Market Talk – May 25, 2022

ASIA:

US President Joe Biden said he’ll review Trump-era tariffs imposed on imports from China amid growing calls from businesses to remove the levies, fueling a rally in the offshore yuan. Biden said he’s considering removing some of the tariffs and would talk with Treasury Secretary Janet Yellen about it after returning to the US from Asia. The offshore yuan jumped as much as 0.7% in reaction and reached the strongest level since May 5. That came after a 1.5% rise last week in response to easing lockdowns in Shanghai and stronger sentiment due to a reduction in a key lending interest rate on Friday by Chinese banks. Other Asian currencies and the Australian dollar received a boost from Biden’s comments. The Aussie rose as much as 1.2% to 0.7126 per greenback.

India has no immediate plans to lift a ban on wheat exports but will continue with deals which are done directly with other governments, India’s commerce ministry announced. The world’s second biggest producer of wheat banned private overseas sales of the grain on May 14 after a scorching heat wave curtailed output and domestic prices hit a record high. Global wheat prices surged after the decision. Many wheat importing countries, including members of the G7 nations, have asked India to reconsider its decision to ban overseas sales of wheat. U.S. Agriculture Secretary Tom Vilsack this month said he has “deep concern” about the ban.

 

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 decreased 70.34 points or -0.26% to 26,677.80
  • Shanghai increased 36.54 points or 1.19% to 3,107.46
  • Hang Seng increased 59.17 points or 0.29% to 20,171.27
  • ASX 200 increased 26.40 points or 0.37% to 7,155.20
  • Kospi increased 11.35 points or 0.44% to 2,617.22
  • SENSEX decreased 303.35 points or -0.56% to 53,749.26
  • Nifty50 decreased 99.35 points or -0.62% to 16,025.80

 

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.00441 or -0.62% to 0.70603
  • NZDUSD increased 0.00055 or 0.09% to 0.64568
  • USDJPY increased 0.54 or 0.43% to 127.401
  • USDCNY increased 0.05722 or 0.86% to 6.71462

 

Precious Metals:

  • Gold decreased 20.75 USD/t oz. or -1.11% to 1,845.15
  • Silver decreased 0.252 USD/t. oz or -1.14% to 21.839

 

 

Some economic news from last night:

South Korea:

Manufacturing BSI Index (Jun) remain the same at 85

Australia:

Construction Work Done (QoQ) (Q1) decreased from -0.4% to -0.9%

New Zealand:

RBNZ Interest Rate Decision increased from 1.50% to 2.00%

Singapore:

GDP (QoQ) (Q1) remain the same at 1.4%

GDP (YoY) (Q1) increased from 3.4% to 3.7%

 

Some economic news from today

Japan:

Coincident Indicator (MoM) (Mar) increased from 0.2% to 0.7%

Leading Index increased from 100.1 to 100.8

Leading Index (MoM) decreased from 0.9% to 0.7%

 

 

 

EUROPE/EMEA:

European shares rose on Wednesday, lifted by resource-linked stocks and banks, with investors watching for updates from central banks on monetary policy tightening amid rising concerns of an economic slowdown. The pan-European STOXX 600 index rose 0.6%. Banks, which benefit when interest rates rise, rose 1.1% to hit a fresh one-month high and were among the biggest boosts to the index. European Central Bank President Christine Lagarde gained key allies for her plan to raise rates out of negative territory this summer, even as one of her own board members expressed some skepticism about the policy path ahead.

British Finance Minister Rishi Sunak will set out more details on Thursday of the government’s response to growing cost of living pressures facing households, a spokesperson for his department said. Quoted as saying the spokesperson said, “The Chancellor was clear that as the situation evolves, so will our response, with the most vulnerable being his number one priority. He will set out more details tomorrow.”

 

The major Europe stock markets had a green day:

 

  • CAC 40 increased 45.50 points or 0.73% to 6,298.64
  • FTSE 100 increased 38.40 points or 0.51% to 7,522.75
  • DAX 30 increased 88.18 points or 0.63% to 14,007.93

 

 

The major Europe currency markets had a mixed day today:

  • EURUSD decreased 0.00712 or -0.66% to 1.06613
  • GBPUSD decreased 0.00025 or -0.02% to 1.25365
  • USDCHF increased 0.0026 or 0.27% to 0.96304

 

Some economic news from Europe today:

France:

French Consumer Confidence (May) decreased from 87 to 86

France Jobseekers Total increased from 2940.0K to 2955.0K

Germany:

German GDP (QoQ) (Q1) increased from -0.3% to 0.2%

German GDP (YoY) (Q1) increased from 1.8% to 4.0%

GfK German Consumer Climate (Jun) increased from -26.6 to -26.0

Spain:

Spanish PPI (YoY) decreased from 47.0% to 45.0%

Swiss:

ZEW Expectations (May) decreased from -51.6 to -52.6

 

US/AMERICAS:

The Federal Reserve released its minutes report today, and, as expected, more rate hikes are plausible in the near future. Policymakers believe the benchmark rate needs to rise by 50 basis points to combat inflation. Furthermore, additional hikes will be necessary at the next several meetings as the Fed moves toward a hawkish stance. Most voting members seem to be in agreement that a 50-point basis point increase is necessary, while some would like to see it rise faster. The Fed indicated “a restrictive stance of policy may well become appropriate depending on the evolving economic outlook and the risks to the outlook.” At this rate, the benchmark will sit between 2.5% to 2.75% by the end of the year.

The Fed will also begin reducing its $9 trillion balance sheet in June through Treasurys and mortgage-backed securities. “Participants agreed that the Committee should expeditiously move the stance of monetary policy toward a neutral posture, through both increases in the target range for the federal funds rate and reductions in the size of the Federal Reserve’s balance sheet,” the report read. The balance sheet will roll off each month before reaching $95 billion by August.

Federal Reserve Chairman Jerome Powell noted that the FOMC would continue to raise rates until there is “clear and convincing” evidence that inflation is decreasing.

US Market Closings:

  • Dow advanced 191.66 points or 0.6% to 32,120.28
  • S&P 500 advanced 37.25 points or 0.95% to 3,978.73
  • Nasdaq advanced 170.29 points or 1.51% to 11,434.74
  • Russell 2000 advanced 34.34 points or 1.95% to 1,799.16

 

Canada Market Closings:

  • TSX Composite advanced 97.55 points or 0.48% to 20,383.75
  • TSX 60 advanced 4.79 points or 0.39% to 1,233.69

 

Brazil Market Closing:

  • Bovespa declined -0.98 of a point or 0% to 110,579.81

 

 

 

ENERGY:

 

The oil markets had a mixed day today:

 

  • Crude Oil increased 0.14 USD/BBL or 0.13% to 109.910
  • Brent increased 0.09 USD/BBL or 0.08% to 113.65
  • Natural gas increased 0.32 USD/MMBtu or 3.64% to 9.1160
  • Gasoline decreased 0.0012 USD/GAL or -0.03% to 3.8098
  • Heating oil increased 0.0143 USD/GAL or 0.38% to 3.7961

 

The above data was collected around 12:55 EST on Wednesday

 

  • Top commodity gainers: Natural Gas (3.64%) and Coffee (1.47%), Cotton (2.60%), Rhodium (1.96%)
  • Top commodity losers: Canola (-3.05%), Cocoa (-1.76%), Coal (-1.96%) and Orange Juice (-1.82%)

 

The above data was collected around 13:16 EST on Wednesday.

 

 

BONDS:

Oil prices rose in early trade on Wednesday, boosted by tight supplies and the prospect of rising demand from the upcoming start of the US summer driving season. Brent crude futures for July rose 46 cents, or 0.4%, to $114.02 a barrel by 0020 GMT. US West Texas Intermediate (WTI) crude futures for July delivery was up 58 cents, or 0.5%, to $110.35 a barrel. Brent had gained 0.1% on Tuesday while WTI settled down 52 cents.

Japan 0.215%(-1.5bp), US 2’s 2.50% (+0.023%), US 10’s 2.7595% (+0.53bps); US 30’s 2.97% (+0.004%), Bunds 0.955% (+0.1bp), France 1.4870% (-1bp), Italy 2.951% (-1.5bp), Turkey 23.33% (-7bp), Greece 3.572% (-9bp), Portugal 2.123% (-0.9bp); Spain 2.089% (+0.9bp) and UK Gilts 1.916% (+3.4bp).

The post Market Talk – May 25, 2022 first appeared on Armstrong Economics.

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