Market Talk – September 8, 2022

ASIA:

Japan’s economy grew more than initially reported in the second quarter, as the lifting of local COVID-19 restrictions boosted consumer and business spending. Gross domestic product (GDP) in the world’s third-largest economy expanded an annualized 3.5% in the second quarter, stronger than the preliminary estimate of annualized 2.2% growth, government data showed Thursday. The reading, which was better than a median market forecast for a 2.9% gain, equals a real quarter-on-quarter expansion of 0.9% from the prior quarter. The growth suggests domestic demand rebounded modestly after the government removed pandemic-related curbs on activity in the first quarter. It was driven in part by a pickup in capital expenditure and a smaller decline of inventories such as cars, the data showed. Private consumption, which makes up more than half of the country’s GDP, grew 1.2%, the data showed, revised up from an initial estimate of a 1.1% increase.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 increased 634.98 points or 2.31% to 28,065.28
  • Shanghai decreased 10.71 points or -0.33% to 3,235.59
  • Hang Seng decreased 189.68 points or -1.00% to 18,854.62
  • Kospi increased 7.82 points or 0.33% to 2,384.28
  • ASX 200 increased 119.40 points or 1.77% to 6,848.70
  • SENSEX increased 659.31 points or 1.12% to 59,688.22
  • Nifty50 increased 174.35 points or 0.99% to 17,798.75

The major Asian currency markets had a mixed day today:

  • AUDUSD increased 0.00004 or 0.01% to 0.67520
  • NZDUSD decreased 0.00157 or -0.26% to 0.60563
  • USDJPY decreased 0.13 or -0.09% to 144.052
  • USDCNY increased 0.00524 or 0.08% to 6.96104

Precious Metals:

l Gold decreased 8.22 USD/t oz. or -0.48% to 1,709.47

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l Silver increased 0.011 USD/t. oz or 0.06% to 18.521

Some economic news from last night:

China:

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

Japan:

Adjusted Current Account decreased from 0.84T to -0.63T

Current Account n.s.a. (Jul) increased from -0.132T to 0.229T

GDP (YoY) (Q2) increased from 2.2% to 3.5%

GDP (QoQ) (Q2) increased from 0.5% to 0.9%

Australia:

Exports (MoM) (Jul) decreased from 4.9% to -10.0%

Imports (MoM) (Jul) increased from 0.7% to 5.0%

Trade Balance (Jul) decreased from 17.130B to 8.733B

New Zealand:

Manufacturing Sales Volume (QoQ) (Q2) decreased from -3.5% to -4.9%

Some economic news from today:

Japan:

Economy Watchers Current Index (Aug) increased from 43.8 to 45.5

India:

M3 Money Supply increased from 8.4% to 8.9%

EUROPE/EMEA:

Queen Elizabeth II has passed away at the age of 96. The Bank of England said its banknotes featuring the image of Queen Elizabeth remained legal tender, following the monarch’s death on Thursday. Queen Elizabeth was the first monarch to feature on Bank of England banknotes.

The European Central Bank (ECB) said on Thursday it would start paying interest on government deposits, easing fears that euro zone countries would shift the cash into government bonds, worsening a shortage of key market collateral. Starting on Sept 14, euro zone government cash balances at their national central banks will accrue interest at the ECB’s deposit rate, which was raised to 0.75% on Thursday, or the overnight rate ESTR, whichever is lower, removing a 0% cap.

Ukraine has regained more than 700 square kilometers (270 sq mi) of its territory in the east and south during a blitzkrieg counteroffensive, a Ukrainian general said Thursday, offering the first official assessment of the operation. Some of the biggest gains appear to have been made this week during a surprise Ukrainian counter-offensive in the Kharkiv region of northeastern Ukraine, when Kievan forces made a sudden and deep thrust behind Russian lines. A Russian official said Moscow’s forces put up stiff resistance and prevented Kiev’s forces from capturing at least one key town in the Kharkiv region.

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The major Europe stock markets had a mixed day:

  • CAC 40 increased 19.98 points or 0.33% to 6,125.90
  • FTSE 100 increased 24.23 points or 0.33% to 7,262.06
  • DAX 30 decreased 11.65 points or -0.09% to 12,904.32

The major Europe currency markets had a negative day today:

  • EURUSD decreased 0.00017 or -0.02% to 0.99925
  • GBPUSD decreased 0.00131 or -0.11% to 1.15034
  • USDCHF decreased 0.00496 or -0.51% to 0.97134

Some economic news from Europe today:

France:

French Non-Farm Payrolls (QoQ) (Q2) increased from 0.3% to 0.4%

Swiss:

Unemployment Rate n.s.a. (Aug) remain the same at 2.0%

Unemployment Rate s.a. (Aug) decreased from 2.2% to 2.1%

Euro Zone:

Deposit Facility Rate (Sep) increased from 0.00% to 0.75%

ECB Marginal Lending Facility increased from 0.75% to 1.50%

ECB Interest Rate Decision (Sep) increased from 0.50% to 1.25%

US/AMERICAS:

Fed Chairman Jerome Powell addressed the public this Thursday to reiterate the importance of curtailing inflation. Powell warned that “history cautions against prematurely loosening policy,” and used exampled from the tenacious inflation in the 70s and 80s. “I can assure you that my colleagues and I are strongly committed to this project and we will keep at it until the job is done,” Powell stated. Treasury yields rose on the news as the two-year note advanced 5 bps to 3.49%. The current benchmark rate is 2.25-2.5%, but that will continue to rise once the Federal Open Market Committee meets at the end of September.

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US Market Closings:

  • Dow advanced 193.24 points or 0.61% to 31,774.52
  • S&P 500 advanced 26.31 points or 0.66% to 4,006.18
  • Nasdaq advanced 70.23 points or 0.6% to 11,862.13
  • Russell 2000 advanced 14.9 points or 0.81% to 1,846.91

Canada Market Closings:

  • TSX Composite advanced 171.56 points or 0.89% to 19,413
  • TSX 60 advanced 10.61 points or 0.91% to 1,174.04

Brazil Market Closing:

  • Bovespa advanced 151.87 points or 0.14% to 109,915.64

ENERGY:

The oil markets had a mixed day today:

  • Crude Oil increased 1.936 USD/BBL or 2.36% to 83.876
  • Brent increased 1.642 USD/BBL or 1.87% to 89.642
  • Natural gas increased 0.0835 USD/MMBtu or 1.06% to 7.9255
  • Gasoline increased 0.0407 USD/GAL or 1.76% to 2.3484
  • Heating oil decreased 0.0523 USD/GAL or -1.46% to 3.5337

The above data was collected around 14:17 EST on Thursday

  • Top commodity gainers: Crude Oil (2.36%), Brent (1.87%), Copper (3.39%) and Palladium (4.38%)
  • Top commodity losers: Palm Oil (-4.04%), Oat (-9.04%), Canola (-2.06%) and Wheat (-1.53%)

The above data was collected around 14:32 EST on Thursday

BONDS:

Japan 0.245%(+0bp), US 2’s 3.49% (+0.042%), US 10’s 3.2864% (+2.14bps); US 30’s 3.44% (+0.036%), Bunds 1.712% (+13.7bp), France 2.253% (+9.9bp), Italy 3.949% (+8bp), Turkey 11.18% (+0bp), Greece 4.207% (+6.3bp), Portugal 2.75% (+9.9bp); Spain 2.896% (+15bp) and UK Gilts 3.1470% (+11.5bp).

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