% from the year prior. The 30-year fixed-rate mortgage rose to 5.94% last week, a sharp rise from the 5.8% rate the week prior. Due to higher rates, it comes as no surprise that refinances are steeply declining. Refinance applications fell 83% from the same period one year ago when the rate was beneath 3%.

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Fed Gov. Michael Barr is set to be nominated for the role of banking regulator by the Biden Administration. Barr, who also acted as assistant Treasury secretary under Obama, announced he will prioritize climate-related financial risks as well as cryptocurrency regulation. He plans to implement climate risk scenario analyses at the central bank and further transparency over the crypto marketplace.

US Market Closings:

  • Dow advanced 436.35 points or 1.4% to 31,581.65
  • S&P 500 advanced 71.8 points or 1.84% to 3,979.99
  • Nasdaq advanced 246.99 points or 2.14% to 11,791.9
  • Russell 2000

Canada Market Closings:

  • TSX Composite
  • TSX 60

Brazil Market Closing:

  • Bovespa

ENERGY:

The oil markets had a negative day today:

  • Crude Oil decreased 4.511 USD/BBL or -5.19% to 82.369
  • Brent decreased 4.17 USD/BBL or -4.49% to 88.660
  • Natural gas decreased 0.24 USD/MMBtu or -2.95% to 7.9050
  • Gasoline decreased 0.0998 USD/GAL or -4.13% to 2.3161

l Heating oil decreased 0.0127 USD/GAL or -0.36% to 3.5611

The above data was collected around 13:29 EST on Wednesday

  • Top commodity gainers: HRC Steel (3.23%), Wheat (3.83%), Lumber (2.51%) and Butter (2.80%)
  • Top commodity losers: Cocoa (-4.84%), Crude Oil (-5.19%), Gasoline (-4.13%) and Brent (-4.49%)

The above data was collected around 13:35 EST on Wednesday.

BONDS:

Japan 0.245%(+0.5bp), US 2’s 3.46% (-0.037%), US 10’s 3.2597% (-8.03bps); US 30’s 3.40% (-0.081%), Bunds 1.575% (-3bp), France 2.154% (-5.2bp), Italy 3.869% (-9.6bp), Turkey 11.18% (-25bp), Greece 4.144% (-2.9bp), Portugal 2.65% (-4.8bp); Spain 2.724% (-7.7bp) and UK Gilts 3.0320% (-6.4bp).

Original Article

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