Market Talk – March 29, 2019

Asia:

Today marked the second and final day in this round of U.S. – China trade negotiations in Beijing.

According to RT News, “The US just ‘invaded’ an island in the East China Sea & no one noticed.” This island belongs to the Japanese, Okinawa archipelago, and was taken over and used as a military base in 1945 during the second World War. Today the relationship between the US and Japan is strong. Since a military strengthened China would be against both their global interests, it is not that the US “invaded” but rather they are performing sole or joint military exercises with the Japanese. The island is known to house a parachute training facility for the U.S. with the facility occupying close to a third of the island. However, RT producing such an article does illustrate the times of tension between the global superpowers we are going through today.

The major Asian stock markets had a green day today: KOSPI increased 12.57 points (+0.59%) to 2,140.67; NIKKEI 225 increased 172.05 points (+0.82%) to 21,205.81, and Shanghai increased 95.81 points (+3.20%) to 3,090.76. Hang Seng increased 276.15 points (+0.96%) to 29,051.36; SENSEX increased 540.03 points (+1.42%) to 38,672.91, and ASX 200 increased 4.60 points (+0.07%) to 6,180.70.

The major Asian currency markets had a mixed day: The AUDUSD increased 0.0021 or 0.30% to 0.7096; the NZDUSD increased 0.0043 or 0.64% to 0.6818, and the USDJPY increased 0.1430 or 0.13% to 110.7630. However, the USDCNY took the opposite route and decreased 0.0198 or 0.29% to 6.7187

Both gold and silver markets had a green day today: Gold increased 5.15 USD/t oz. or 0.40% to 1,294.09 and silver increased 0.15 USD/t oz. or 1.00% to 15.1907.

Some economic news from yesterday late evening:

• New Zealand Building Consents (MoM) (Feb) decreased from 13.6% to 1.9%
• Australia Private Sector Credit (MoM) (Feb) increased from 0..2% to 0.3%
• Australia Housing Credit (Feb) increased from 0.2% to 0.3%
• South Korea Industrial Production (MoM) (Feb) decreased from 0.2% to -2.6%
• South Korea Retail Sales (MoM) decreased from 0.1% to -0.5%
• Japan Jobs/applications ratio (Feb) remain the same at 1.63
• Japan Tokyo Core CPI (YoY) (Mar) remain the same at 1.1%
• Japan Industrial Production (MoM) (Feb) increased from -3.4% to 1.4%
• Japan Retail Sales (YoY) (Feb) decreased from 0.6% to 0.4%
• Japan Unemployment Rate (Feb) decreased from 2.5% to 2.3%

Some economic news from Friday:

• Japan Construction Orders (YoY) (Feb) decreased from 19.8% to -3.4%
• Japan Housing Starts (YoY) (Feb) increased from 1.1% to 4.2%
• Hong Kong M3 Money Supply (Feb) decreased from 1.5% to 1.4%

Some news from India:

• Balance of Payments (USD) (Q4) decreased from -1.900B to -4.300B
• Bank Loan Growth decreased from 14.6% to 14.5%
• Current Account % of GDP (QoQ) (Q4) increased from -2.90% to -2.50%
• Deposit Growth increased from 9.8% to 10%
• FX Reserves, USD increased from 405.64B to 406.67B
• Trade Balance (USD) (Q4) increased from -50.0B to -49.5B

Europe:

In the UK today, PM Theresa May had her withdrawal agreement with the EU rejected by 286 to 344 votes. This marks the third time the government had its plans defeated in parliament. Meanwhile, outside of the parliament thousands gather to demonstrate against the delay to Brexit. “Brexit Now!” was chanted by many protesters. There really is no clear path forward at this moment.

EU leader Donald Tusk has given the UK government 11 days to come up with a fresh Brexit plan to avoid crashing out of the bloc on 12 April.

The matter of the Irish/Northern Irish border is yet to be resolved with the Irish Taoiseach Leo Varadkar stating that UK leaving with a no-deal seems like a growing possibility. Labour leader Jeremy Corbyn asked for another election, which would allow the public to decide who is better to take it forward. The former governor of the Bank of England, Mervyn King, has criticized the government over their handling of Brexit and urged the UK to leave the EU now.

The major European stock markets had a green day today: CAC 40 increased 53.99 points or 1.02% to 5,350.53; the FTSE 100 increased 44.86 points or 0.62% to 7,279.19, and the DAX increased 97.88 points or 0.86% to 11526.04.

The major European currency markets had a mixed day today: The EURUSD increased 0.0006 or 0.05% to 1.1226 and the USDCHF increased 0.0001 or 0.01% to 0.9956. However, the GBPUSD took the opposite route and decreased 0.00183 or -0.14% to 1.30247

Some economic news from Europe:

UK:

• Nationwide HPI (YoY) (Mar) increased from 0.4% to 0.7%
• Nationwide HPI (MoM) (Mar) increased from -0.1% to 0.2%
• Business Investment (QoQ) (Q4) increased from -1.4% to -0.9%
• Current Account (Q4) decreased from -23.0B to -23.7B
• GDP (QoQ) (Q4) remain the same at 0.2%
• GDP (YoY) (Q4) increased from 1.3% to 1.4%
• M4 Money Supply (MoM) (Feb) increased from 0.2% to 0.3%

France:

• French Consumer Spending (MoM) (Feb) decreased from 1.4% to -0.4%
• French CPI (MoM) increased from 0.0% to 0.8%
• French HICP (MoM) increased from 0.1% to 0.9%

Germany:

• German Retail Sales (MoM) (Feb) decreased from 2.8% to 0.9%
• German Import Price Index (MoM) (Feb) increased from -0.2% to 0.3%
• German Unemployment Change (Mar) increased from -20K to -7K
• German Unemployment Rate (Mar) decreased from 5.0% to 4.9%
• German Unemployment (Mar) decreased from 2.238M to 2.231M

Italy:

• Italian CPI (MoM) (Mar) increased from 0.1% to 0.3%
• Italian HICP (MoM) (Mar) increased from -0.3% t0 2.3%
• Italian PPI (MoM) (Feb) increased from -0.5% to -0.1%
• Italian PPI (YoY) (Feb) decreased from 3.4% to 3.1%

Spain:

• Spanish GDP (QoQ) (Q4) remain the same at 0.6%
• Spanish GDP (YoY) (Q4) decreased from 2.4% to 2.3%
• Spanish Retail Sales (YoY) (Feb) increased from 0.9% to 1.2%

Switzerland:

• KOF Leading Indicators (Mar) increased from 93.0 to 97.4

Norway

• Unemployment Rate n.s.a. (Mar) decreased from 2.5% to 2.4%
• Unemployment Change (Mar) decreased from 78.98K to 78.32K
• Core Retail Sales (MoM) (Feb) decreased from 1.5% to -1.3%
• Central Bank Currency Purchase (Apr) remain the same at -600.0M

U.S./Americas:

Wall Street finished strong amid a highly anticipated IPO and continued trade discussions with China. The Dow advanced over 211 points in today’s session, a +0.82% increase, closing at 25928.68. The S&P 500, finishing up its best first quarter in over two decades, closed up +0.67% to 2834.40. The Nasdaq increased +0.78%, closing at 7729.32 while the Russell 2000 rose +0.30%, closing at 1539.74.

Lyft, a popular ride share company, soared over 20% midday from its initial list price of $72 – a valuation of ~$24 billion. The stock jumped to $88.60 during midday trading and closed the day at 78.15. Uber, Lyft’s top competitor, is expected to go public later this year.

Treasury Secretary Steven Mnuchin sounded optimistic about on-going trade negotiations with China, referring to recent discussions as “constructive.”

President Trump, via Twitter, stated he will close the Mexican border next week if Mexico does not abide by his demands to curb illegal immigration: “Congress must change our weak immigration laws now, and Mexico must stop illegals from entering the U.S. through our southern border… If Mexico doesn’t immediately stop ALL illegal immigration coming into the United States through our southern border, I will be CLOSING the border, or large sections of the border, next week.”

The USD Index increased 0.07% this Friday (last reading 97.27). The USDCAD decreased -0.63% (last reading 1.3352).

Canada’s economy grew at a greater than expected rate in January. According to a report released by Statistics Canada this Friday, Canada’s GDP rose by 0.3% during the first month of 2019, offsetting the previous two months of declines. This news comes as a welcomed surprise as analysts expected economic growth to remain stagnant in January.

Canadian markets did not fare as well as U.S. with the TSX Composite closed down -0.33% (16102.09 close) and the TSX 60 closed down -0.45% (959.50 close).

Brazil’s Bovespa continued its recovery today, adding an additional 1025.61 points (+1.09%, 95414.55 close).

Energy:

The Saudi Ministers called up against the recent tweet by Trump for OPEC to increase supply, having stated they will all ignore the Trump “tolerance threshold.” Oil has rallied more than 30% since the beginning of the year, making it the biggest quarterly rise since 2009.

The energy markets had a mixed day today: Crude Oil increased 0.87 USD/BBL or 1.47% to 60.06; Brent increased 0.55 USD/BBL or 0.81% to 68.38 and Gasoline increased 0.02 USD/GAL or 0.95% to 1.89. However Natural gas and Heating oil took the opposite route decreased 0.03 USD/MMBtu or 0.92% to 2.69 and 0.0029USD/GAL or 0.15% to 1.9712.

Top commodity gainers were Feeder Cattle (2.57%), Palladium (2.37%) Steel (2.29%, and Copper (2.16%). The biggest losers were Corn (-3.01%), Lumber (-2.96%), Wheat (-2.48%), Ethanol (-2.54%), and Orange Juice (-2.46%).

The above commodity data were collected around noon EST time on Friday.

Bonds:

Japan -0.09%(+0bp), US 2’s 2.27% (+4bps), US 10’s 2.41%(+2bps), US 30’s 2.83%(+2bps), Bunds -0.07% (+1bp), France 0.32% (+1bp), Italy 2.50% (+2bp), Turkey 17.86% (-57bp), Greece 3.74% (-4bp), Portugal 1.25% (-2bp), Spain 1.09% (-1bp) and UK Gilts 1.00% (-0bp)