Market Talk – July 19, 2022

ASIA:

China’s banks have detailed 2.11 billion yuan ($312 million) of loans at risk to the increasing number of homebuyers refusing to pay mortgages on unfinished homes, as fears grow over a potential spillover into the wider financial sector. State-owned Agricultural Bank of China Ltd. said Thursday it held 660 million yuan of overdue loans on unfinished homes, the largest among banks that have disclosed their holdings. Industrial & Commercial Bank of China Ltd., the world’s biggest bank by assets, said it held 637 million yuan of such mortgages, while smaller rival Industrial Bank Co. said 384 million yuan of mortgages on unfinished homes have become delinquent. In most cases, the overdue amount makes up less than 1% of the lender’s total mortgage portfolio.

Russia is seeking payment in United Arab Emirates dirhams for oil exports to some Indian customers, as Moscow moves away from the U.S. dollar to insulate itself from the effects of Western sanctions, Reuters reported. Russia has been hit by a slew of sanctions from the United States and its allies over its invasion of Ukraine in late February, which it terms a “special military operation”. Russian oil major Rosneft is pushing crude through trading firms including Everest Energy and Coral Energy into India, now its second biggest oil buyer after China. The United Arab Emirates, seeking to maintain what it says is a neutral position, has not imposed sanctions on Moscow, and the payments could add to the frustration of some in the West, who privately say the UAE’s position is untenable and siding with Russia.

 

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 increased 173.21 points or 0.65% to 26,961.68
  • Shanghai increased 1.33 points or 0.04% to 3,279.43
  • Hang Seng decreased 185.12 points or -0.89% to 20,661.06
  • ASX 200 decreased 37.50 points or -0.56% to 6,649.60
  • Kospi decreased 4.28 points or -0.18% to 2,370.97
  • SENSEX increased 246.47 points or 0.45% to 54,767.62
  • Nifty50 increased 62.05 points or 0.38% to 16,340.55

 

The major Asian currency markets had a mixed day today:

  • AUDUSD increased 0.00922 or 1.35% to 0.69003
  • NZDUSD increased 0.00732 or 1.19% to 0.62252
  • USDJPY decreased 0.262 or -0.19% to 138.070
  • USDCNY decreased 0.01462 or -0.22% to 6.74458

 

Precious Metals:

             Gold  increased 3.08 USD/t oz. or 0.18% to 1,712.09

             Silver increased 0.104 USD/t. oz or  0.56% to 18.777

 

No economic news from last night:

 

Some economic news from today:

New Zealand:

GlobalDairyTrade Price Index decreased from -4.1% to -5.0%

Hong Kong:

Unemployment Rate (Jun) decreased from 5.1% to 4.7%

 

EUROPE/EMEA:

Workers in the United Kingdom are struggling with the biggest drop in pay in more than two decades, as surging food and energy prices take a giant bite out of wages. Real pay — workers’ wages that take inflation into account — slumped by 2.8% between March and May compared to the same time last year, according to data released Tuesday by the Office for National Statistics. For months, rising global energy and commodity prices — worsened by Russia’s invasion of Ukraine — have helped stoke global inflation. The world’s fifth-largest economy has been one of the hardest hit among the world’s wealthiest nations. UK consumer prices hit a 40-year high of 9.1% in May, the highest among the G7 leading economies — and is forecast to climb above 11% later this year despite a series of interest rate hikes.

Starbucks is reportedly considering selling its UK business after massive price surge. The company is engaged with advisers to determine whether it could — or should — sell its business in the United Kingdom, according to UK newspaper The Times. Food prices in particular have been soaring, creating a cost of living crisis for many in the UK. Disposable incomes are on track for the second biggest fall since record keeping began in 1964, according to the Bank of England.

 

The major Europe stock markets had a green day:

  • CAC 40 increased 109.31 points or 1.79% to 6,201.22
  • FTSE 100 increased 73.04 points or 1.01% to 7,296.28
  • DAX 30 increased 348.60 points or 2.69% to 13,308.41

The major Europe currency markets had a mixed day today:

  • EURUSD increased 0.00971 or 0.96% to 1.02367
  • GBPUSD increased 0.00577 or 0.48% to 1.20033
  • USDCHF decreased 0.00918 or -0.94% to 0.96852

 

 

 

Some economic news from Europe today:

UK:

Average Earnings ex Bonus (May) increased from 4.2% to 4.3%

Average Earnings Index +Bonus (May) decreased from 6.8% to 6.2%

Claimant Count Change (Jun) increased from -34.7K to -20.0K

Employment Change 3M/3M (MoM) (May) increased from 177K to 296K

Unemployment Rate (May) remain the same at 3.8%

Swiss:

Trade Balance (Jun) increased from 2.995B to 3.803B

Euro Zone:

Construction Output (MoM) (May) increased from -0.97% to 0.36%

Core CPI (YoY) (Jun) decreased from 3.8% to 3.7%

Core CPI (MoM) (Jun) decreased from 0.5% to 0.2%

CPI (YoY) (Jun) increased from 8.1% to 8.6%

CPI (MoM) (Jun) remain the same at 0.8%

CPI ex Tobacco (YoY) (Jun) increased from 8.2% to 8.8%

CPI ex Tobacco (MoM) (Jun) remain the same at 0.8%

HICP ex Energy & Food (YoY) (Jun) increased from 4.4% to 4.6%

HICP ex Energy and Food (MoM) (Jun) decreased from 0.7% to 0.4%

US/AMERICAS:

US Congress debating over legislation today that could ramp up semiconductor chip production domestically. The legislation would provide $52 billion in incentives for domestic producers and developers, and hopefully offset the supply shortage compounded by shipping delays. The bill is facing bipartisan support as some warehouses have plans to open in Republican-led states if the bill passes.

Boeing received another buy this Tuesday after Delta Air Lines announced they would purchase 100 737 Max 10 aircrafts. Boeing touts the 737 Max 10 as being 20%-30% more fuel efficient with room for 182 passengers (20 first class, 33 Comfort+, and 129 economy). Over half of Delta’s fleet is now made of Boeing aircrafts.

US Market Closings:

  • Dow advanced 752.1 points or 2.42% to 31,824.71
  • S&P 500 advanced 105.29 points or 2.75% to 3,936.14
  • Nasdaq advanced 353.1 points or 3.11% to 11,713
  • Russell 2000 advanced 60.91 points or 3.5% to 1,799.32

 

Canada Market Closings:

  • TSX Composite advanced 342.09 points or 1.84% to 18,937.71
  • TSX 60 advanced 20.27 points or 1.8% to 1,145.84

 

Brazil Market Closing:

  • Bovespa advanced 1,328.67 points or 1.37% to 98,244.8

 

ENERGY:

 

The oil markets had a mixed day today:

 

  • Crude Oil increased 1.27 USD/BBL or 1.24% to 103.870
  • Brent increased 0.94 USD/BBL or 0.88% to 107.21
  • Natural gas decreased 0.115 USD/MMBtu or -1.54% to 7.3640
  • Gasoline increased 0.0199 USD/GAL or 0.61% to 3.2842
  • Heating oil decreased 0.017 USD/GAL or -0.47% to 3.6385

The above data was collected around 13:45 EST on Tuesday

 

  • Top commodity gainers: Steel (3.04%), Coffee (1.90%), Rhodium (4.64%) and Orange Juice (2.73%)
  • Top commodity losers: Canola (-1.86%), Aluminum (-2.05%), Corn (-2.37%) and Sugar (-2.68%)

The above data was collected around 13:54 EST on Tuesday.

 

 

BONDS:

 

Japan 0.234%(+0.1bp), US 2’s 3.22% (+0.061%), US 10’s 3.0097% (+4.97bps); US 30’s 3.17% (+0.038%), Bunds 1.2810% (+6.7bp), France 1.8530% (+3.6bp), Italy 3.4410% (+7.2bp), Turkey 18.00% (-15bp), Greece 3.48% (+0.5bp), Portugal 2.427% (+4.8bp); Spain 2.498% (+4.4bp) and UK Gilts 2.1780% (+2.1bp).

The post Market Talk – July 19, 2022 first appeared on Armstrong Economics.

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