Market Talk – February 6, 2023

ASIA:

The idea of lifting the cryptocurrency ban has started floating in China as a former central bank official has called the country to review its stringent crypto restrictions. Huang Yiping, a former member of the Monetary Policy Committee at the People’s Bank of China (PBoC), believes that the Chinese government should think again about whether the ban on cryptocurrency trading is sustainable in the long run. Despite calling for an in-depth analysis of the potential long-term benefits of crypto for China, Huang still emphasized that there are many risks associated with cryptocurrencies like Bitcoin. Huang argued that Bitcoin is more like a digital asset rather than a currency because it lacks intrinsic value. Echoing a common anti-crypto narrative, he also claimed that a significant share of Bitcoin transactions is related to illegal transactions.

The major Asian stock markets had a mixed day today:

• NIKKEI 225 increased 184.19 points or 0.67% to 27,693.65
• Shanghai decreased 24.71 points or -0.76% to 3,238.70
• Hang Seng decreased 438.31 points or -2.02% to 21,222.16
• ASX 200 decreased 19.10 points or -0.25% to 7,539.00
• Kospi decreased 42.21 points or -1.70% to 2,438.19
• SENSEX decreased 334.98 points or -0.55% to 60,506.90
• Nifty50 decreased 89.45 points or -0.50% to 17,764.60

The major Asian currency markets had a mixed day today:

• AUDUSD decreased 0.00278 or -0.40% to 0.68912
• NZDUSD decreased 0.00272 or -0.43% to 0.63048
• USDJPY increased 1.326 or 1.01% to 132.496
• USDCNY decreased 0.0054 or -0.08% to 6.80070

Precious Metals:

• Gold increased 5.65 USD/t oz. or 0.30% to 1,871.18
• Silver decreased 0.060 USD/t. oz or -0.27% to 22.290

Some economic news from last night:

Australia:

Retail Sales (MoM) decreased from 1.7% to -3.9%

No economic news from today:

EUROPE/EMEA:

Former U.K. Prime Minister Liz Truss is blaming a “powerful economic establishment” for bringing her chaotic 44-day tenure to an end last year. Truss resigned in October, becoming the shortest-serving prime minister in British history, after her radical tax-cutting budget roiled financial markets, sank the pound, took British pension plans to the brink of collapse and led to a revolt within her own Conservative Party. In a 4,000-word essay published by the Sunday Telegraph, Truss argued that she was never given a “realistic chance” to implement the £45 billion ($54 billion) tax-cutting agenda she and Finance Minister Kwasi Kwarteng put forward.

The major Europe stock markets had a negative day:

• CAC 40 decreased 96.84 points or -1.34% to 7,137.10
• FTSE 100 decreased 65.09 points or -0.82% to 7,836.71
• DAX 30 decreased 130.52 points or -0.84% to 15,345.91

The major Europe currency markets had a mixed day today:

• EURUSD decreased 0.00576 or -0.53% to 1.07354
• GBPUSD decreased 0.00163 or -0.14% to 1.20347
• USDCHF increased 0.00135 or 0.15% to 0.92715

Some economic news from Europe today:

Germany:

German Factory Orders (MoM) (Dec) increased from -4.4% to 3.2%

UK:

Construction PMI (Jan) decreased from 48.8 to 48.4

Euro Zone:

Retail Sales (MoM) (Dec) decreased from 1.2% to -2.7%

US/AMERICAS:

Failed company FTX is demanding that political organizations return all donated funds. Founder  Sam Bankman-Fried was deeply involved in DC politics and lobbied for eased laws regarding cryptocurrencies. Bankman-Fried personally donated $40 million, primarily to Democratic candidates and organizations. FTX’s new CEO John Ray III is now seeking around $1 million in returned donations, and the company is threatening a lawsuit if the funds are not voluntarily returned by the end of the month.

Bank of America CEO Brian Moynihan foresees an incoming recession in the US. The CEO of the nation’s second-largest bank is against proposals to raise the debt ceiling and told CNN “there’s got to be an argument about how we make sure we live within our means as a country.” Meanwhile, Treasury Secretary Janet Yellen is warning Congress that there will be a global financial crisis if there is no debt agreement. “Congress has the purse strings. I would be careful about trying to restructure the US Constitution,” Moynihan said. “I think we should leave it alone and make sure it operates correctly.”

US Market Closings:

• Dow declined 34.99 points or -0.1% to 33,891.02
• S&P 500 declined 25.4 points or -0.61% to 4,111.08
• Nasdaq declined 119.5 points or -1% to 11,887.45
• Russell 2000 declined 27.82 points or -1.4% to 1,957.72

Canada Market Closings:

• TSX Composite declined 129.42 points or -0.62% to 20,628.92
• TSX 60 declined 7.34 points or -0.59% to 1,244.35

Brazil Market Closing:

• Bovespa advanced 198.11 points or 0.18% to 108,721.58

ENERGY:

The oil markets had a mixed day today:

• Crude Oil increased 0.738 USD/BBL or 1.00% to 74.127
• Brent increased 0.951 USD/BBL or 1.19% to 80.891
• Natural gas decreased 0.0036 USD/MMBtu or -0.15% to 2.4064
• Gasoline increased 0.0527 USD/GAL or 2.27% to 2.3737
• Heating oil decreased 0.0088 USD/GAL or -0.32% to 2.7665

The above data was collected around 14:24 EST on Monday

• Top commodity gainers: Brent (1.19%), Gasoline (2.27%), Coffee (2.17%) and HRC Steel (2.89%)
• Top commodity losers: Zinc (-3.35%), Cotton (-2.32%), Sugar (-2.73%) and Lumber (-2.78%)

The above data was collected around 14:29 EST Monday.

BONDS:

Japan 0.495% (+0.9bp), US 2’s 4.45% (+0.144%), US 10’s 3.6268% (+9.48bps); US 30’s 3.67% (+0.042%), Bunds 2.291% (+9.6bp), France 2.746% (+11.2bp), Italy 4.165% (+15.7bp), Turkey 10.77% (+12bp), Greece 4.237% (+21.7bp), Portugal 3.164% (+10.8bp); Spain 3.31% (+15.8bp) and UK Gilts 3.256% (+20bp).

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