Market Talk – July 22, 2019

ASIA:

Mass protests occurred over the weekend in Hong Kong. The public was forewarned of the protests through social media as locals were advised to stay clear of protestors. Overall, China was pleased with the handling of the protestors by local authorities. The Foreign Ministry said local authorities should use all necessary measures to “safeguard the rule of law in Hong Kong.” Beijing wants to arrest protestors and stop further demonstrations. However, it can use other measures such as bringing in the military.

The NY Times reported that “Chinese” money in the US is drying up, with Chinese investments plummeting 90% since President Trump took office. Meanwhile, China’s state media suggested purchases of US agricultural products could herald the resumption of trade negotiations. However, there is no ease regarding the South China Sea situation. Beijing recently accused the U.S. of stirring up trouble in the region. “This is slander against Chinese and Southeast Asian countries’ efforts to uphold peace and stability in the South China Sea and properly manage differences,” Foreign Ministry Geng told a news briefing on Monday. “Countries and people in the region will not believe their words.”

The major Asian stock markets had a negative day today:

• Shanghai decreased 37.23 points or -1.27% to 2,886.97
• Kospi decreased 1.02 points or -0.05% to 2,093.34
• ASX 200 decreased 9.10 points or -0.14% to 6,691.20
• NIKKEI 225 decreased 50.20 points or -0.23% to 21,416.79
• Hang Seng decreased 394.14 points or -1.37% to 28,371.26
• SENSEX decreased 305.88 points or -0.80% to 38,031.13

The major Asian currency markets had a mixed day today:

• AUDUSD decreased 0.0008 or 0.11% to 0.7034
• NZDUSD increased 0.0005 or 0.07% to 0.6766
• USDJPY increased 0.2060 or 0.19% to 107.9060
• USDCNY increased 0.0018 or 0.03% to 6.8832

Precious Metals:

• Gold increased 2.49 USD/t oz. or 0.17% to 1,425.05
• Silver increased 0.215 USD/t. oz or 1.33% to 16.4060

Some economic news from today:

Hong Kong:

• CPI (YoY) (Jun) increased from 2.80% to 3.30%

EUROPE/EMEA:

The European Union would respond with tariffs of its own if the Trump administration imposed tariffs on European car imports, a senior EU trade official said on Monday.

Ursula von der Leyen’s appointment as new European Commission chief will allow Brussels and Washington to reset their relationship. “It gives the United States and the European Union an opportunity to reset its entire relationship,” Sondland said, referring to von der Leyen’s appointment. “Things have begun to stagnate a little. They’ve begun to reach impasses on a number of fronts.”

Europeans are feeling the heat as there is a current heatwave in the continent. France and Spain are facing “extreme danger” from fires due to the scorching heatwave across western Europe this week.

With more trade deals occurring, China plans to impose an anti-dumping tax on some stainless steel imports from the European Union and three Asian countries. Beijing will impose anti-dumping duties of 18.1% to 103.1% on stainless steel billets and hot-rolled stainless steel plates imported from the EU and others, effective July 23, China’s Ministry of Commerce said in a statement.

The major Europe stock markets had a green day today:

• CAC 40 increased 14.68 points or 0.26% to 5,567.02
• FTSE 100 increased 6.23 points, or 0.08% to 7,514.93
• DAX increased 29.33 points or 0.24% to 12,289.40.

The major Europe currency markets had a mixed day today:

• EURUSD decreased 0.0010 or 0.09% to 1.1210
• GBPUSD decreased 0.0024 or 0.20% to 1.2476
• USDCHF increased 0.0003 or 0.03% to 0.9819

U.S./AMERICAS:

Judy Shelton, President Trump’s nominee for the Federal Reserve, stated this Monday that she would like to see a full 50 basis point rate cut at the end of the month. This may come as no surprise considering President Trump has been advocating a reduction in rates. “I do think global conditions and the clear monetary paths being signaled by other central banks are a factor in considering how much our own Federal Reserve might choose to lower on July 31,” Shelton commented.

On Friday, Boston Federal Reserve President Eric Rosengren stated during an interview with CNBC that he believes the Fed should continue to be patient with raising interest rates. Rosengren said he would like to see additional supporting evidence indicating a need for a rate reduction. “So, given that the economy is quite strong, given that I do think that inflation is going to be very close to 2%, and given that the growth in the economy is satisfactory, I think that’s an environment where you don’t have to take a lot of action,” Rosengren stated.

The Department of Justice is close to approving a merger deal between Sprint and T-Mobile. If approved, the new entity will be worth $160 billion.

Huawei’s U.S.-based research group, Futurewei Technologies, announced today that it may be forced to layoff a large number of employees. According to one unconfirmed source, nearly 70% of employees are at risk of unemployment. Another source claims that work at Futurewei Technologies came to nearly a standstill after the parent company was blacklisted. Two months ago, the U.S. placed Huawei on a blacklist due to concerns over cybersecurity. Huawei declined to comment any further on the impending layoffs.

U.S. Market Closings:

• The Dow advanced 17.70 points or 0.07% to 27,171.90
• S&P 500 advanced 8.42 points or 0.28% to 8,204
• Nasdaq advanced 57.65 points or 0.71% to 8,204.14
• Russell 2000 declined 3.11 points or -0.20% to 1,544.78

Canada Market Closings:

• TSX Composite advanced 32.94 points or 0.20% to 16,518.88
• TSX 60 advanced 2.68 points or 0.27% to 986.83

Brazil Market Closing:

• Bovespa increased 497.53 points or 0.48% to 103,949.46

ENERGY:

Millions of hidden barrels of Iranian oil are set to hit the markets. Chinese companies have continued to import Iranian crude, but instead of reporting the crude imports, which would violate US sanctions, they’re storing the oil in bonded storage tanks situated at Chinese ports.

The oil markets had a mixed day today:

• Crude Oil increased 0.58 USD/BBL or 1.04% to 56.1994
• Brent increased 0.88 USD/BBL or 1.41% to 63.2218
• Natural gas increased 0.057 USD/MMBtu or 2.53% to 2.3095
• Gasoline decreased 0.0063 USD/GAL or -0.34% to 1.8308
• Heating oil increased 0.0148 USD/GAL or 0.78% to 1.9059
• Top commodity gainers: Natural Gas (2.53%), Cocoa (2.19%), Feeder Cattle(1.63%), and Brent (1.49%)
• Top commodity losers: Wheat (-2.99 %), Corn (-2.03%), Oat (-1.93%), and Soybeans (-1.47%)

The above data was collected around 15:36  EST on Monday.

BONDS:

Japan -0.13%(+0bp), US 2’s 1.82% (+1bps), US 10’s 2.05%(-0bps), US 30’s 2.56%(-2bps), Bunds -0.34% (-2bp), France -0.08% (-1bp), Italy 1.66% (+5bp), Turkey 15.61% (+0bp), Greece 2.12% (-64bp), Portugal 0.46% (-1bp), Spain 0.41% (+3bp) and UK Gilts 0.72% (-1bp).

• French 3-Month BTF Auction increased from -0.563% to -0.545%
• French 6-Month BTF Auction increased from -0.601% to -0.596%
• French 12-Month BTF Auction decreased from -0.621% to -0.655%
• US 3-Month Bill Auction decreased from 2.115% to 2.040%
• US 6-Month Bill Auction remain the same at 2.010%