Market Talk – April 18, 2019

Asia:

Amazon announced they will shut down its China marketplace business, effectively ceding the market to Alibaba and JD.com. The business will wind down in July, giving ample time for sellers using the services to transfer to other providers. Amazon does plan to continue to support “cross-border” business – that is, importing goods into China for local consumers.

Elsewhere, Japanese PM Shinzo Abe announced he has given up on settling an agreement with Russia in regards to the territorial dispute over the Kuril Islands (aka Southern Kurils by Russia and the Northern Territories by Japan) – a dispute that has lasted since 1945 when Soviet forces overtook the islands after Japan’s surrender to Allied Forces.

Most of the major Asian stock markets had a negative day today: Shanghai decreased 12.92 points (-0.40%) to 3,250.20; KOSPI decreased 32.12 points (-1.43%) to 2,213.77; SENSEX decreased 135.36 points (-0.34%) to 39,140.28; Hang Seng decreased 161.42 points (-0.54%) to 29,963.26; and NIKKEI 225 decreased 187.85 points (-0.84%) to 22,090.12. However, ASX 200 took the opposite route and increased 3.40 points (0.05%) to 6,259.80.

The AUDUSD decreased 0.0037 or 0.52% to 0.7141; the NZDUSD decreased 0.0052 or 0.77% to 0.6675; and The USDJPY decreased 0.0790 or 0.07% to 111.9710. The USDCNY took the opposite route and increased 0.0316 or 0.47% to 6.7081.

Gold decreased 0.04 USD/t oz. or -0.00% to 1,272.41 and silver decreased 0.005 USD/t. oz or -0.03% to 15.0136.

Some economic news from Asia:

China:

• China FDI (Mar) increased from 5.5% to 6.5%

Hong Kong:

• Hong Kong remain the same at 2.8%

South Korea:

• Interest Rate Decision (Apr) remain the same at 1.75%

Japan:

• Reuters Tankan Index (Apr) decreased from 10 to 8
• Foreign Bonds Buying increased from -1,742.5B to 591.1B
• Foreign Investments in Japanese Stocks decreased from 1,463.5B to 528.5B
• Manufacturing PMI (Apr) increased from 49.2 to 49.5

Australia:

• Manufacturing PMI decreased from 52.0 to 51.0
• Services PMI increased from 49.3 to 50.5
• Employment Change (Mar) increased from 4.6K to 25.7K
• Full Employment Change (Mar) increased from -7.3K to 48.3K
• NAB Quarterly Business Confidence decreased from 1 to -1
• Participation Rate (Mar) increased from 65.6% to 65.7%
• Unemployment Rate (Mar) increased from 4.9% to 5.0%

Europe:

In its continued efforts to lead the world in big tech legislation, the a new EU law could begin to fine websites such as Facebook and Twitter if terrorist content is posted for longer than an hour.

In other news, Nigel Farage’s Brexit Party has shot up in the latest polls for the European elections. Farage’s party came in at third place with 13.5%, but the Labour is currently leading the polls with 26.5%. The center-right is projected to remain the largest representation in the EU parliament. Some are seeing the European elections as a mini Brexit referendum, with Labour being a vote for a pro-European stance.

The major European stock markets had a mixed day today. The CAC 40 increased 17.29 points or 0.31% to 5,580.38 and DAX increased 69.32 points or 0.57% to 12,222.39. The FTSE 100 took the opposite route and decreased 11.44 points, or -0.15% to 7,459.88.

The major European currency markets had a mixed day today. The EURUSD decreased 0.00647 or -0.57% to 1.12293, and the GBPUSD decreased 0.0056 or 0.43% to 1.2987. The USDCHF took the opposite route and increased 0.0051 or 0.50% to 1.0154.

Some economic news from Europe:

Switzerland:

• Trade Balance (Mar) increased from 2.943B to 3.179B

Germany:

• German PPI (MoM) (Mar) remain the same at -0.1%
• German PPI (YoY) (Mar) decreased from 2.6% to 2.4%
• German Composite PMI (Apr) increased from 51.4 to 52.1
• German Manufacturing PMI (Apr) increased from 44.1 to 44.5
• German Services PMI (Apr) increased from 55.4 to 55.6

France:

• French Manufacturing PMI (Apr) decreased from 49.7 to 49.6
• French Markit Composite PMI (Apr) increased from 48.9 to 50.0
• French Services PMI (Apr) increased from 49.1 to 50.5

Italy:

• Italian Industrial New Orders (MoM) (Feb) decreased from 2.1% to -2.7%
• Italian Industrial New Orders (YoY) (Jan) increased from -4.7% to -2.9%
• Italian Industrial Sales (MoM) (Feb) decreased from 3.10% to 0.30%
• Italian Industrial Sales (YoY) (Jan) increased from -7.40% to 1.30%

UK:

• Core Retail Sales (YoY) (Mar) increased from 3.8% to 6.2%
• Core Retail Sales (MoM) (Mar) increased from 0.4% to 1.2%
• Retail Sales (YoY) (Mar) increased from 4.0% to 6.7%
• Retail Sales (MoM) (Mar) increased from 0.6% to 1.1%

Eurozone:

• Manufacturing PMI (Apr) increased from 47.5 to 47.8
• Markit Composite PMI (Apr) decreased from 51.6 to 51.3
• Services PMI (Apr) decreased from 53.3 to 52.5

U.S./Americas:

Most major U.S. markets finished in the green ahead of the long holiday weekend. The Dow advanced 110 points or 0.42% (26,559.54 close); the S&P 500 advanced 4.58 points or 0.16% (2,905.03 close); the Nasdaq was just slightly positive, gaining 1.98 points or 0.02% (7,998.06 close); and the Russell 2000 lost 1.85 points or -0.12% (1,565.75 close).

The full Mueller report was released to the public today. The much-anticipated report comes after a two-year special investigation into Russia’s alleged interference in the 2016 U.S. presidential election. “NO COLLUSION — NO OBSTRUCTION!” President Donald Trump reiterated throughout the day. The lengthy report found that Russia did in fact execute a cyber-attack during 2016 U.S. elections, and while it found there was a number of apparent communications between the Trump campaign (or those associated with the campaign) and Russia (or those associated with Russia) it did not rise to a level to bring formal charges.

Mueller’s report stated: “Although the investigation established that the Russian government perceived it would benefit from a Trump presidency and worked to secure that outcome, and that the Campaign expected it would benefit electorally from information stolen and released through Russian efforts, the investigation did not establish that members of the Trump Campaign conspired or coordinated with the Russian government in its election interference activities.” Legally, neither Trump, nor his campaign, is found to have conspired with the Russians to hack the election, and the DOJ’s position is there can be no obstruction of justice if there was no underlying criminal act. While the report does not exonerate Trump or his campaign completely, it doesn’t quite give his opponents what they are looking for either. This is not the end of this debate – especially with 2020 election campaigns starting to kick off.

In other news, there were two notable IPO’s today in technology. The popular “discovery engine” Pinterest (PINS) went live on the NYSE, closing its first day at $24.40 (28.42% higher than the initial price). Zoom (ZM), a video conferencing service, had an even better day in its first public offering on the Nasdaq – originally priced at $36, shares soaring to $65 during early trading before closing the day at $62 (+72.22%). Pinterest and Zoom join Lyft and PagerDuty technology IPO’s so far this year while Wall Street waits for Uber, Slack and Postmates among others to follow.

Senate Majority Leader Mitch McConnell announced plans to introduce legislation that will raise the minimum age for tobacco sales from 18 to 21. According to the Center for Disease Control (CDC), 90% of smokers try their first cigarette before the age of 18. However, more tobacco users are switching to the vaporized form of the product, especially teenagers, and the CDC stated that this form of smoking has surged by 78%. Juuls, a privately held tobacco company who netted $1.8 billion in sales last year, declined to comment. Altria (-3.22%), British American Tobacco (-1.44%), and Phillip Morris (-1.16%) all experienced losses upon the news.

The USD Index rose 0.46% this Thursday (last reading 97.45). The USDCAD is up 0.32% (last reading 1.3381).

In Canada, markets were fairly positive ahead of the holiday. The TSX Composite gained 0.41% (16,612.81 close), and the TSX 60 gained 0.47% (995.29 close).

Brazil’s Bovespa rebounded today, gaining 1.39% (94,578.26 close).

Energy:

A recent report from Reuters suggests that China is continuing to to buy and stockpile crude oil, even as the price of crude begins to creep upwards. China does not release detailed stats on its reserve (SPR). However, refineries have refined 12.6 million bpd, which is up 4.4% since the start of the year.

Crude oil increased 0.13 USD/BBL or 0.20% to 63.9728; Brent increased 0.29 USD/BBL or 0.40% to 72.0389; Gasoline and Heating oil increased 0.0267 USD/GAL or 1.31% to 2.0646 and 0.0008 USD/GAL or 0.04% to 2.0730 respectfully. However, natural gas took the opposite route and decreased 0.022 USD/MMBtu or -0.87% to 2.4928.

Top commodity gainers were Coffee (4.19%), Sugar (3.48%), Platinum (1.61%), and Gasoline (1.34%). The biggest losers were Oat (-3.59%), Orange Juice(-2.14%), Bitumen (-1.90%) and Cocoa (-1.57%).

The above data was collected around 13:51 EST time on Thursday.

Bonds:

Japan -0.03%(-2bp), US 2’s 2.39% (-3bps), US 10’s 2.56%(-3bps), US 30’s 2.97%(-3bps), Bunds 0.02% (-6bp), France 0.37% (-7bp), Italy 2.61% (+2bp), Turkey 17.06% (-45bp), Greece 3.31% (-52bp), Portugal 1.17% (-5bp), Spain 1.06% (-3bp) and UK Gilts 1.20% (-2bp)

• US 4-week Bill Auction increased from 2.375% to 2.400%
• US 5-year TIPS Auction decreased from 1.129% to 0.515%
• French 3-year BTAN Auction decreased from -0.38% to-0.43%

Most major financial markets will be closed tomorrow in honor of Good Friday.

We would like to wish all our readers who celebrate a happy Easter.

We will post a new Market Talk after holiday.