Market Talk – June 20, 2019

ASIA / AUSTRALIA:

North Korean leader Kim Jong Un will hold talks with Chinese President Xi. President Xi arrived in North Korea’s capital, Pyongyang, in the first state visit in 14 years. The main topics reportedly will be nuclear armaments and trade. Interesting timing given both are in the midst of US negotiations in way or another.

The major Asian stock markets had a green day today. Shanghai increased 69.32 points or 2.38% to 2,987.12, Kospi increased 6.51 points or 0.31% to 2,131.29, ASX 200 increased 39.30 points or 0.59% to 6,687.40, NIKKEI 225 increased 128.99 points or 0.60% to 21,462.86, Hang Seng increased 348.29 points or 1.23% to 28,550.43, and SENSEX increased 488.89 points or 1.25% to 39,601.63.

The major Asian currency markets had a mixed day. AUDUSD increased 0.0045 or 0.65% to 0.6926, NZDUSD increased 0.0056 or 0.86% to 0.6593, USDJPY decreased 0.7570 or 0.70% to 107.3330, and USDCNY decreased 0.0391 or 0.57% to 6.8544.

Gold increased 29.24 USD/t oz. or 2.15% to 1,391.73 and silver increased 0.286 USD/t. oz or 1.89% to 15.4482.

Some economic news:

South Korea:

• PPI (YoY) (May) decreased from 0.6% to 0.4%
• PPI (MoM) (May) decreased from 0.3% to 0.0%

New Zealand:

• GDP (QoQ) (Q1) remain the same at 0.6%
• GDP (YoY) (Q1) remain the same at 2.5%
• GDP Annual Average (Q1) decreased from 2.9% to 2.7%
• GDP Expenditure (QoQ) (Q1) increased from 0.6% to 0.8%

Japan:

• Foreign Bonds Buying decreased from 1739.7B to 327.3B
• Foreign Investments in Japanese Stocks increased from -148.0B to -95.4B
• BoJ Interest Rate Decision remain the same at -0.10%
• All Industries Activity Index (MoM) increased from -0.3% to 0.9%

Indonesia:

• Interest Rate Decision remain the same at 6.00%
• Deposit Facility Rate (Jun) remain the same at 5.25%
• Lending Facility Rate (Jun) remain the same at 6.75%

EUROPE / EMEA:

According to a new report published today, three countries from east Europe, Bulgaria, Estonia and Latvia, are benefiting the most relative to GDP by the European Union’s Investment Plan for Europe.

A “historic” ruling by the UK’s court of appeal declaring sales to Saudi Arabia for use in its war against Yemen as unlawful. This is seen as the first time UK have gone against Saudi interests.

In the next two days, Tory lawmakers will narrow down two candidates and displayed in front of the party for a final decision on who will take on Theresa May’s seat.

US President Donald Trump has not ruled out some type of retaliation against Iran for the shooting down of a US Navy drone. President Trump said that “you will soon find out” if the US will retaliate. Iran claims the drone was in Iranian air space whereas the US say it was international waters.

The major European stock markets had a green day today. CAC 40 increased 17.13 points or 0.31% to 5,535.57, FTSE 100 increased 20.90 points, or 0.28% to 7,424.44, and DAX increased 46.86 points or 0.38% to 12,355.39.

The major European currency markets had a mixed day today. EURUSD increased 0.0066 or 0.59% to 1.1290, GBPUSD increased 0.00684 or 0.54% to 1.27074, USDCHF decreased 0.0125 or -1.26% to 0.9815.

Some economic news:

Swiss:

• Trade Balance (May) increased from 2.309B to 3.410B

Norway:

• Interest Rate Decision increased from 1.00% to 1.25%

Eurozone:

• Consumer Confidence (Jun) decreased from -6.5 to -7.2

UK:

• Core Retail Sales (MoM) (May) remain the same at -0.3%
• Core Retail Sales (YoY) (May) decreased from 4.7% to 2.2%
• Retail Sales (MoM) (May) decreased from -0.1% to -0.5%
• Retail Sales (YoY) (May) decreased from 5.1% to 2.3%
• BoE MPC vote cut (Jun) remain the same at 0
• BoE MPC vote hike (Jun) remain the same at 0
• BoE MPC vote unchanged (Jun) remain the same at 9
• BoE QE Total (Jun) remain the same at 435B
• BoE Interest Rate Decision (Jun) remain the same at 0.75%

U.S. / AMERICAS:

Canadian Prime Minister Justin Trudeau visited the White House this Thursday to discuss USMCA (U.S.-Mexico-Canada Agreement), otherwise known as the intended replacement for NAFTA. “Trade between Canada & the US supports millions of good, middle class jobs on both sides of the border. I’m at the White House today to work with Trump on increasing trade and moving forward with the new NAFTA,” Trudeau commented on Twitter.

The Trump-Trudeau meeting was overshadowed by the aforementioned Iranian downing of a US drone that occurred in the Persian Gulf. The attack occurred in the same region where oil tankers were attacked, allegedly by Iran, earlier this month. Iranian Foreign Minister Javad Zarif claimed that the drone “violated Iranian airspace.” However, the Pentagon disagreed, claiming the attack was “unprovoked” as the drone was flying over international waters. As the day progressed, U.S. officials altered their view, stating that the shooting may have been unintentional. It is unknown at this time how or if the U.S. will respond.

Senators from both ends of the political spectrum agreed to block Trump from selling billions worth of military supplies to Saudi Arabia and the UAE. Although Saudi Arabia is technically a U.S.-ally, the Senate opposes numerous human rights violations that do not align with U.S. interests, such as the murder of journalist Jamal Khashoggi. Earlier this year, the Senate came to a bipartisan agreement to prevent the U.S. from interfering with Saudi Arabia’s war with Yemen.

Wall Street had another strong performance this Thursday. The S&P 500 rallied to a new record high this after closing at 2,954.18 (+27.72 points, +0.95%). The Dow climbed 249.17 points (+0.94%) and closed at 26,753.17, the Nasdaq added 64.02 points (+0.80%) and closed at 8,051.34, and the Russell 2000 added 7.92 points (+0.51%) to 1,563.49.

The Canadian markets rose today as well, with the TSX Composite advancing 63.04 points (+0.38%) to 16,574.83 and the TSX 60 adding 3.26 points (+0.33%) to 992.05.

Brazil’s Bovespa continued its ascension this Thursday, advancing 899.02 points (+0.90%) past yesterday’s all-time high to close at 100,303.41.

ENERGY:

Due to Iranian sanctions, India is forced to look elsewhere for their supply of Crude. India is looking at ways to establish oil routes from Russia, India’s Oil Minister Dharmendra Pradhan said after a meeting with Yury Trutnev, Russia’s Deputy Prime Minister.

The oil markets had a mixed day today. Crude Oil increased 2.7 USD/BBL or 5.02% to 56.4574, Brent increased 2.38 USD/BBL or 3.85% to 64.2985, Natural gas decreased 0.097 USD/MMBtu or -4.26% to 2.1764, Gasoline increased 0.0471USD/GAL or 2.71% to 1.7800, and Heating oil increased 0.05 USD/GAL or 2.73% to 1.8756.

Top commodity gainers: Crude Oil (5.82%), Coffee (4.62%), Orange Juice (4.55%), and Brent (4.27%). Top commodity losers: Cotton (-3.76%), Natural Gas (-3.73%), Lean Hogs (-2.91%), and Cocoa (-2.88%)

The above data was collected around 14:36 EST on Thursday.

BONDS:

Japan -0.14%(-1bp), US 2’s 1.71% (-4bps), US 10’s 2.00%(-3bps), US 30’s 2.52%(-3bps), Bunds -0.29% (+4bp), France 0.01% (-3bp), Italy 2.16% (+5bp), Turkey 15.89% (-121bp), Greece 2.62% (-55bp), Portugal 0.55% (-3bp), Spain 0.39% (-2bp) and UK Gilts 0.81% (-6bp).

• French 3-Year BTAN Auction decreased from -0.52% to -0.65%
• French 5-Year BTAN Auction decreased from -0.19% to -0.38%
• Spanish 3-Year Bonos Auction decreased from -0.361% to -0.408%
• Spanish 5-Year Bonos Auction decreased from -0.096% to -0.182%
• US 4-Week Bill Auction decreased from 2.215% to 2.140%
• US 8-Week Bill Auction decreased from 2.200% to 2.105%
• US 5-Year TIPS Auction decreased from 0.515% to 0.152%