Market Talk – October 4, 2019

ASIA:

Russian President Vladimir Putin said yesterday that Russia will be aiding China to build a warning system to identify intercontinental ballistic missile launches. At this current moment, only Russia and the US have this installed.

US President Donald Trump called on China to investigate on Joe Biden, perhaps again inviting foreign interference in a US presidential election, which caused the impeachment inquiry in the first place.

Today the Reserve Bank of India cut interest rates for a fifth straight time, with the aim to boost the economy as the growth is at a six-year low.

The major Asian stock markets had a mixed day today:

• Shanghai closed (public holiday)
• Kospi decreased 11.22 points or -0.55% to 2,020.69
• ASX 200 increased 24.10 points or 0.37% to 6,517.10
• NIKKEI 225 increased 68.46 points or 0.32% to 21,410.20
• Hang Seng decreased 289.28 points or -1.11% to 25,821.03
• SENSEX decreased 433.56 points or -1.14% to 37,673.31

The major Asian currency markets had a mixed day today:

• AUDUSD increased 0.0029 or 0.43% to 0.6770
• NZDUSD increased 0.0017 or 0.27% to 0.6317
• USDJPY decreased 0.0740 or 0.07% to 106.8260
• USDCNY decreased 0.0130 or 0.18% to 7.1139

Precious Metals:

• Gold increased 2.6 USD/t oz. or 0.17% to 1,504.59
• Silver increased 0.029 USD/t. oz or 0.17%% to 17.5554

Some economic news from last night:

South Korea:

• FX Reserves – USD (Sep) increased from 401.48B to 403.32B

Indonesia:

• Consumer Confidence decreased from 123.1 to 121.8

Hong Kong:

• Manufacturing PMI (Sep) increased from 40.8 to 41.5

Australia:

• HIA New Home Sales (MoM) increased from -7.2% to 7.3%
• Retail Sales (MoM) (Aug) increased from -0.1% to 0.4%

Some economic news from today:

India:

• FX Reserves, USD increased from 428.57B to 433.59B
• Nikkei Services PMI (Sep) decreased from 52.4 to 48.7
• Cash Reserve Ratio remain the same at 4.00%
• Interest Rate Decision decreased from 5.40% to 5.15%
• Reverse REPO Rate decreased from 5.15% to 4.90%

EUROPE/EMEA:

Contrary to the words of PM Boris Johnson, the UK government has promised a court they will address the EU seeking an extension to article 50 (again!) as required by the newly approved Benn act.

Donald Tusk the President of the European Council said that the EU is “open but not convinced” by Boris Johnson’s new proposals for a Brexit deal with the EU. It seems as if time is definitely running out.

Leaders of the EU’s troika put pressure on the 27 member states to start accession talks with North Macedonia and Albania “no later” than this month.

A referendum in Switzerland is scheduled as early as May on ending the free movement of people from the EU. This would be the equivalent of the Swiss Brexit. Recently, relationships between EU and Swiss are on hard times as they are failing to reach an agreement with a treaty.

According to a US admiral, Iran has not drawn its military back and is still in a threatening military posture in the Middle East after the Sept. 14 attack on Saudi Arabia.

The major Europe stock markets had a green day today:

• CAC 40 increased 49.56 points or 0.91% to 5,488.32
• FTSE 100 increased 77.74 points, or 1.10% to 7,155.38
• DAX increased 87.56 points or 0.73% to 12,012.81

The major Europe currency markets had a mixed day today:

• EURUSD increased 0.0021 or 0.19% to 1.0985
• GBPUSD decreased 0.00002 or -0.00% to 1.23278
• USDCHF decreased 0.0041 or -0.41% to 0.9950

Some economic news from Europe today:

France:

• French Government Budget Balance (Aug) decreased from -109.7B to -123.1B

Italy:

• Italian Public Deficit (Q2) decreased from 7.1% to 1.1%

UK:

• Housing Equity Withdrawal (QoQ) increased from -7.0B to -6.9B

US/AMERICAS:

Unemployment in the US dropped to a 50-year low this September, according to the newly released jobs report. The unemployment rate currently stands at 3.5%, the lowest recording since 1969. Payrolls underwhelmed analysts’ expectations by 80,000 jobs after totaling 136,000 for September. Wages remained relatively stagnant. Overall, the report was rather neutral and may or may not have an impact on the next FOMC meeting.

Federal Reserve Chairman Jerome Powell said the economy is in a “good place” and the Fed intends to “keep it there as long as possible.” In a speech this Friday, Powell addressed concerns of low inflation by hinting that the central bank may need to readjust their target rate. “Low can be good, but when inflation—and, consequently, interest rates—are too low, the Fed and other central banks have less room to cut rates to support the economy during downturns,” Powell noted.

According to new data from the Bureau of Labor and Statistics, Americans paid more in taxes last year than healthcare, food, and clothing combined. Federal income taxes averaged $9,031.93; Social Security taxes averaged $5,023.73; state and local taxes averaged $2,284.62; property taxes averaged $2,199.80; and “other” taxes averaged $77.85. Combined, these fees cost taxpayers an average of $18,617.93. In contrast, Americans paid $3,859.82 less on overall living essentials such as healthcare ($4,968.44), apparel ($1,866.48), and food ($7,923.19).

European Central Bank President Christine Lagarde told CNN reporters that a Trump impeachment could damage the global economy. “I have no opinion or view because I’m not an American,” Lagarde said. However, she noted that she was an intern during the Nixon Watergate scandal and saw firsthand “how much energy, focus, and brain power” was spent on the impeachment process. Lagarde worries that “focusing on purely political issues” will have negative consequences for the global economy at large.

US Market closings:

• Dow advanced 372.68 points or 1.42% to 26,573.72
• S&P 500 advanced 41.38 points or 1.42% to 2,952.01
• Nasdaq advanced 110.21 points or 1.40% to 7,982.47
• Russell 2000 advanced 14.36 points or 0.97% to 1,500.70

Canada Market Closings

• TSX Composite advanced 80.32 points or 0.49% to 16,449.35
• TSX 60 advanced 4.90 points or 0.50% to 983.06

Brazil Market Closing:

• Bovespa advanced 1,035 points or 1.02% to 102,551.32

ENERGY:

Slight optimism in the global economy with the US unemployment rate down this month. Crude and WTI reacted positively after having two weekly losses.

The oil markets had a mixed day today:

• Crude Oil increased 0.04 USD/BBL or 0.08% to 52.5446
• Brent increased 0.33 USD/BBL or 0.57% to 58.0053
• Natural gas increased 0.04 USD/MMBtu or 1.72% to 2.3652
• Gasoline increased 0.0082 USD/GAL or 0.53% to 1.5671
• Heating oil increased 0.0116 USD/GAL or 0.62% to 1.8844
• Top commodity gainers: Natural Gas (1.72%), Soybeans (0.96%), Palladium(0.89%), and Heating Oil (0.62 %)
• Top commodity losers: Cotton(-4.05 %), Ethanol (-5.32%), Coffee (-3.33%), and Cocoa (-1.63%)

The above data was collected around 13:25 EST on Friday.

BONDS:

Japan -0.21%(-2bp), US 2’s 1.42% (+3bps), US 10’s 1.52%(-1bps), US 30’s 2.02%(-2bps), Bunds -0.59% (-0bp), France -0.29% (+0bp), Italy 0.84% (+1bp), Turkey 13.36% (-2bp), Greece 1.39% (-31bp), Portugal 0.15% (+0bp), Spain 0.14% (-1bp) and UK Gilts 0.44% (-3bp).