Market Talk – June 13, 2022

ASIA:

Five global banks signed up as cornerstone members of the Alliance for Green Commercial Banks, a global green banking initiative established by the Hong Kong Monetary Authority (HKMA) and the World Bank’s International Finance Corporation (IFC). The five cornerstone banks are Bank of China (Hong Kong), Citigroup, Crédit Agricole CIB, HSBC, and Standard Chartered. They are to work closely with the IFC and the HKMA to advocate client adaptation of green strategies, promote best practices in green products and services, and unlock new business opportunities to enable the green transition of economies, the HKMA said in a statement.

India’s retail inflation eased marginally in May after touching an eight-year high of 7.79% in April but remained above the central bank’s tolerance band for the fifth month in a row, suggesting it would continue with rate hikes in August. Consumer price index-based inflation rose 7.04% in May year-on-year, helped by slower increases in food prices, data released by the National Statistics Office showed on Monday. A surge in crude oil and commodity prices since Russia invaded Ukraine in February has pushed up consumer prices globally, forcing many central banks to raise interest rates to tame inflation. The dip in prices was likely to be temporary, economists said, as a heatwave in June has pushed up prices of vegetables, while the government cut estimates of wheat production because of dry spells in northern India.

 

The major Asian stock markets had a negative day today:

  • NIKKEI 225 decreased 836.85 points or -3.01% to 26,987.44
  • Shanghai decreased 29.28 points or -0.89% to 3,255.55
  • Hang Seng decreased 738.60 points or -3.39% to 21,067.58
  • ASX 200 closed
  • Kospi decreased 91.36 points or -3.52% to 2,504.51
  • SENSEX decreased 1,456.74 points or -2.68% to 52,846.70
  • Nifty50 decreased 427.40 points or -2.64% to 15,774.40

 

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.01172 or -1.66% to 0.69247
  • NZDUSD decreased 0.0098 or -1.54% to 0.62563
  • USDJPY decreased 0.027 or -0.02% to 134.412
  • USDCNY increased 0.04985 or 0.74% to 6.78065

 

Precious Metals:

  • Gold decreased 49.80 USD/t oz. or -2.66% to 1,821.16
  • Silver decreased 0.757 USD/t. oz or -3.46% to 21.114

 

Some economic news from last night:

Japan:

BSI Large Manufacturing Conditions (Q2) decreased from -7.7 to -9.9

Some economic news from today:

India:

CPI (YoY) (May) decreased from 7.79% to 7.04%

 

 

EUROPE/EMEA:

Britain’s economy unexpectedly shrank in April, official figures showed on Monday, adding to fears of a sharp slowdown just three days before the Bank of England announces the scale of its latest interest rate response to the surge in inflation. Gross domestic product contracted by 0.3% after falling by 0.1% in March, the first back-to-back declines since April and March 2020, at the start of the coronavirus pandemic. Over the three months to April, GDP was up by 0.2%, weaker than the Reuters poll forecast of 0.4% and slowing sharply from growth of 0.8% in the three months to March.

The eurozone will avoid a recession this year and growth will accelerate noticeably after bottoming out in the second quarter, a key European Central Bank survey showed on Monday. The economy is now expected to grow by 0.1% in the second quarter, accelerating to 0.4% in both the third and fourth quarters, the ECB’s Survey of Monetary Analysts showed. The survey, presented to policymakers at last week’s ECB meeting, was compiled before the ECB said that rates would rise by 25 basis points in July and possibly by a bigger margin in September. The rate hike will come as the ECB fights to tame inflation, which is now seen back at the 2% target by the first quarter of 2024, according to the survey.

 

The major Europe stock markets had a negative day:

  • CAC 40 decreased 164.91 points or -2.67% to 6,022.32
  • FTSE 100 decreased 111.71 points or -1.53% to 7,205.81
  • DAX 30 decreased 334.80 points or -2.43% to 13,427.03

 

The major Europe currency markets had a mixed day today:

  • EURUSD decreased 0.011 or -1.05% to 1.04030
  • GBPUSD decreased 0.01828 or -1.49% to 1.21257
  • USDCHF increased 0.01154 or 1.17% to 0.99864

 

Some economic news from Europe today:

UK:

GDP (QoQ) decreased from 0.8% to 0.2%

GDP (YoY) decreased from 6.4% to 3.4%

GDP (MoM) decreased from -0.1% to -0.3%

Industrial Production (MoM) (Apr) decreased from -0.2% to -0.6%

Manufacturing Production (MoM) (Apr) decreased from -0.2% to -1.0%

Monthly GDP 3M/3M Change decreased from 0.8% to 0.2%

Trade Balance (Apr) increased from -23.90B to -20.89B

Trade Balance Non-EU (Apr) increased from -13.80B to -10.99B

NIESR GDP Estimate decreased from 0.2% to -0.1%

Italy:

Italian Quarterly Unemployment Rate decreased from 9.0% to 8.6%

Spain:

Spanish Consumer Confidence increased from 74.6 to 76.0

US/AMERICAS:

The S&P 500 dropped back into a bear market within the first 30 minutes of trading this Monday. The index is now down over 20% from its January high, marking the lowest level since March 2021. The Dow plummeted 2.79% while the Nasdaq fell 4.8%. Recession fears are growing amid crippling inflation and people are pulling out of their positions before the situation worsens.

Airlines in the US are expecting a surge in travel this summer after the Biden Administration lifted COVID testing mandates. The US Travel Association predicts 5.4 million tourists could visit the US before the end of the year, and spend upwards of $9 billion. Yet, inflation could be a deterrent for travelers. Hotel prices are now up 33% on average, and airfare rose 37.8% YoY. Canada also announced that they would stop random COVID testing at airports but vaccine mandates for travelers will remain in place.

US Market Closings:

  • Dow declined 876.05 points or -2.79% to 30,516.74
  • S&P 500 declined 151.23 points or -3.88% to 3,749.63
  • Nasdaq declined 530.8 points or -4.68% to 10,809.23
  • Russell 2000 declined 85.69 points or -4.76% to 1,714.59

 

Canada Market Closings:

  • TSX Composite declined 532.26 points or -2.63% to 19,742.56
  • TSX 60 declined 28.81 points or -2.63% to 19,742.56

 

Brazil Market Closing:

  • Bovespa declined 2,883.05 points or -2.73% to 102,598.18

 

 

ENERGY:

 

The oil markets had a mixed day today:

 

  • Crude Oil increased 0.14 USD/BBL or 0.12% to 120.790
  • Brent increased 0.03 USD/BBL or 0.02% to 122.04
  • Natural gas increased 0.183 USD/MMBtu or -2.07% to 8.6670
  • Gasoline increased 0.1604 USD/GAL or -3.84% to 4.0118
  • Heating oil increased 0.0943 USD/GAL or -2.16% to 4.2724
  • Top commodity gainers: Methanol (1.94%) and Potatoes (2.00%)
  • Top commodity losers: Platinum (-4.44%), Lumber (-5.02%), Palladium (-7.34%) and Gasoline (-3.84%)

 

The above data was collected around 16:35 EST on Monday.

 

BONDS:

 

Japan 0.255%(+0.5bp), US 2’s 3.38% (+0.308%), US 10’s 3.3656% (+20.07bps); US 30’s 3.36% (+0.155%), Bunds 1.627% (+12.5bp), France 2.2430% (+15bp), Italy 4.100% (+25.4bp), Turkey 20.52% (-84bp), Greece 4.438% (+6.9bp), Portugal 3.042% (+24.6bp); Spain 3.052% (+28.5bp) and UK Gilts 2.5220% (+7.9bp).

 

The post Market Talk – June 13, 2022 first appeared on Armstrong Economics.

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