Market Talk – January 17, 2020

ASIA:

China’s annual growth rate was reported as its weakest in 29 years. The growth rate was 6.1% with Chinese officials stating that the economy was stable. Other numbers reported were that population growth was also slowing with Chinese citizens having fewer children than in previous years.

Malaysia is talking to the Indian government and trade officials in a bid to resolve concerns over New Delhi’s new palm oil import restrictions, an Indian Government official said in Kuala Lumpur. India’s government recently objected to Malaysian Prime Minister Mahathir Mohamad speaking out against recent policies which critics say discriminate against Muslims.

Indian PM Modi took a swipe at the Washington Post today, which is owned by Jeff Bezos, by calling the paper “agenda driven.” This is after a somewhat successful trip by Jeff Bezos who is planning on venturing to India with Amazon in a move that could provide up to 25k new jobs. Bezos was particularly fond of India even calling it “special.”

India’s commerce minister Piyush Goyal has pointed out that New Delhi is in advanced stages to resolve some of the ongoing trade issues with Washington and is keen to further expand ties, including a free trade project. The two countries have been locked in trade disputes for months, slapping higher tariffs on each other’s products with the US withdrawing a key concession to India. India was also in talks with the European Union to move towards free trade agreements, Mr. Goyal said.

The major Asian stock markets had a green day today:

• Shanghai increased 1.41 points or 0.05% to 3,075.50
• Kospi increased 2.52 points or 0.11% to 2,250.57
• ASX 200 increased 22.30 points or 0.32% to 7,064.10
• NIKKEI 225 increased 108.13 points or 0.45% to 24,041.26
• Hang Seng increased 173.38 points or 0.60% to 29,056.42
• SENSEX increased 12.81 points or 0.03% to 41,945.37

The major Asian currency markets had a negative day today:

• AUDUSD decreased 0.0019 or 0.27% to 0.6878
• NZDUSD decreased 0.0023 or 0.35% to 0.6613
• USDJPY decreased 0.0710 or 0.06% to 110.1450
• USDCNY decreased 0.0143 or 0.21% to 6.8624

Precious Metals:

• Gold increased 7.7 USD/t oz. or 0.50% to 1,557.93
• Silver increased 0.1187 USD/t. oz or 0.66%% to 18.0235

Some economic news from last night:

China:

Fixed Asset Investment (YoY) (Dec) increased from 5.2% to 5.4%

GDP (YoY) (Q4) remain the same at  6.0%

GDP (QoQ) (Q4) remain the same at 1.5%

Chinese GDP YTD (YoY) (Q4) decreased from 6.2% to 6.1%

Industrial Production (YoY) (Dec) increased from 6.2% to 6.9%

Chinese Industrial Production YTD (YoY) (Dec) increased from 5.6% to 5.7%

Retail Sales (YoY) (Dec) remain the same at 8.0%

Chinese Retail Sales YTD (YoY) (Dec) remain the same at 8.05%

Chinese Unemployment Rate increased from 5.1% to 5.2%

South korea:

Interest Rate Decision (Jan) remain the same at 1.25%

Japan:

Foreign Bonds Buying increased from -193.0B to 2,322.4B

Foreign Investments in Japanese Stocks increased from -80.8B to -16.4B

Tertiary Industry Activity Index (MoM) increased from -5.2% to 1.3%

Australia:

HIA New Home Sales (MoM) remain the same at -0.5%

New Zealand:

Business NZ PMI (Dec) decreased from 51.4 to 49.3

Singapore:

Non-Oil Exports (MoM) (Dec) decreased from 5.80% to 1.10%

Non-Oil Exports (YoY) (Dec) increased from -5.90% to 2.40%

Trade Balance increased from 3.690B to 4.750B

Some economic news from today:

India:

Bank Loan Growth increased from 7.1% to 7.6%

Deposit Growth decreased from 10.1% to 9.8%

FX Reserves, USD increased from 461.16B to 461.21B

EUROPE/EMEA:

The UK assured the EU there will be no automatic deportation for those EU citizens residing in the UK. EU members will begin applying for residency on March 31st and will be given a six-month grace period. As of the end of the month, the UK will be out of Europe.

According to the FT, Europe is playing hardball with the UK over Brexit. They are determined to negotiate at a level playing field. In a presentation prepared by the EU, they did mention they will do their best to conclude trade talks by July 2020.

Surprisingly, UK sales have dropped in the last quarter of the year by 0.6% compared with the previous three months.

With Germany heading for an environmental revolution, farmers took to the streets in protest claiming the government is taking unwarranted steps and regulations that are negatively affecting their businesses.

Meanwhile, ongoing strikes in France, particularly in the capital of Paris, are disrupting the economy.

France has deployed a radar system in Saudi Arabia to reassure the kingdom they are an ally. “In the Arabian Peninsula and Gulf, where tensions are mounting, we have deployed in record time the Jaguar Task Force, which contributes to reassuring the Saudi kingdom,” President Macron said.

CNN reported that Iran’s attack on the US base on January 8th did in fact injure US service members contrary to a report issued by the US pentagon.

The major Europe stock markets had a green day today:

• CAC 40 increased 61.69 points or 1.02% to 6,100.72
• FTSE 100 increased 64.75 points, or 0.85% to 7,674.56
• DAX 30 increased 96.70 points or 0.72% to 13,526.13

The major Europe currency markets had a mixed day today:

• EURUSD decreased 0.0044 or -0.40% to 1.1093
• GBPUSD decreased 0.00559 or -0.43% to 1.30221
• USDCHF increased 0.0030 or 0.31% to 0.9680

Some economic news from Europe today:

Swiss:

PPI (YoY) (Dec) increased from -2.5% to -1.7%

PPI (MoM) (Dec) increased from -0.4% to 0.1%

France:

French Government Budget Balance (Nov) decreased from -107.7B to -113.9B

Italy:

Italian Trade Balance (Nov) decreased from 8,057B to 4,872B

Italian Trade Balance EU (Nov) decreased from 2.10B to 0.70B

Italian CPI (MoM) (Dec) remain the same at 0.2%

Italian CPI (YoY) (Dec) remain the same at 0.5%

Italian CPI Ex Tobacco (MoM) (Dec) increased from 0.1% to 0.4%

Italian HICP (YoY) (Dec) remain the same at 0.5%

Italian HICP (MoM) (Dec) remain the same at 0.2%

Euro Zone:

Current Account (Nov) increased from 32.4B to 33.9B

Current Account n.s.a. (Nov) decreased from 41.0B to 36.6B

Construction Output (MoM) (Nov) increased from -0.46% to 0.73%

Core CPI (YoY) (Dec) remain the same at 1.3%

Core CPI (MoM) (Dec) remain the same at 0.4%

CPI (YoY) (Dec) remain the same at 1.3%

CPI (MoM) (Dec) increased from -0.3% to 0.3%

CPI ex Tobacco (YoY) (Dec) increased from 0.9% to 1.2%

CPI ex Tobacco (MoM) (Dec) increased from -0.4% to 0.3%

HICP ex Energy & Food (YoY) (Dec) remain the same at 1.4%

HICP ex Energy and Food (MoM) (Dec) increased from -0.4% to 0.3%

UK:

Core Retail Sales (YoY) (Dec) increased from 0.6% to 0.7%

Core Retail Sales (MoM) (Dec) remain the same at -0.8%

Retail Sales (YoY) (Dec) increased from 0.8% to 0.9%

Retail Sales (MoM) (Dec) increased from -0.8% to -0.6%

US/AMERICAS:

Wall Street continued to soar this Friday after all three indexes reached all-time highs yet again. The Dow first pushed through the 29,000 level earlier in the week and closed Friday’s session at 29,348.10. Visa led the Dow’s performance today (1.78%), followed by Travelers (1.43%), and Home Depot (1.29%). The S&P 500 rose to 3,329.62 after QUALCOMM (4.47%), CenturyLink (3.61%), and Citizens Financial Group (3.33%) pushed the index higher. QUALCOMM’s strong performance also helped the Nasdaq post a record high of 9,388.94 this Friday, with AMD (2.33%), and Intuit (2.18%) providing additional support.

US job openings contracted in December, according to new data released by the Labor Department, after falling by 561,000 vacancies to 6.8 million. However, the lack of available jobs is consistent with the historically low unemployment rate.

Boeing’s 737 MAX had yet another setback today after finding additional software issues. Boeing has yet to comment on how they plan to resolve the issue. The Federal Aviation Administration (FAA) is now unlikely to approve the plane’s reimplementation until the spring. Southwest and American Airlines announced that they are extending cancellations of the 737 MAX until June. Boeing’s stock declined 2.36% this Friday.

Mexico is praising the United States-Mexico-Canada Agreement (USMCA) as a major victory for the nation. Mexican President Andres Manuel Lopez Obrador stated in a video message that the deal will “generate confidence in Mexico for the arrival of investment, for companies to set up here, and for jobs with good salaries.” According to Reuters, three Chinese automakers are considering moving production to Mexico once the deal officially passes. Auto manufacturing composes a large percentage of Mexico’s exports but declined by 4.1% in 2019.

The last step in finalizing the USMCA is for the Canadian Parliament to provide their approval. Deputy Prime Minister Chrystia Freeland previously stated she would present the legislation in the House of Commons once the US approved of the deal. Although Canada is expected to approve, there are a few grey areas.

US Market Closings:

• Dow advanced 50.56 points or 0.17% to 29348.10
• S&P 500 advanced 12.81 points or 0.39% to 3,329.62
• Nasdaq advanced 31.81 points or 0.34% to 9,388.94
• Russell 2000 declined 5.58 points or -0.33% to 1,699.64

Canada Market Closings:

• TSX Composite advanced 74.25 points or 0.42% to 17,559.02
• TSX 60 advanced 4.69 points or 0.45% to 1,046.06

Brazil Market Closing:

• Bovespa advanced 1,774.09 points or 1.52% to 118,478.30

ENERGY:

Crude and Brent were relatively flat today as they’re no longer playing on momentum from geopolitical risks with Iran or trade negotiations between the US and China.

The oil markets had a negative day today:

• Crude Oil decreased 0.11 USD/BBL or -0.19% to 58.5216
• Brent decreased 0.03 USD/BBL or -0.05% to 64.7191
• Natural gas decreased 0.0545 USD/MMBtu or -2.67% to 1.9862
• Gasoline decreased 0.0198USD/GAL or -1.18% to 1.6566
• Heating oil decreased 0.0101 USD/GAL or -0.54% to 1.8614
• Top commodity gainers: Palladium (7.15%), Ethanol (3.87%), Corn (3.40%), and Cocoa (3.17%)
• Top commodity losers: Natural Gas (-2.67%), Bitumen (-2.63%), Palm Oil (-1.67%), and Gasoline (-1.18%)

The above data was collected around 13.25 am EST on Friday.

BONDS:

Japan 0.00%(-1bp), US 2’s 1.55% (-1bps), US 10’s 1.81%(+1bps); US 30’s 2.29%(+3bps), Bunds -0.21% (+4bp), France 0.04% (-0bp), Italy 1.41% (-3bp), Turkey 10.61% (-10bp), Greece 1.42% (-53bp), Portugal 0.38% (-3bp) Spain 0.45% (-1bp) and UK Gilts 0.62% (-3bp).