Market Talk – February 27, 2023

ASIA:

JPMorgan is proposing a new Asia credit index with slashed China weighting in parallel to its existing $85 billion Asia credit index, amid growing geopolitical tensions and dimming appetite for Chinese property bonds, Reuters reported. For the new index, JPMorgan has suggested the weighting of China be cut to close to 30% compared with a level of about 43% in its existing JPMorgan Asia credit index in which China is the largest component, according to the sources familiar with the matter. The move comes after JPMorgan initially proposed expanding the existing JACI, but with China weighting cut to 29.86% from 43.14% now, according to a proposal shared with investors in January and reviewed by Reuters, and the second source and two other people.

The major Asian stock markets had a negative day today:

• NIKKEI 225 decreased 29.52 points or -0.11% to 27,423.96
• Shanghai decreased 9.13 points or -0.28% to 3,258.03
• Hang Seng decreased 66.53 points or -0.33% to 19,943.51
• ASX 200 decreased 82.20 points or -1.12% to 7,224.80
• Kospi decreased 20.97 points or -0.87% to 2,402.64
• SENSEX decreased 175.58 points or -0.30% to 59,288.35
• Nifty50 decreased 73.10 points or -0.42% to 17,392.70

The major Asian currency markets had a negative day today:

• AUDUSD decreased 0.00001 or 0.00% to 0.67249
• NZDUSD decreased 0.00001 or 0.00% to 0.61599
• USDJPY decreased 0.206 or -0.15% to 136.254
• USDCNY decreased 0.01574 or -0.23% to 6.96436

Precious Metals:

• Gold increased 5.83 USD/t oz. or 0.32% to 1,816.64
• Silver decreased 0.077 USD/t. oz or -0.37% to 20.692

Some economic news from last night:

Australia:

Company Gross Operating Profits (QoQ) (Q4) increased from -11.5% to 10.6%

New Zealand:

Core Retail Sales (QoQ) decreased from 0.5% to -1.3%

Retail Sales (QoQ) (Q4) decreased from 0.4% to -0.6%

EUROPE/EMEA:

European high yield corporate debt is increasingly vulnerable as the global economy slows, suggesting a higher risk of defaults, Deutshe Bank said in a note on Monday. While the sector spans issuers rated BB+/BA1 and below, those with a single-B rating or lower now make up 38% of Deutsche’s high-yield bond index, the highest in a decade after a wave of real estate downgrades. Sentiment in Europe has received a boost from the recent sharp fall in energy prices and China’s economy reopening but several headwinds remain, including the lagged impact of European Central Bank rate hikes and the risk of a U.S. recession dragging on European corporates, Deutsche noted. Deutsche said it expected around 55 billion euros in high yield bond supply in 2023, 15 billion euros more than in 2022, and anticipated a marginal increase in merger and acquisition and leveraged buyout activity in the first half of the year.

The major Europe stock markets had a green day:

• CAC 40 increased 108.28 points or 1.51% to 7,295.55
• FTSE 100 increased 56.45 points or 0.72% to 7,935.11
• DAX 30 increased 171.69 points or 1.13% to 15,381.43

The major Europe currency markets had a mixed day today:

• EURUSD increased 0.0045 or 0.43% to 1.05910
• GBPUSD increased 0.00863 or 0.72% to 1.20303
• USDCHF decreased 0.0032 or -0.34% to 0.93760

Some economic news from Europe today:

Euro Zone:

M3 Money Supply (YoY) (Jan) decreased from 4.1% to 3.5%

US/AMERICAS:

The US National Association of Realtors reported an uptick in home sales this January, primarily supported by a short drop in rates. Contracts advanced 8.1% last month compared to December, which marks the second consecutive month of positive sales. On the annual level, however, home sales fell by 24%. The 30-year fixed rate mortgage fell to the 6% range in January, but is now pushing the 7% level. Due to historically limited supply and high rates, the positive trend is not expected to continue.

US Market Closings:

• Dow advanced 72.17 points or 0.22% to 32,889.09
• S&P 500 advanced 12.2 points or 0.31% to 3,982.24
• Nasdaq advanced 72.04 points or 0.63% to 11,466.98
• Russell 2000 advanced 5.78 points or 0.31% to 1,896.27

Canada Market Closings:

• TSX Composite advanced 40.94 points or 0.2% to 20,260.13
• TSX 60 advanced 2.08 points or 0.17% to 1,220.25

Brazil Market Closing:

• Bovespa declined 87.38 points or -0.08% to 105,711.05

ENERGY:

The oil markets had a mixed day today:

• Crude Oil decreased 0.397 USD/BBL or -0.52% to 75.923
• Brent decreased 0.415 USD/BBL or -0.50% to 82.745
• Natural gas increased 0.1266 USD/MMBtu or 4.97% to 2.6746
• Gasoline decreased 0.0009 USD/GAL or -0.04% to 2.3578
• Heating oil increased 0.0312 USD/GAL or 1.12% to 2.8274

The above data was collected around 12:10 EST on Monday

• Top commodity gainers: Orange Juice (7.89%), HRC Steel (4.80%), Natural Gas (4.97%) and Platinum (3.40%)
• Top commodity losers: Oat (-5.43%), Rhodium (-6.14%), Wheat (-2.33%) and Coal (-5.83%)

The above data was collected around 12:15 EST Monday.

BONDS:

Japan 0.502% (+0.2bp), US 2’s 4.79% (-0.014%), US 10’s 3.9238% (-2.52bps); US 30’s 3.92% (-0.015%), Bunds 2.581% (+5.2bp), France 3.058% (+4.5bp), Italy 4.425% (-0.9bp), Turkey 10.27% (+4bp), Greece 4.424% (+1.1bp), Portugal 3.474% (+5bp); Spain 3.624% (+3.7bp) and UK Gilts 3.808% (+15.1bp).

The post Market Talk – February 27, 2023 first appeared on Armstrong Economics.