Market Talk – July 3, 2019

ASIA / AUSTRALIA:

China responded to the UK’s criticism of its handling of Hong Kong by telling them that they should not interfere in “domestic affairs.” The UK’s Foreign Secretary tweeted full support for the Hong Kong citizens right for a peaceful protest. In addition, he told China that the way good relations are maintained is on the basis of mutual respect. The Chinese UK ambassador stated that these remarks have damaged their relations.

The US says the recent “disturbing” missile tests contradict China’s promise not to use the South Chinese Sea as a militarized zone. The Pentagon stated that the recent tests were designed to intimidate other claimants to the disputed waters. The Chinese Government did pre-warn ships not to enter the test area.

South Korea cut their global growth targets as they realize that demand has been hit by the US-Chinese trade war.

The major Asian stock markets had a mixed day today. Shanghai decreased 28.68 points or -0.94% to 3,015.26, Kospi decreased 26.00 points or -1.23% to 2,096.02, ASX 200 increased32.30 points or 0.49% to 6,685.50, NIKKEI 225 decreased 116.11 points or -0.53% to 21,638.16, Hang Seng decreased 20.42 points or -0.07% to 28,855.14, and SENSEX increased 22.77 points or 0.06% to 39,839.25.

The major Asian currency markets had a mixed day today. AUDUSD increased 0.0041 or 0.59% to 0.7035, NZDUSD increased 0.0033 or 0.50% to 0.6704, USDJPY decreased 0.0130 or 0.01% to 107.8670, and USDCNY decreased 0.0030 or 0.04% to 6.8838.

Gold increased 0.01 USD/t oz. or 0.00% to 1,419.10 and silver decreased 0.0035 USD/t. oz or -0.02% to 15.3176.

Some economic news:

South Korea:

• CPI (YoY) (Jun) remain the same at 0.7%
• CPI (MoM) (Jun) decreased from 0.2% to -0.2%
• FX Reserves – USD (Jun) increased from 401.97B to 403.07B

Australia:

• AIG Services Index (Jun) decreased from 52.5 to 52.2
• Services PMI increased from 51.5 to 52.6
• Building Approvals (MoM) (May) increased from -4.7% to 0.7%
• Exports (MoM) (May) increased from 2% to 4%
• Imports (MoM) (May) decreased from 3% to 1%
• Private House Approvals (May) increased from -2.6% to -0.3%
• Trade Balance (May) increased from 4.871B to 5.745B

New Zealand:

• ANZ Commodity Price Index (MoM) decreased from 0.1% to -3.9%

China:

• Caixin Services PMI (Jun) decreased from 52.7 to 52.0

India:

• Nikkei Services PMI (Jun) decreased from 50.2 to 49.6
• M3 Money Supply remain the same at 10.1%

Singapore:

• Manufacturing PMI (Jun) decreased from 49.9 to 49.6

EUROPE / EMEA:

Some are raising concerns at the lack of democracy when choosing the top officials at the EU. With a German, French, Belgian, and Spaniard being elected some feel as if only the elite European countries are being served. The first meeting of the EU parliament didn’t go so well when the Brexit Party and other anti-European parties turned their backs during a European anthem.

A European satellite has recorded the month of June to be the hottest month “since records began.” June was 2 degrees hotter than normal, with some people claiming humans are responsible.

Canada has refused to apply its European Union Trade deal to the UK if no Brexit agreement occurs. This means that a lot of work needs to be done, contrary to what has been told by politicians, if the UK crashes out without a deal in October.

Switzerland and the EU are still in disagreement with regards to existing deals – with the EU adamant to shut down the “Swiss model.” Shares of Nestle, Novartis, and UBS will for now be traded on the SIX exchange in Zurich rather than in Frankfurt or London.

The major European stock markets had a green day today. CAC 40 increased 42 points or 0.75% to 5,618.81, FTSE 100 increased 50.13 points or 0.66% to 7,609.3, and DAX increased 89.52 points or 0.71% to 12,616.24.

The major European currency markets had a mixed day today. EURUSD decreased 0.0005 or 0.04% to 1.1278, GBPUSD decreased 0.0012 or 0.10% to 1.2579, and USDCHF increased 0.0008 or 0.08% to 0.9869 .

Some economic news:

Spain:

• Spanish Services PMI (Jun) increased from 52.8 to 53.6

Italy:

• Italian Services PMI (Jun) increased from 50.0 to 50.5

France:

• French Markit Composite PMI (Jun) decreased from 52.9 to 52.7
• French Services PMI (Jun) decreased from 53.1 to 52.9

Germany:

• German Composite PMI (Jun) remain the same at 52.6
• German Services PMI (Jun) increased from 55.6 to 55.8

Eurozone:

• Markit Composite PMI (Jun) increased from 52.1 to 52.2
• Services PMI (Jun) increased from 53.4 to 53.6

UK:

• Services PMI (Jun) decreased from 51.0 to 50.2

Norway:

• House Price Index (YoY) (Jun) increased from 1.80% to 2.60%

U.S. / AMERICAS:

The U.S. Department of Congress hit Vietnamese steel with a steep 400% tariff today. Vietnam is one of the countries allegedly benefitting from the U.S.-China trade war. Other Asian countries, such as Taiwan and South Korea, have used Vietnam’s position to their advantage by routing exports to Vietnam before sending them to the U.S. to bypass tariffs.

This Wednesday, President Trump accused both China and Europe of “playing [a] big currency manipulation game and pumping money into their system in order to compete with USA.” The president suggested that the U.S. should “match” their games and insinuated that America has allowed other countries to take advantage of it for years.

According to CNN’s latest poll, former Vice President Joe Biden remains in the lead as the top Democratic presidential candidate, but Kamala Harris came in at 17%, which is just shy of Biden’s 22% lead. Elizabeth Warren (15%) came in third, while Bernie Sanders (14%) came in fourth. All other potential candidates received 4% or less. CNN will host the next round of debates on July 30 and 31 in Detroit, Michigan.

Canada is hosting a Ukraine Reform Conference (URC) this week in Toronto, Ontario. According to the URC website, the goal of the event is to “reinforce security, democratic accountability and prosperity for all of the people of Ukraine.” Canada has vowed to support Ukraine’s fight for sovereignty in the face of “Russian aggression.” PM Trudeau posted on Twitter: “Canadians stand with the Ukrainian people & will always defend Ukraine’s sovereignty. We are close friends & allies, and together we’re working to create more good, middle class jobs for people in both our countries.”

Wall Street did not let the half-day impact its bullish momentum as the U.S. marketplace continued its upward trajectory. The S&P 500 hit a new record high yet again, closing at 2,995.82 after adding 22.81 points (+0.77%). The Dow also closed at a new record high after climbing 179.32 points (+0.67%) to 26,966.00. The Nasdaq advanced another 61.14 points (+0.75%) to close at 8,170.23. The Russell 2000 added 11.58 points (+0.74%), closing at 1,572.12.

The U.S. markets will be closed tomorrow in honor of Independence Day.

The Canadian markets performed well this Wednesday with the TSX Composite advancing 104. 91 points (+0.64%) to 16,576.20, and the TSX 60 gaining 7.01 points (+0.71%) to 992.46.

Brazil’s Bovespa recovered from yesterday’s performance, adding 1,437.94 points (+1.43%) to close at 102,043.11.

ENERGY:

A recent report from the University of Cambridge suggests that Bitcoin’s energy consumption is more than that of the whole of Switzerland.

China has raised import quotas even with falling refining margins. The US is considering allowing China to import oil from Iran. The US EIA also reported a draw of 5 million barrel, with WTI moving up closer to the 60 dollar range.

The oil markets had a green day today. Crude Oil increased 1.05 USD/BBL or 1.87% to 57.4146, Brent increased 1.46 USD/BBL or 2.34% to 63.7150, Natural gas increased 0.051 USD/MMBtu or 2.28% to 2.2863, Gasoline increased 0.0495 USD/GAL or 2.65% to 1.9166, and Heating oil increased 0.0137 USD/GAL or 0.73% to 1.9028.

Top commodity gainers: Cheese (7.16%), Milk (6.39%), Corn (4.53%), and Wheat (2.88%). Top commodity losers: Rubber (-2.61%), Oat (-2.37%), Lumber (-2.04%), and Cocoa (-1.56%).

The above data was collected around 15:11 EST on Wednesday. 

BONDS:

Japan -0.15%(-1bp), US 2’s 1.77% (+0bps), US 10’s 1.95%(-3bps), US 30’s 2.47%(-4bps), Bunds -0.39% (-2bp), France -0.10% (-4bp), Italy 1.58% (-27bp), Turkey 15.59% (-17bp), Greece 2.05% (-86bp), Portugal 0.30% (-7bp), Spain 0.21% (-8bp) and UK Gilts 0.70% (-3bp).

• German 5-Year Bobl Auction decreased from -0.560% to -0.660%
• US 4-Week Bill Auction increased from 2.145% to 2.210%
• US 8-Week Bill Auction increased from 2.120% to 2.155%