Market Talk – June 10, 2019

ASIA / AUSTRALIA:

President Trump has told CNBC (US) that he believes China will make a deal with the U.S. because they “will have to.” He also reiterated that putting the tariffs on countries like Mexico and China will put the U.S. at a tremendous competitive advantage. Earlier in the day, President Trump tweeted that the five percent tariff on all Mexican goods was prevented due to a deal between the two nations. Later in the day, he threatened more tariffs on Chinese Imports if President Xi Jinping was not present at this month’s G-20 meeting.

Latest key figures from China show that their trade surplus with the U.S. is down 10% on an annual rate for the first four months of the year – extrapolating that figure could bring an annual figure in excess of 20%.

Meanwhile, a Japanese fighter F-35 has crashed in the Pacific Ocean off the coast of Japan because the pilot lost his “spatial awareness.” This is just days after Turkey was given a deadline of the end of July to choose between buying US F-35 fighter jets and Russian anti-aircraft missile systems.

The major Asian stock markets had a green day today. Shanghai increased 24.33 points or 0.86% to 2,852.13; Kospi increased 27.16 points or 1.31% to 2,099.49; ASX 200 increased 60.90 points or 0.95% to 6,443.90; NIKKEI 225 increased 249.71 points or 1.20% to 21,134.42; Hang Seng increased 613.36 points or 2.27% to 27,578.64; and SENSEX increased 168.62 points or 0.43% to 39,784.52.

The major Asian currency markets had a mixed day today. AUDUSD decreased 0.0037 or 0.53% to 0.6961; NZDUSD decreased 0.0053 or 0.80% to 0.6611; USDJPY increased 0.3550 or 0.33% to 108.5350; and USDCNY decreased 0.0012 or 0.02% to 6.9419.

Gold decreased 14 USD/t oz. or -1.04% to 1,327.00 and silver decreased 0.328 USD/t. oz or -2.19% to 14.6788.

Some economic news:

Japan:

  • Adjusted Current Account increased from 1.27T ro 1.60T
  • Bank Lending (YoY) (May) increased from 2.4% to 2.6%
  • Current Account n.s.a. (Apr) decreased from 2.848T to 1.707T
  • GDP (YoY) (Q1) increased from 2.1% to 2.2%
  • GDP (QoQ) (Q1) increased from 0.5% to 0.6%
  • GDP Capital Expenditure (QoQ) (Q1) increased from -0.3% to 0.3%
  • GDP External Demand (QoQ) (Q1) remain the same at 0.4%
  • GDP Price Index (YoY) increased from -0.3% to 0.1%
  • GDP Private Consumption (QoQ) (Q1) remain the same at -0.1%
  • Economy Watchers Current Index (May) decreased from 45.3 to 44.1

China:

  • Exports (YoY) (May) increased from -2.7% to 1.1%
  • Imports (YoY) (May) decreased from 4.0% to -8.5%
  • Trade Balance (USD) (May) increased from 13.84B to 41.65B

Indonesia:

  • Core Inflation (YoY) (May) increased from 3.05% to 3.12%
  • Inflation (YoY) (May) increased from 2.83% to 3.32%
  • Inflation (MoM) (May) increased from 0.44% to 0.68%

EUROPE / EMEA:

The UK and South Korea signed an outline Free Trade Agreement (FTA) that seeks to maintain existing trade arrangements post-Brexit. This marks the first Asian country the UK has been able to conclude a deal with since the UK declared their wish to leave the EU. The UK’s economic growth is falling and Brexit is to blame for the falling car production in the UK. Figures suggest there was a sharp decline in car production in April with the economy contracting 0.4% that month.

France, the UK, and Germany have committed to stick with their commitments from Iran’s nuclear deal, German Foreign Minister Heiko Mass has confirmed. He mentioned that it was important in order to diffuse the situation and avoid military escalation.  Meanwhile, the Iranian foreign minister warned that the U.S. cannot expect to stay safe and described the economic war the U.S. imposed against Iran. Responding to Trump’s tweet last month, he replied, “Whoever starts a war with us will not be the one who finishes it.”

It’s not only NASA that is embracing private space flight. The European Space Agency (ESA) is opening its own commercial space program, giving companies the option to take paid trips into orbit.

The major Europe stock markets had a green day today. CAC 40 increased 18.45 points or 0.34% to 5,382.50, FTSE 100 increased 43.60 points or 0.59% to 7,375.54, and DAX increased 92.24 points or 0.77% to 12,045.38.

The major Europe currency markets had a mixed day today. EURUSD decreased 0.0016 or 0.14% to 1.1315, GBPUSD decreased 0.0043 or 0.34% to 1.2691, and USDCHF increased 0.0019 or 0.19% to 0.9895.

Some economic news:

Italy:

  • Italian Industrial Production (MoM) (Apr) increased from -1.0% to -0.7%
  • Italian Industrial Production (YoY) (Apr) increased from -1.6% to -1.5%

UK:

  • Construction Output (MoM) (Apr) increased from -1.9% to -0.4%
  • K. Construction Output (YoY) (Apr) decreased from 3.2% to 2.4%
  • GDP (MoM) decreased from -0.1% to -0.4%
  • GDP (YoY) decreased from 1.8% to 1.3%
  • Index of Services decreased from 0.3% to 0.2%
  • Industrial Production (MoM) (Apr) decreased from 0.7% to -2.7%
  • Industrial Production (YoY) (Apr) decreased from 1.3% to -1.0%
  • Manufacturing Production (MoM) (Apr) decreased from 0.9% to -3.9%
  • Manufacturing Production (YoY) (Apr) decreased from 2.6% to -0.8%
  • Monthly GDP 3M/3M Change decreased from 0.5% to 0.3%
  • Trade Balance (Apr) increased from -15.43B to -12.11B
  • Trade Balance Non-EU (Apr) increased from -6.22B to -4.60B
  • NIESR GDP Estimate decreased from 0.3% to 0.1%
  • NIESR Monthly GDP Tracker decreased from 0.4% to 0.1%

U.S. / AMERICAS:

As previously mentioned, the most recent threat of a tariff hike on Mexican imports was avoided after the U.S. and Mexico made a “last minute deal” to curb illegal immigration. “Tariffs are a beautiful thing when you’re the piggy bank,” President Trump said during his interview with CNBC today. “As soon as I put tariffs on the table, it was done. It took two days,” he continued. Mexico is poised to move an additional 6,000 soldiers to the border. The details of the deal are still underway as Mexico is reluctant to accept “third world asylum” status. Some have called out that much of what is in this proposed deal had already been largely agreed to, just that they were improved upon.

In the same interview with CNBC, President Trump commented that he many place tariffs on French wine imports to balance the playing field for U.S. wine producers. The U.S. currently charges France a 5 cent fee per 750 ml of wine and a 14 cent fee for sparkling wine. However, EU imposed fees range from 11 to 29 cents per 750 ml bottle. The U.S. is currently the largest buyer of European wine, while the EU only accounts for 16% of U.S. wine exports.

Over 180 U.S. companies banded together to publish a full-page ad in the New York Times this Monday to tell U.S. lawmakers that restricting women’s rights is “bad for business.” Several states including Georgia, Mississippi, Kentucky, and Louisiana have proposed bans on abortions, and Alabama has outlawed the procedure entirely under all circumstances. The letter states that the proposed laws would threaten “the health, independence, and economic stability of our employees and customers.” Disney, WarnerMedia, and Netflix have also threatened to cease all filming in the state of Georgia if the laws are passed.

Over the weekend, Microsoft unveiled plans to release a new gaming console in 2020. Codenamed “Project Scarlet,” the new console promises faster playtime, better graphics, and increased memory. Microsoft has not released a new console since 2013 when they produced Xbox One. In 2017 alone, the company profited $10 billion from the gaming device. Shares of Microsoft were up 0.91% this Monday.

In other tech news, the CRM platform Salesforce announced plans to purchase Tableau Software for $15.7 billion. Following the announcement, Tableau shares soared 33.41% while Salesforce declined by 5.23%.

U.S. markets continued to advance this Monday. The Dow rose 78.74 points or +0.30% to 26,062.68; the S&P 500 added 13.39 points or +0.47% to 2,886.74; the NASDAQ rose 81.07 points or +1.05% to 7,823.17; and the Russell 2000 advanced 9.17 points or +0.61% to 1,523.56.

The Canadian markets declined slightly this Monday. The TSX Composite fell 14.7 points or -0.09% to 16,216.26, and the TSX 60 lost 1.01 points or -0.10% to 972.46.

Brazil’s Bovespa declined 354.57 points or -0.36%, closing at 97,466.69.

ENERGY:

Crude managed to edge higher as the Mexican tariffs were avoided due to a last minute deal that improved the global growth forecasts and crude demand. However, Chinese crude oil imports have dropped 8% in May, although April’s imports were the all-time peak over fears of trade war and China stockpiling crude.

The oil markets had a mixed day today. Crude Oil decreased 0.12 USD/BBL or -0.22% to 53.7878; Brent decreased 0.38 USD/BBL or -0.60% to 62.9160; Natural gas increased 0.014 USD/MMBtu or 0.60% to 2.3547; Gasoline increased 0.0038 USD/GAL or 0.22% to 1.7413; and Heating oil decreased 0.0006 USD/GAL or -0.03% to 1.8264.

Top commodity gainers: Canola (2.96%), Live Cattle (2.50%), Feeder Cattle (2.42%), and Cocoa (2.34%). Top commodity losers: Silver (-2.07%), Palm Oil (-1.33%), Orange Juice (-3.30%), and Coffee (-2.87%)

The above data was collected around 14:00 EST on Monday.

BONDS:

Japan -0.12%(-2bp), US 2’s 1.85% (+2bps), US 10’s 2.14%(+6bps), US 30’s 2.57%(-4bps), Bunds -0.26% (-2bp), France 0.13% (+5bp), Italy 2.37% (-0bp), Turkey 18.12% (-4bp), Greece 2.85% (-76bp), Portugal 0.72% (+8bp), Spain 0.61% (+6bp) and UK Gilts 0.84% (+2bp).

  • US 3-Month Bill Auction decreased from 2.300% to 2.240%
  • US 6-Month Bill Auction decreased from 2.255% to 2.140%
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