Market Talk – January 9, 2020

ASIA:

The United States and China continued trade talks in Beijing for an unscheduled third day, US officials said. There are signs of progress on issues including purchases of US farm and energy commodities and increased access to China’s markets. People familiar with the talks said the world’s two largest economies were further apart on Chinese structural reforms. The Trump administration is demanding in order to stop alleged theft and forced transfer of U.S. Technology and how to hold Beijing in its promises.

Later in the day, China announced that the Vice Premier Liu He will be traveling to Washington next week in order to sign phase 1 of the trade deal. US President Trump said that the signing will take place on January 15th which ties in with the Chinese Vice Premier travel plans.

Unfazed by the projections of GDP growth slowing to an 11-year low in the current fiscal, Prime Minister Narendra Modi on Thursday said fundamentals of the Indian economy are strong and it has the capacity to bounce back. Modi, who seems to have taken charge of efforts to revive the economy, has over the past few days held as many as 12 brainstorming meetings with different stakeholders over various issues affecting the economy and to thrash out the appropriate policy interventions in the upcoming budget.  On Thursday, he met economists, private equity and venture capitalists, business leaders and agriculture experts at Niti Aayog and called for focused efforts from all stakeholders to achieve the target of nearly doubling the size of the Indian economy to $5 trillion by 2024.

India’s Supreme Court ruled on Tuesday that Monsanto can claim patents on its genetically modified (GM) cotton seeds, a victory for the U.S. company that is expected to encourage biotechnology firms to step up investment in the country. The decision on appeal overturns an earlier ruling by the Delhi High Court that Monsanto. The world’s biggest seed maker, which has been bought by Germany’s Bayer AG, could not claim patents on GM cotton seeds.  The outcome is positive for foreign agricultural companies such as Bayer, Dupont Pioneer and Syngenta which have been concerned they could lose patents on GM crops in India.

India has banned Malaysian refined palm oil, as a dispute emerged after Malaysian Prime Minister Mahathir Mohamad criticized Indian recent actions in Kashmir as well as the newly introduced Citizenship law.

Singapore’s former Chief Justice Yong Pung How died on Thursday morning at the age of 93. Prime Minister Lee Hsien Loong called him “one of Singapore’s finest sons.” In a condolence letter to Mr. Yong’s wife, PM Lee said that Mr. Yong, who also helped set up the Government of Singapore Investment Corporation (GIC) and served at the Monetary Authority of Singapore, had left an indelible mark on the country’s legal profession and society. In particular, it was in the judiciary that Mr. Yong had left his deepest legacy, he noted.

The major Asian stock markets had a green day today:

  • Shanghai increased 27.99points or 0.91% to 3,094.88
  • Kospi increased 35.14 points or 1.63% to 2,186.45
  • ASX 200 increased 56.60 points or 0.83% to 6,874.20
  • NIKKEI 225 increased 535.11 points or 2.31% to 23,739.87
  • Hang Seng increased 473.08 points or 1.68% to 28,561.00
  • SENSEX increased 634.61 points or 1.55% to 41,452.35

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.0018 or 0.26% to 0.6853
  • NZDUSD decreased 0.0043 or 0.65% to 0.6611
  • USDJPY increased 0.4420 or 0.41% to 109.5100
  • USDCNY decreased 0.0092 or 0.13% to 6.9271

Precious Metals:

  • Gold decreased 5.05 USD/t oz. or -0.32% to 1,549.43
  • Silver decreased 0.2461 USD/t. oz or -1.36%% to 17.9127

Some economic news from last night:

China:

CPI (YoY) (Dec) remain the same at 4.5%

CPI (MoM) (Dec) decreased from 0.4% to 0.0%

PPI (YoY) (Dec) increased from -1.4% to -0.5%

Australia:

Exports (MoM) (Nov) increased from -5% to 2%

Imports (MoM) (Nov) decreased from 0% to -3%

Trade Balance (Nov) increased from 4.075B to 5.800B

Japan:

Foreign Bonds Buying increased from -922.9B to -446.1B

Foreign Investments in Japanese Stocks increased from 140.7B to 171.0B

New Zealand:

ANZ Commodity Price Index (MoM) decreased from 4.3% to -2.8%

EUROPE/EMEA:

Head of the European Commission Ursula Von der Layen is still critical over the Brexit timeline imposed by the UK, she tweeted, “The more divergence there is, the more distant the partnership has to be. And without an extension of the transition period beyond 2020, you cannot expect to agree on every single aspect of our new partnership. We will have to prioritise.”

UK BOE Governor Mark Carney has hinted at the fact that they may have to cut interest rates to bolster the economy, as he warns that the BOE does not have many other options to do so.

UK research on immigration has estimated that nearly 110,000 children are without secure immigration status in London alone. Accounting for adults too, the number stands at 674,000 for the UK, with nearly half being children.

UK retail sales growth figures came out for 2019, show that it was the worst year on record for growth. The sales have fallen for the first time in 24 years, and are the lowest began since records began in 1995.

Abu Dhabi Sovereign fund Mubadala sold close to a billion dollars of Unicredit stock as they reduced their holdings from 4.99% to close to 2% of the Italian bank.

After US President Trump backed away from escalating the probability of war with Iran, an Iranian senior commander in the Revolutionary Guard Abdollah Araghi said tougher retaliation take place against the US in the future.  Meanwhile, the UK PM Boris Johnson has had a phone call with Iranian President Rouhani, urging the President to keep calm regarding any escalation.

Russian President Putin attended military drills in the Black Sea today. On show were more than 30 warships and 39 aircraft as well as a few missile launches as global tensions heat up.

The major Europe stock markets had a green day today:

  • CAC 40 increased 11.56 points or 0.19% to 6,042.55
  • FTSE 100 increased 23.19 points, or 0.31% to 7,598.12
  • DAX 30 increased 174.88 points or 1.31% to 13,495.06

The major Europe currency markets had a negative day today:

  • EURUSD decreased 0.0004 or 0.04% to 1.1107
  • GBPUSD decreased 0.00387 or 0.30% to 1.30643
  • USDCHF decreased 0.0003 or 0.03% to 0.9732

Some economic news from Europe today:

Germany:

Germany Thomson Reuters IPSOS PCSI (Jan) increased from 53.43 to 53.60

Gemran Current Account Balance n.s.a (Nov) increased from 22.9B to 24.9B

German Exports (MoM) (Nov) decreased from 1.5% to -2.3%

German Imports (MoM) (Nov) decreased from 0.5% to -0.5%

German Industrial Production (MoM) (Nov) increased from -1.0% to 1.1%

German Trade Balance (Nov) decreased from 20.4B to 18.3B

Swiss:

Retail Sales (YoY) (Nov) decreased from 0.4% to 0.0%

Italy:

Italian Monthly Unemployment Rate (Nov) remain the same at 9.7%

France:

France Thomson Reuters IPSOS PCSI (Jan) increased from 42.49 to 42.89

UK:

Thomson Reuters IPSOS PCSI (Jan) increased from 48.5 to 52.6

US/AMERICAS:

Wall Street experienced another historic day this Thursday after all three major indexes reached record highs. The Dow reached a record high of 28,957.17 after advancing over 200 points, aided by Goldman Sachs (1.96%), Apple, (1.92%), and Coca-Cola (1.79%). The S&P 500 reached 3,274.70, aided by L Brands (3.77%), Ball (3.6%), and Align Technology (3.51%). The Nasdaq peaked to an intraday high of 9,215.95 before settling at a closing high of 9,203.43. The index’s performance was boosted by Biomarin Pharmaceutical (5.57%), Align Technology (3.51%), and Xilinx (2.43%).

Canadian Prime Minister Justin Trudeau is seeking answers for the Ukraine-bound Boeing plane crash in Iran that killed all 176 people on board including 63 Canadians. “It’s dangerous to speculate on possible causes,” Trudeau warned, despite international news agencies calling foul play. Transport Canada released a heightened travel advisory on Wednesday due to a “regional threat of terrorism and the risk of arbitrary detention.” The agency heeded a special warning to Canadian-Iranian citizens with a cautionary notice that Iran does not recognize dual citizenship and they are at risk of being targeted by the Iranian government.

Despite PM Trudeau’s warning against speculation, the US media is now reporting that the plane was likely shot down by Iranian forces. President Trump suggested that the plane may have been shot down unintentionally. Ominously, the Ukrainian embassy in Iran removed a message on their website that originally stated the crash was the result of mechanical errors rather than terrorist activity. Boeing stock rose 1.55% today, possibly indicating that the public does not believe the crash to be the result of another manufacturing flaw.

China’s Commerce Ministry confirmed this Thursday that Vice Premier Liu He will travel to the White House next week to sign phase one of the trade deal. President Trump announced that he will travel to Beijing at a later date to discuss phase two.

The White House Council on Environmental Quality (CEQ) announced plans this Thursday to remove certain regulations in order to speed up energy and infrastructure projects. The National Environmental Policy Act (NEPA) has been in place for 50-years and mandates federal agencies to review environmental factors before proceeding with new developments. President Trump called the process “outrageously slow and burdensome,” which may hold some validity as it takes an average of 4.5 years for various agencies to complete their environmental assessments that average 600 pages. The keystone pipeline

US Market Closings:

  • Dow advanced 212.08 points or 0.74% to 28,957.17
  • S&P 500 advanced 21.65 points or 0.67% to 3,274.70
  • Nasdaq advanced 74.18 points or 0.81% to 9,203.43
  • Russell 2000 advanced 1.40 points or 0.08% to 1,664.99

Canada Market Closings:

  • TSX Composite advanced 67.75 points or 0.39% to 17,235.57
  • TSX 60 advanced 3.76 points or 0.37% to 1,026.72

Brazil Market Closings:

  • Bovespa declined 301.03 points or -0.26% to 115,946.00

ENERGY:

US crude oil imports have increased and exports reduced during the week of January 3rd, with the US net import/exports being -3.70 million barrels per day. The Crude supplies edged up by 1.2m bpd.

The oil markets had a mixed day today:

  • Crude Oil increased 0.03 USD/BBL or 0.05% to 59.5507
  • Brent increased 0.6 USD/BBL or 0.93% to 65.4848
  • Natural gas increased 0.0023 USD/MMBtu or 0.11% to 2.1409
  • Gasoline decreased 0.0012USD/GAL or -0.07% to 1.6660
  • Heating oil decreased 0.0149 USD/GAL or -0.76% to 1.9507
  • Top commodity gainers: Wheat(1.91%),Coco a(1.96%),Oat(1.63%), and Sugar(1.56%)
  • Top commodity losers: Lean Hogs(-3.67%), Bitumen(-2.49%), Orange Juice (-1.93%), and Lumber(-1.76%)

The above data was collected around 15.35 EST on Thursday.

BONDS:

Japan -0.02%(-1bp), US 2’s 1.59% (+5bps), US 10’s 1.86%(-2bps); US 30’s 2.37%(+1bps), Bunds -0.26% (+2bp), France 0.06% (+1bp), Italy 1.39% (-4bp), Turkey 11.53% (-52bp), Greece 1.44% (-52bp), Portugal 0.41% (+1bp), Spain 0.46% (+3bp) and UK Gilts 0.81% (-1bp).

  • French 10-Year OAT Auction increased from -0.08% to 0.04%
  • Spanish 3-Year Bonos Auction increased from -0.447% to -0.391%
  • Spanish 5-Year Bonos Auction decreased from -0.085% to -0.103%
  • US 4-Week Bill Auction decreased from 1.500% to 1.490%
  • US 8-Week Bill Auction remain the same at 1.515%
  • US 30-Year Bond Auction increased from 2.307% to 2.341%

 

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