Market Talk – February 7, 2023

ASIA:

Taiwan will speed up the development of drones for military use, considering the lessons of the war in Ukraine and the threat posed by China, the island’s defense ministry said on Tuesday. Unmanned aircraft have played a crucial role on both sides since Russia launched a full-scale invasion of Ukraine in February last year. Ukraine’s defense minister has said that he regarded drones as the future of modern warfare. Taiwan, which is facing a growing threat from China to use force to bring it under Beijing’s control, has repeatedly said it is closely watching the war and learning lessons it could apply to fight off a Chinese attack, including how Ukraine has resisted a numerically superior force.

India has the strongest growth prospects among emerging market economies and the fiscal 2024 budget will support productivity and higher growth which will be the bulwark for the economy amid the global downturn, according to S&P. The international ratings firm expects India to grow 6% on a real basis in FY24. The Centre is working on a fiscal deficit of 5.9% of gross domestic product in the upcoming year, and something above 9% at the general government level. The government’s debt stock is hovering around 85% of GDP on a net basis.

The major Asian stock markets had a mixed day today:

• NIKKEI 225 decreased 8.18 points or -0.03% to 27,685.47
• Shanghai increased 9.40 points or 0.29% to 3,248.09
• Hang Seng increased 76.54 points or 0.36% to 21,298.70
• ASX 200 decreased 34.90 points or -0.46% to 7,504.10
• Kospi increased 13.52 points or 0.55% to 2,451.71
• SENSEX decreased 220.86 points or -0.37% to 60,286.04
• Nifty50 decreased 43.10 points or -0.24% to 17,721.50

The major Asian currency markets had a mixed day today:

• AUDUSD increased 0.00576 or 0.84% to 0.69386
• NZDUSD increased 0.00126 or 0.20% to 0.63156
• USDJPY decreased 1.56 or -1.18% to 131.090
• USDCNY decreased 0.01022 or -0.15% to 6.79008

Precious Metals:

• Gold increased 4.17 USD/t oz. or 0.22% to 1,871.53
• Silver decreased 0.115 USD/t. oz or -0.52% to 22.150

Some economic news from last night:

Japan:

Household Spending (MoM) (Dec) decreased from -0.9% to -2.1%

Household Spending (YoY) (Dec) decreased from -1.2% to -1.3%

Australia:

Trade Balance (Dec) decreased from 13.475B to 12.237B

RBA Interest Rate Decision (Feb) increased from 3.10% to 3.35%

Some economic news from today:

China:

FX Reserves (USD) (Jan) increased from 3.128T to 3.184T

Hong Kong:

Foreign Reserves (USD) increased from 424.00B to 436.90B

Japan:

Coincident Indicator (MoM) (Dec) decreased from -0.3% to -0.4%

Leading Index decreased from 97.4 to 97.2

Leading Index (MoM) (Dec) increased from -1.2% to -0.5%

EUROPE/EMEA:

Germany will act as a drag on growth in Europe until at least 2030, as it faces pressure to address a declining workforce and sluggish investment, according to a report by ratings agency Scope seen by Reuters on Monday. The agency sees Germany’s growth potential at 1.0% in the medium term compared with 1.5% for the euro zone as a whole, as accumulating costs related to the COVID-19 pandemic, the war in Ukraine and the energy crisis weigh on public finances. By the end of 2024, the German economy is forecast to be around 1.2% larger than at the end of 2019, before the pandemic hit, compared with 5.7% for the euro area, the agency said. The Berlin-based and Europe-focused ratings agency said Germany faces structural challenges to its economy, including a shrinking number of people of working age, estimated to decline by around 0.8% annually between 2023 and 2030, and “persistent underinvestment coupled with slow project implementation,” even as the country strives to transition to a more digital, green economy.

The major Europe stock markets had a mixed day:

• CAC 40 decreased 4.75 points or -0.07% to 7,132.35
• FTSE 100 increased 28.00 points or 0.36% to 7,864.71
• DAX 30 decreased 25.03 points or -0.16% to 15,320.88

The major Europe currency markets had a mixed day today:

• EURUSD decreased 0.00142 or -0.13% to 1.07158
• GBPUSD increased 0.00192 or 0.16% to 1.20352
• USDCHF decreased 0.0051 or -0.55% to 0.92310

Some economic news from Europe today:

Swiss:

Unemployment Rate n.s.a. (Jan) increased from 2.1% to 2.2%

Unemployment Rate s.a. (Jan) remain the same at 1.9%

Germany:

German Industrial Production (MoM) (Dec) decreased from 0.4% to -3.1%

UK:

Halifax House Price Index (YoY) decreased from 2.1% to 1.9%

Halifax House Price Index (MoM) (Jan) increased from -1.3% to 0.0%

Mortgage Rate (GBP) (Jan) increased from 6.41% to 6.66%

 US/AMERICAS:

Federal Reserve Chairman Jerome Powell has declared that the “disinflationary process” has begun in the US. Powell noted that the goods sector, accounting for 25% of the economy, will be the first to see inflation wane. Yet, the Fed has a long way to go before their 2% inflation target is achieved. Last week’s jobs report indicated an increasingly tight labor market. The Federal Reserve may need to act more aggressively to combat price instability, but their decisions will depend on incoming data.

US Market Closings:

• Dow advanced 265.67 points or 0.78% to 34,156.69
• S&P 500 advanced 52.92 points or 1.29% to 4,164.00
• Nasdaq advanced 226.34 points or 1.9% to 12,113.79
• Russell 2000 advanced 14.89 points or 0.76% to 1,972.61

Canada Market Closings:

• TSX Composite advanced 96.08 points or 0.47% to 20,725.00
• TSX 60 advanced 4.52 points or 0.36% to 1,248.87

Brazil Market Closing:

• Bovespa declined 891.85 points or -0.82% to 107,829.73

ENERGY:

The oil markets had a green day today:

• Crude Oil increased 2.679 USD/BBL or 3.62% to 76.789
• Brent increased 2.333 USD/BBL or 2.88% to 83.323
• Natural gas increased 0.1423 USD/MMBtu or 5.79% to 2.5993
• Gasoline increased 0.0815 USD/GAL or 3.43% to 2.4549
• Heating oil increased 0.1274 USD/GAL or 4.60% to 2.8961

The above data was collected around 14:21 EST on Tuesday              

• Top commodity gainers: Natural Gas (5.79%), Heating Oil (4.60%), Coal (9.36%) and HRC Steel (6.05%)
• Top commodity losers: Cheese (-2.17%), Potatoes (-1.34%), Iron Ore 62% fe (-1.28%) and Lumber (-3.62%)

The above data was collected around 14:27 EST Tuesday.

BONDS:

Japan 0.495% (+0bp), US 2’s 4.46% (+0.006%), US 10’s 3.6754% (+4.34bps); US 30’s 3.71% (+0.039%), Bunds 2.36% (+7.6bp), France 2.777% (+2.7bp), Italy 4.188% (+3.5bp), Turkey 11.39% (+62bp), Greece 4.18% (+2bp), Portugal 3.179% (+4bp); Spain 3.393% (+8.5bp) and UK Gilts 3.287% (+4.3bp).  

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