Market Talk – May 26, 2022

ASIA:

Earlier this week, China’s premier, Li Keqiang, warned that the world’s second-largest economy could struggle to record positive growth in the current quarter. “We will try to make sure the economy grows in the second quarter,” he said. A weaker yuan would probably help China’s export and trade balance, it would also make it less attractive for foreign investors to hold yuan-denominated assets.

India will continue to buy “cheap oil” from Russia but has not finalized terms of the discount, as per a published-on Reuters. With concerns that conventional payment routes could be blocked due to Western sanctions on Moscow, including on banks, work was ongoing to set up a rupee-rouble trade mechanism to facilitate transactions, a govt official said. While Russia’s oil exports have not to date fallen under Western sanctions, some international traders have avoided buying the barrels given the disruption to payment systems and shipping.

The major Asian stock markets had a mixed day today:

• NIKKEI 225 decreased 72.96 points or -0.27% to 26,604.84
• Shanghai increased 15.64 points or 0.50% to 3,123.11
• Hang Seng decreased 55.07 points or -0.27% to 20,116.20
• ASX 200 decreased 49.30 points or -0.69% to 7,105.90
• Kospi decreased 4.77 points or -0.18% to 2,612.45
• SENSEX increased 503.27 points or 0.94% to 54,252.53
• Nifty50 increased 144.35 points or 0.90% to 16,170.15

The major Asian currency markets had a mixed day today:

• AUDUSD decreased 0.00099 or -0.14% to 0.70861
• NZDUSD decreased 0.00205 or -0.32% to 0.64645
• USDJPY increased 0.232 or 0.18% to 127.366
• USDCNY increased 0.05785 or 0.86% to 6.76686

Precious Metals:

• Gold decreased 6.14 USD/t oz. or -0.33% to 1,846.69
• Silver decreased 0.061 USD/t. oz or -0.28% to 21.908

Some economic news from last night:

Japan:

Corporate Services Price Index (CSPI) (YoY) increased from 1.3% to 1.7%

Foreign Bonds Buying increased from 373.4B to 627.0B

Foreign Investments in Japanese Stocks increased from -345.4B to 4.1B

South Korea:

Interest Rate Decision (May) increased from 1.50% to 1.75%

Australia:

Building Capital Expenditure (MoM) (Q1) decreased from 2.2% to -1.7%

Plant/Machinery Capital Expenditure (QoQ) (Q1) increased from -0.1% to 1.2%

Private New Capital Expenditure (QoQ) (Q1) decreased from 2.3% to -0.3%

Some economic news from today

Hong Kong:

Exports (MoM) (Apr) increased from -8.9% to 1.1%

Imports (MoM) (Apr) increased from -6.0% to 2.1%

Trade Balance increased from -37.3B to -36.6B

Singapore:

Industrial Production (YoY) (Apr) increased from 5.1% to 6.2%

Industrial Production (MoM) (Apr) increased from -11.2% to 2.2%

EUROPE/EMEA:

The European Union can still strike a deal on a Russian oil embargo in the coming days or look to “other instruments” if no agreement is reached, Germany’s economy minister Robert Habeck said at Group of Seven talks in Berlin on Thursday. The EU executive European Commission proposed the embargo as the harshest sanction yet on Russia after its invasion of Ukraine. But talks have failed to produce a breakthrough so far, with Hungary, Moscow’s closest ally in the EU, vetoing the move. The EU also offered up to 2 billion euros ($2.1 billion) for oil infrastructure to help those countries pivot to non-Russian supplies.

The major Europe stock markets had a green day:

• CAC 40 increased 111.94 points or 1.78% to 6,410.58
• FTSE 100 increased 42.17 points or 0.56% to 7,564.92
• DAX 30 increased 223.36 points or 1.59% to 14,231.29

The major Europe currency markets had a mixed day today:

• EURUSD increased 0.00176 or 0.16% to 1.07088
• GBPUSD decreased 0.00115 or -0.09% to 1.25805
• USDCHF decreased 0.00116 or -0.12% to 0.96050

Some economic news from Europe today:

Italy:

Italian Business Confidence (May) decreased from 109.9 to 109.3

Italian Consumer Confidence (May) increased from 100.0 to 102.7

Italian Industrial Sales (YoY) (Mar) increased from 20.80% to 21.40%

Italian Industrial Sales (MoM) (Mar) decreased from 2.90% to 2.40%

US/AMERICAS:

The US Bureau of Economic Analysis revealed that the economy declined -1.5% during the first quarter, which is worse than the -1.3% estimate. This marks the worst first quarter for the nation since the pandemic shutdown the global economy during the second quarter of 2020 when GDP nosedived -31.2%. The Atlanta Federal Reserve is optimistic that the economy will rebound in Q2 with a 1.8% GDP forecast.

The US labor department reported a decrease in unemployment during the week ending on May 21. Initial claims decreased by 8,000 to a total of 210,000 after remaining stagnant at 218,000 the week prior. The four-week moving average reached 206,750 after increasing by 7,250 from the previous week’s unrevised total of 199,500.

US Market Closings:

• Dow advanced 528.26 points or 1.61% to 32,638.44
• S&P 500 advanced 79.21 points or 1.99% to 4,057.94
• Nasdaq advanced 305.91 points or 2.68% to 11,740.65
• Russell 2000 advanced 39.07 points or 2.17% to 1,838.24

Canada Market Closings:

• TSX Composite advanced 148.43 points or 0.73% to 20,532.18
• TSX 60 advanced 7.59 points or 0.62% to 1,241.28

Brazil Market Closing:

• Bovespa advanced 1,310.07 points or 1.18% to 111,889.88

ENERGY:

The oil markets had a green day today:

• Crude Oil increased 3.81 USD/BBL or 3.45% to 114.140
• Brent increased 3.21 USD/BBL or 2.82% to 117.24
• Natural gas increased 0.211 USD/MMBtu or 2.35% to 9.2010
• Gasoline increased 0.0398 USD/GAL or 1.04% to 3.8715
• Heating oil increased 0.0869 USD/GAL or 2.25% to 3.9533

The above data was collected around 13:00 EST on Thursday

• Top commodity gainers: Crude Oil (3.45%) and Lumber (4.08%), Orange Juice (5.22%),  Coffee (4.24%)
• Top commodity losers: Cotton (-2.47%) and Rubber (-2.03%)

The above data was collected around 13:09 EST on Thursday.

BONDS:

Japan 0.247%(+3.7bp), US 2’s 2.49% (-0.010%), US 10’s 2.7702% (+1.96bps); US 30’s 3.01% (+0.034%), Bunds 0.99% (+3.5bp), France 1.5070% (+2.4bp), Italy 2.900% (-4.7bp), Turkey 23.33% (+21bp), Greece 3.532% (-4.1bp), Portugal 2.129% (+2.2bp); Spain 2.082% (+2.3bp) and UK Gilts 1.974% (+6.5bp).

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