Market Talk – April 30, 2019

ASIA:

China today sentences a second Canadian to death for drug smuggling, earlier in the year the two countries had a tense relationship due to the handover of Huawei’s CEO daughter to the US.

Washington commented on the Chinese Belt and Road initiative as a huge strategic mistake by allowing China to be at the head of the power structure and having excessive dependence on China in the region. This obviously comes as the US and China continue trade talks with tariffs still employed from both sides while negotiations continue.

Japanese emperor declared abdication, being the first in over 200 years due to old age and health concerns. The Emperor Akihito, wished for global peace after 30 years in charge, tomorrow his eldest son will take command ushering a new era of order and harmony – Reiwa in Japanese.

The most of Major Asian stock markets had a negative day today: NIKKEI 225 decreased 48.85 points(-0.22%) to 22,258.73; ASX 200 decreased 34.00 points(-0.53%) to 6,325.50; SENSEX decreased 35.78 points(-0.09%) to 39,031.55; Hang Seng decreased 193.70 points(-0.65%) to 29,699.11; KOSPI decreased 12.84 points(-0.58%) to 2,203.59; however Shanghai took the opposite route increased 15.84 points(0.52%) to 3,078.34.

The most of major Asian currency markets had a negative day today: The AUDUSD decreased 0.0004 or 0.06% to 0.7051; The USDJPY decreased 0.1920 or 0.17% to 111.4380 and The USDCNY decreased 0.0006 or 0.01% to 6.7378; however The NZDUSD took the opposite route  increased 0.0010 or 0.15% to 0.6677.

Gold increased 3.6USD/t oz. or 0.28% to 1,283.44 and Silver increased 0.032 USD/t. oz or 0.21% to 14.9394

Some economic news:

South Korea

• Manufacturing BSI Index (May) decreased from 75 to 73
• Industrial Production (MoM) (Mar) increased from -2.6% to 1.4%
• Industrial Production (YoY) (Mar) increased from -3.4% to 2.8%
• Retail Sales (MoM) increased from -0.5% to 3.3%
• Service Sector Output (MoM) (Mar) increased from -1.6% to 0.2%

China:

• Manufacturing PMI (Apr) decreased from 50.5 to 50.1
• Non-Manufacturing PMI (Apr) decreased from 54.8 to 54.3
• Caixin Manufacturing PMI (Apr) decreased from 50.8 to 50.2

New Zealand:

• ANZ Business Confidence (Apr) increased from -38.0 to -37.5
• NBNZ Own Activity (Apr) increased from 3% to 7.1%

Australia:

• Housing Credit (Mar) decreased from 0.3% to 0.2%
• Private Sector Credit (MoM) (Mar) remain the same at 0.3%

Singapore:

• Bank Lending (Mar) increased from 672.3B to 676.1B

Indonesian:

• Foreign Direct Investment (YoY) (Q1) increased from -11.60% to -0.90%
• M2 Money Supply (YoY) (Mar) increased from 6.00% to 6.50%

Hongkong:

• M3 Money Supply (Mar) increased from 1.4% to 3.0%
• Indian: Infrastructure Output (YoY) (Mar) increased from 2.2% to 4.7%

EUROPE:

Vodafone has denied a report saying issues found in equipment supplied by Huawei in 2011 and 2012 could have allowed unauthorized access to its fixed-line network there. The initial report came from Bloomberg which suggested Vodaphone had found flaws within the system.

Europe’s GDP rose 0.4% in the last 3 months of 2018, compared to early estimates of 0.2% for the time period. This caused the Euro bonds price to slip slightly (yields to increase) writing off last weeks gains.

The major European Stock markets had a mixed day today:  CAC 40 increased 5.44 points or 0.10% to 5,586.41;   DAX increased 16.06 points or 0.13% to 12,344.08; however The FTSE 100 took the opposite route decreased 22.44 points, or -0.30% to 7,418.22;

The major European currency markets had a mixed day today: The EURUSD increased 0.0030 or 0.27% to 1.1215; and The GBPUSD increased 0.0098 or 0.76% to 1.3034; however The USDCHF took the opposite route  decreased 0.0005 or 0.05% to 1.0190.

Some economic news from Europe:

German:

• German Import Price Index (MoM) (Mar) decreased from 0.3% to 0.0%
• German Import Price Index (YoY) (Mar) increased from 1.6 % to 1.7%
• GfK German Consumer Climate (May) remain the same at 10.4
• German CPI (YoY) (Apr) increased from 1.3% to 2.0%
• German CPI (MoM) (Apr) increased from 0.4% to 1.0%
• German HICP (MoM) (Apr) increased from 0.5% to 1.0%
• German HICP (YoY) (Apr) increased from 1.4% to 2.1%
• German Unemployment Change (Apr) decreased from -7K to -12K
• German Unemployment Rate (Apr) remain the same at 4.9%
• German Unemployment (Apr) decreased from 2.232M to 2.220M
• German Unemployment n.s.a. (Apr) decreased from 2.301M to 2.229M

Italian:

• Italian GDP (QoQ) (Q1) increased from -0.1% to 0.2%
• Italian GDP (YoY) (Q1) decreased from 0.6% to 0.1%
• Italian CPI (MoM) (Apr) decreased from 0.3% to 0.2%
• Italian CPI (YoY) (Apr) increased from 1.0% to 1.1%
• Italian HICP (MoM) (Apr) decreased from 2.3% to 0.6%
• Italian HICP (YoY) (Apr) increased from 1.1% to 1.2%
• Italian Monthly Unemployment Rate (Mar) decreased from 10.5% to 10.2%

Spanish:

• Spanish CPI (MoM) (Apr) increased from 0.4% to 1.0%
• Spanish CPI (YoY) (Apr) increased from 1.3% to 1.5%
• Spanish GDP (QoQ) (Q1) increased from 0.6% to 0.7%
• Spanish GDP (YoY) (Q1) increased from 2.3% to 2.4%
• Spanish HICP (MoM) decreased from 1.4% to 1.1%
• Spanish HICP (YoY) (Apr) increased from 1.3% to 1.6%
• Spanish Current account (Feb) decreased from -1.47B to -2.77B
• Spanish Retail Sales (YoY) (Mar) increased from 1.4% to 1.7%

French:

• French GDP (YoY) increased from 1.0% to 1.1%
• French GDP (QoQ) (Q1) remain the same at 0.3%
• French Consumer Spending (MoM) (Mar) increased from -0.4% to -0.1%
• French CPI (MoM) (Apr) decreased from 0.8% to 0.2%
• French CPI (YoY) increased from 1.1% to 1.2%
• French Government Budget Balance (Mar) decreased from -36.9B to -40.7B
• French HICP (YoY) increased from 1.3% to 1.4%
• French HICP (MoM) decreased from 0.9% to 0.3%
• French PPI (MoM) (Mar) decreased from 0.4% to 0.0%

Euro zone:

• GDP (QoQ) increased from 0.2% to 0.4%
• GDP (YoY) increased from 1.1% to 1,2%
• Unemployment Rate (Mar) decreased from 7.8% to 7.7%

Swiss:

• KOF Leading Indicators (Apr) decreased from 97.1 to 96.2

Norway:

• Core Retail Sales (MoM) (Mar) increased from -1.2% to 0.6%
• Unemployment Rate (Feb) remain the same at 3.8%

US / AMERICAS:

Another mixed day today on Wall Street as corporate earnings season continues. The Dow gained over 38 points, closing at 26,592.91 (+0.15%) while the S&P 500 closed at 2,945.83 (+0.10%), but the Nasdaq lost just over 66 points, closing at 8,095.39 (-0.81%). The Russell 2000 was also down, closing at 1,591.21 (-0.45%).

Thanks to a notable drop from Google’s parent company, Alphabet (-7.5%), Communication Services sector had a rather poor day (-2.56%) while Consumer Staples (+1.23%) and Utilities (1.67%)were the leading sectors. Apple (-1.93%) was sold off before its earnings scheduled for after the closing bell, while UnitiedHealth (-1.84%) and Disney (-1.67%) were also laggards. Meanwhile, NXP Semi’s (+7.89%), Shopify (+7.86%), Zoom Video (6.41%), Mastercard (+2.88%), Phizer (+2.58%), Merck (2.51%), Dow (2.22%) and Chevron (1.99%) were among the day’s gainers.

Alphabet / Google’s reported nearly $1 billion less revenue than the street had expected after yesterday’s market close. A downtick in ad sales, after a change to YouTube’s algorithm was called out by the company. Keep in mind though, the company is still growing. Ad revenue grew 15% instead of over 20% that analysts were expecting. While this is a “problem”, it is a problem most companies would love to have given the larger context of Google’s dominance in digital advertising and consumer utilization. Today was the company’s worst performing day in over 6 years, and follows a bullish move heading into earnings based on optimism.

While earnings continue to roll out, most are now eagerly anticipating the next Fed announcement on rates. Some are anticipating the possibility of a rate cut after President Trump spoke out (tweeted out more like) on the topic, advocating for a cut. While it wouldn’t seem likely a cut is actually imminent, the Fed has been somewhat unpredictable of late.

In Canada, the TSX Composite was down again (16,580.73 close, -0.12%), as was the TSX 60 (994.53 close, -0.12%).

In Brazil, the Bovespa rebounded slightly, closing at 96,353.33 (-0.17%).

ENERGY:

Venezuela is still undergoing turmoil as opposition leader Guiado is calling for citizens to come out to the streets to express disappointment of the current President Nicolas Maduro. Guaido is currently recognized as the President by the majority of the western world. However current officials of Venezuela are calling the Guiado’s attempts at taking over control a coup. Naturally this is causing issues with supply of Venezuelan oil – the world’s largest oil deposits.

Saudi Arabia stated that a deal between the OPEC producers to cut production could be extended well past June covering all of 2019.

The oil markets had a mixed day today: Brent increased 0.62 USD/BBL or 0.86% to 72.6628; Gasoline increased 0.02 USD/GAL or 1.08% to 2.1073 and Heating oil increased 0.02 USD/GAL or 0.97% to 2.0748; however Crude Oil and Natural gas took the opposite route decreased 0.03 USD/BBL or -0.05% to 63.4931 and 0.022 USD/MMBtu or -0.85% to 2.5658 respectfully.

Top commodity gainers are Sugar (3.10%), Coal(1.32%) ，Palladium（1.28%) and Bitumen(1.28%),. Biggest losers are Oat (-3.70%), Ethanol(-2.47%) ;Wheat(-2.09%) and Orange Juice (-1.96%).

The above data were collected around noon 17:36 EST time on Tuesday

BONDS:

Japan -0.04%(-1bp), US 2’s 2.27% (-3bps), US 10’s 2.50%(-3bps), US 30’s 2.93%(-3bps), Bunds 0.01% (+1bp), France 0.37% (+0bp), Italy 2.57% (-2bp), Turkey 18.95% (+36bp), Greece 3.37% (+6bp), Portugal 1.11% (-2bp), Spain 1.01% (-1bp) and UK Gilts 1.17% (+2bp)

German 2-year Schatz Auction decreased from -0.570% to -0.580%

Italian 5-Year BTP Auction increased from 1.71% to 1.72%

Italian 10-Year BTP Auction decreased from 2.61% to 2.59%