Market Talk – April 3, 2019

Asia:

The U.S. and China are reportedly growing closer to a final trade agreement. The news caused the Shanghai composite to move up 1.24%. A White House economic advisor stated that the negotiators are “making good headway,” however, this deal was due to have been wrapped up by now. There is uncertainty whether a deal can reach a conclusion.

For the lucky citizens of Japan, the government is declaring a public 10-day holiday to wish in the new emperor at the end of the month.

Most of the major Asian stock markets had a green day today: NIKKEI 225 increased 207.90 points (0.97%) to 21,713.21; Hang Seng increased 361.72 points (1.22%) to 29,986.39; KOSPI increased 26.09 points (1.20%) to 2,203.27; Shanghai increased 39.47 points (1.24%) to 3,216.30; ASX 200 increased 42.60 (0.68%) to 6,285.00. However, SENSEX took the opposite route and decreased 179.53 points (-0.46%) to 38,877.12.

The major currency markets had a mixed day today: the AUDUSD increased 0.0004 or 0.06% to 0.7115, and the USDJPY increased 0.1150 or 0.10% to 111.4550. However, the NZDUSD and the USDCNY took the opposite route and decreased 0.0022 or 0.32% to 0.6782 and 0.0042 or 0.06% to 6.7137 respectfully.

Gold increased 2.81 USD/t oz. or 0.22% to 1,287.77 and silver increased 0.02 USD/t. oz or 0.10% to 15.10

Some economic news from yesterday late evening:

• China Caixin Services PMI (Mar) increased from 51.1 to 54.4
• Hong Kong Manufacturing PMI (Mar) decreased from 48.4 to 48.0
• South Korea increased from 404.67B to 405.25B
• New Zealand ANZ Commodity Price Index (MoM) decreased from 2.8% to 1.4%

Australia:

• Retail Sales (MoM) (Feb) increased from 0.1% to 0.8%
• Trade Balance (Feb) increased from 4.351B to 4.801B
• AIG Services Index (Mar) increased from 44.5 to 44.8
• Services PMI decreased from 49.8 to 49.5
• Exports (MoM) (Feb) decreased from 5% to 0%
• Imports (MoM) (Feb) decreased from 3% to -1%

Singapore:

• Manufacturing PMI (Mar) increased from 50.4 to 50.8

Europe:

Concerning Brexit, Theresa May held talks with Labour head Jeremy Corbyn in an attempt to help the current deadlock. With only eight days remaining, it seems as if a hard Brexit is in the cards. French PM Macron stated, “Should the United Kingdom be unable…to propose a solution backed by a majority, they will de facto have chosen themselves to leave without a deal…We cannot avoid failure for them.” EU’s Juncker further complemented this by saying no more short Brexit delays unless a deal is internally approved by April 12. Today the UK parliament hit a deadlock as a vote to vote on whether more votes should be held on Monday; it really seems as if there is no direction or plan. The EU draft has recognized Gibraltar (a small country attached to Spain) as part of the UK and thus exposed to the same fate as the UK.

Separately, a research group, stated that the EU must tax airlines in order to reduce the runway emissions.

The major European stock markets had a green day today: CAC 40 increased 45.45 points or 0.84% to 5,468.91; the FTSE 100 increased 27.16 points or 0.37% to 7,418.28; and the DAX increased 199.61 points or 1.70% to 11,954.40.

The major European currency markets had a mixed day today: the EURUSD increased 0.0027 or 0.24% to 1.1239 and the GBPUSD increased 0.0064 or 0.49% to 1.3163. The USDCHF took the opposite route and decreased 0.0012 or 0.12% to 0.9976.

Economic news from Europe on Wednesday:

• Spanish Services PMI (Mar) increased from 54.5 to 56.8
• Italian Services PMI (Mar)increased from 50.4 to 53.1
• Italian Public Deficit (Q4) decreased from 2.2% to 2.0%
• UK Services PMI (Mar) decreased from 51.3 to 48.9
• French Markit Composite PMI (Mar) increased from 48.7 to 48.9
• French Services PMI (Mar) increased from 48.7 to 49.1
• German Composite PMI (Mar) decreased from 51.5 to 51.4
• German Services PMI (Mar) increased from 54.9 to 55.4
• Norway House Price Index (YoY) (Mar) increased from 3% to 3.2%

Eurozone:

• Markit Composite PMI (Mar) increased from 51.3 to 51.6
• Services PMI (Mar) increased from 52.7 to 53.3
• Retail Sales (MoM) (Feb) decreased from 0.9% to 0.4%
• Retail Sales (YoY) (Feb) increased from 2.2% to 2.8%

U.S./Americas:

All the major U.S. indexes closed in positive territory on Monday. The Dow gained 39 points, a 0.15% increase, and closed at 26218.13. The S&P 500 soared for the fifth consecutive day (0.21%, 2873.40 close). The Nasdaq jumped 0.60%, closing for the day at 7895.55. The Russell 2000 increased by 0.49% this Wednesday and closed at 1560.91.

Job growth hit an 18-month low in March, according to a report released this Wednesday by ADP and Moody’s Analytics. Private payrolls rose by 129,000, which is the weakest monthly reporting since September 2017. Analysts expected jobs to increase by over 170,000.

Positions in healthcare and educational services rose by 56,000, the hospitality industry rose by 13,000, and professional and business services increased by 41,000. However, new construction positions decreased by 6,000, and manufacturing jobs decreased by 2,000. The service industry saw the largest increase upon adding 135,000 jobs. The Institute for Supply Management released a separate report this Wednesday noting that, despite growth, March was the slowest month of gains for the service sector.

The Labor Department will release their nonfarm payroll report this Friday, which will provide further clarity on American job growth.

President Trump reiterated his stance on implementing tighter border control by any means necessary. Closing the border could have serious implications for the U.S. economy as $1.6 billion in goods passes through the U.S. and Mexico daily. In an interview with NPR Radio, President of the Fresh Produce Association of the Americas Lance Jungmeyer cautioned that closing the border would cause a spike in produce prices. “Probably over half of what most consumers put in their shopping bag when it comes to fresh produce, they would find reduced quantities at higher prices,” Jungmeyer warned. The automotive industry would also suffer from a closure as 37% of imported auto parts to the U.S. come from Mexico.

The USD Index declined by -0.25% this Wednesday (last reading 97.11). The USD/CAD rose by 0.07% (last reading 1.3347).

The Canadian markets continued to advance for the third consecutive day. The TSX Composite closed at 16279.86 (0.10% increase), while the TSX 60 closed at 971.66 (0.13% increase).

The Bovespa saw substantial losses for the second consecutive day after declining by -0.94% (94493.91 close).

Energy:

As reported last week there were issues with shale supply. Today the U.S. had a big jump in Crude stockpiles. This naturally caused Crude oil to come down from their new five-month highs.

The energy markets had a mixed day today: Brent increased 0.01 USD/BBL or 0.02% to 69.53, Gasoline increased 0.05 USD/GAL or 2.71% to 1.95, and Heating oil increased 0.02 USD/GAL or 0.96% to 2.01. However, Crude Oil and Natural Gas took the opposite route and decreased 0.13 USD/BBL or 0.21% to 62.35 and 0.04 USD/MMBtu or 1.29% to 2.68 respectfully.

Top commodity gainers are Cheese (6.95%), Milk (5.84%), Coffee (3.55%）and Gasoline (2.73%). Biggest losers are Ethanol (-3.21%), Rice (-1.75%) and Sugar (-1.66%)

The above data were collected around 15:53 EST time on Wednesday

Bonds:

Japan -0.05%(+1bp), US 2’s 2.33% (+0bps), US 10’s 2.52%(+2bps), US 30’s 2.92%(+3bps), Bunds -0.05% (-2bp), France 0.40% (+2bp), Italy 2.54% (+3bp), Turkey 17.18% (+26bp), Greece 3.65% (-6bp), Portugal 1.28% (-0bp), Spain 1.15% (-0bp) and UK Gilts 1.09% (+5bp)