Market Talk – February 21, 2023

ASIA:

 

BlackRock Investment Institute raised U.S. short-term government bonds as well as Chinese and other emerging market stocks to “overweight” on Tuesday, saying investors were realizing that the U.S. Federal Reserve may have to become more aggressive in its campaign to subdue inflation. BlackRock also said it was going “overweight” on Chinese and other emerging-market stocks – a bet on China’s economic recovery after Beijing jettisoned its strict “zero COVID” policy in December. The investment management company said it prefers emerging markets over domestic equities due to “China’s powerful restart, peaking EM rate cycles and a broadly weaker U.S. dollar.” China’s blue-chip CSI300 Index has climbed 7% so far in 2023, outperforming the S&P 500’s 4% recovery.

The Indian rupee’s expected volatility against the dollar over the next one month hit its lowest level in almost seven months on Tuesday, tracking the currency’s recent narrow trading range and on expectations of the central bank’s continued support. The rupee’s one-month at-the-money volatility was quoting at 4.50/4.80%, near its lowest level since late July last year. The slide in the OTC (over the counter) volatility comes alongside a plunge in realized volatility – measured in terms of the last ten days’ closing price – to 2.2%, its lowest this year. The rupee initially sold off after a much better-than-expected U.S. jobs report on Feb. 3. But, since then it has held in a narrow range of 82.35-to-82.90 with the Reserve Bank of India likely intervening to prevent the currency from weakening past

 

 

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 decreased 58.84 points or -0.21% to 27,473.10
  • Shanghai increased 16.19 points or 0.49% to 3,306.52
  • Hang Seng decreased 357.47 points or -1.71% to 20,529.49
  • ASX 200 decreased 15.20 points or -0.21% to 7,336.30
  • Kospi increased 3.84 points or 0.16% to 2,458.96
  • SENSEX decreased 18.82 points or -0.03% to 60,672.72
  • Nifty50 decreased 17.90 points or -0.10% to 17,826.70

 

 

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.00451 or -0.65% to 0.68599
  • NZDUSD decreased 0.00384 or -0.61% to 0.62116
  • USDJPY increased 0.595 or 0.44% to 134.825
  • USDCNY increased 0.02594 or 0.38% to 6.88404

 

Precious Metals:

  • Gold decreased 4.93 USD/t oz. or -0.27% to 1,836.21
  • Silver increased 0.191 USD/t. oz or 0.88% to 21.930

 

Some economic news from last night:

New Zealand:

PPI Input (QoQ) (Q4) decreased from 0.8% to 0.5%

Japan:

Services PMI increased from 52.3 to 53.6

 

Some economic news from today:

New Zealand:

GlobalDairyTrade Price Index decreased from 3.2% to -1.5%

 

 

EUROPE/EMEA:

 

Fresh from his visit to Ukraine, U.S. President Joe Biden rallied NATO allies in Poland on Tuesday, proclaiming “unwavering” support for Kyiv and commitments to bolster the alliance’s eastern flank against Russia. Biden used the trip to rally support for Ukraine as the war enters its second year, with no end in sight, and it came on the same day as a speech by Russian President Vladimir Putin suspending a landmark nuclear accord with Washington. Biden spoke after meeting NATO ally and Polish President Andrzej Duda, a vocal proponent of stronger Western support for Kyiv.

 

The major Europe stock markets had a negative day:

  • CAC 40 decreased 26.96 points or -0.37% to 7,308.65
  • FTSE 100 decreased 36.56 points or -0.46% to 7,977.75
  • DAX 30 decreased 79.93 points or -0.52% to 15,397.62

 

The major Europe currency markets had a mixed day today:

  • EURUSD decreased 0.00386 or -0.36% to 1.06434
  • GBPUSD increased 0.00677 or 0.56% to 1.21057
  • USDCHF increased 0.00445 or 0.48% to 0.92785

 

 

Some economic news from Europe today:

France:

French Manufacturing PMI (Feb) decreased from 50.5 to 47.9

French Services PMI (Feb) increased from 49.4 to 52.8

Germany:

German Manufacturing PMI (Feb) decreased from 47.3 to 46.5

German Services PMI (Feb) increased from 50.7 to 51.3

German ZEW Current Conditions (Feb) increased from -58.6 to -45.1

German ZEW Economic Sentiment (Feb) increased from 16.9 to 28.1

Euro Zone:

ZEW Economic Sentiment (Feb) increased from 16.7 to 29.7

Manufacturing PMI (Feb) decreased from 48.8 to 48.5

S&P Global Composite PMI (Feb) increased from 50.3 to 52.3

Services PMI (Feb) increased from 50.8 to 53.0

UK:

CBI Industrial Trends Orders increased from -17 to -16

Composite PMI increased from 48.5 to 53.0

Manufacturing PMI increased from 47.0 to 49.2

Services PMI increased from 48.7 to 53.3

 

US/AMERICAS:

Wall Street closed in the red this Tuesday as the markets begin to react to the Fed’s word over recently positive data. The Dow declined by nearly 700 points, with undertones of a larger problem at play. Home Depot’s 7% decline dragged the entire index down, and was brought on by a poor fourth-quarter report. EPS were $3.30 compared to the expected $3.28; reported revenue was $35.83 billion compared to the expected $36.97 billion. This marks the first time Home Depot underperformed since November 2019, signaling a shift in consumer spending amid inflation.

An alarming report by MetLife Investment Management has found that institutions may control 40% of the single-family rental market by 2030. Institutions began building portfolios from foreclosed properties after the 2008 housing crash that led to the Great Recession. Since then, institutional investors have purchased hundreds of thousands of homes across the US. Estimates state that institutional investors will own 7.6 million single-family homes across America by 2030, and lawmakers are now looking to crackdown on the practice as many Americans are already priced out of the housing market.

US Market Closings:

  • Dow declined 697.1 points or -2.06% to 33,129.59
  • S&P 500 declined 81.75 points or -2% to 3,997.34
  • Nasdaq declined 294.97 points or -2.5% to 11,492.3
  • Russell 2000 declined 58.14 points or -2.99% to 1,888.21

 

Canada Market Closings:

  • TSX Composite declined 262.6 points or -1.28% to 20,252.64
  • TSX 60 declined 14.17 points or -1.15% to 1,221.75

 

Brazil Market Closing:

  • Bovespa declined 764.54 points or -0.7% to 109,176.92

 

 

ENERGY:

 

The oil markets had a mixed day today:

 

  • Crude Oil decreased 0.654 USD/BBL or -0.85% to 76.581
  • Brent decreased 0.769 USD/BBL or -0.92% to 83.300
  • Natural gas decreased 0.163 USD/MMBtu or -7.28% to 2.0753
  • Gasoline decreased 0.0174 USD/GAL or -0.71% to 2.4295
  • Heating oil increased 0.047 USD/GAL or 1.71% to 2.8006

 

The above data was collected around 13:48 EST on Tuesday

 

  • Top commodity gainers: Coffee (3.44%), HRC Steel (4.80%), Lean Hogs (4.38%) and Cheese (1.77%)
  • Top commodity losers: Potatoes (-2.40%), Wheat (-1.68%), Orange Juice (-1.96%) and Natural Gas (-7.28%)

 

The above data was collected around 14:09 EST Tuesday.

 

 

BONDS:

 

Japan 0.505% (+0.5bp), US 2’s 4.73% (+0.076%), US 10’s 3.9506% (+10.11bps); US 30’s 3.97% (+0.084%), Bunds 2.549% (+9bp), France 3.023% (+9.5bp), Italy 4.476% (+14.1bp), Turkey 10.20% (-15bp), Greece 4.543% (+21.9bp), Portugal 3.435% (+8.4bp); Spain 3.617% (+10.7bp) and UK Gilts 3.63% (+15.6bp).

 

The post Market Talk – February 21, 2023 first appeared on Armstrong Economics.

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