Market Talk – May 18, 2023

ASIA:

Japan’s economy experienced a faster-than-expected recovery in the first quarter, coming out of a recession caused by the COVID-19 pandemic. The growth was primarily driven by increased consumption following the pandemic, which helped counter the challenges posed by global economic conditions. However, concerns have arisen due to signs of a slowdown in economic growth in the United States, Europe, and China. This uncertainty has raised questions about when the central bank can withdraw its extensive stimulus program. Recent government data showed that Japan’s economy grew by 1.6% in January-March, surpassing market expectations and marking the first increase in three quarters. The nominal gross domestic product also reached a record high, supported by rising prices.

The major Asian stock markets had a mixed day today:

• NIKKEI 225 increased 480.34 points or 1.60% to 30,573.93
• Shanghai increased 13.09 points or 0.40% to 3,297.32
• Hang Seng increased 166.68 points or 0.85% to 19,727.25
• ASX 200 increased 37.60 points or 0.52% to 7,236.80
• Kospi increased 20.74 points or 0.83% to 2,515.40
• SENSEX decreased 128.90 points or -0.21% to 61,431.74
• Nifty50 decreased 51.80 points or -0.28% to 18,129.95

The major Asian currency markets had a mixed day today:

• AUDUSD decreased 0.00437 or -0.66% to 0.66153
• NZDUSD decreased 0.00357 or -0.57% to 0.62123
• USDJPY increased 0.851 or 0.62% to 138.521
• USDCNY increased 0.04441 or 0.63% to 7.05311

Precious Metals:

• Gold decreased 25.84 USD/t oz. or -1.30% to 1,955.88
• Silver decreased 0.306 USD/t. oz or -1.29% to 23.420

Some economic news from last night:

Japan:

Adjusted Trade Balance increased from -1.21T to -1.02T

Exports (YoY) (Apr) decreased from 4.3% to 2.6%

Trade Balance (Apr) increased from -755.1B to -432.4B

Australia:

Employment Change (Apr) decreased from 61.1K to -4.3K

Full Employment Change (Apr) decreased from 82.5K to -27.1K

Unemployment Rate (Apr) increased from 3.5% to 3.7%

New Zealand:

PPI Input (QoQ) (Q1) decreased from 0.5% to 0.2%

Some economic news from today:

Hong Kong:

Unemployment Rate (Apr) decreased from 3.1% to 3.0%

EUROPE/EMEA:

During his visit to Tokyo before the G7 summit in Hiroshima, UK Prime Minister Rishi Sunak has reached new agreements with Japan in the areas of defence and economy. The partnership involves enhanced collaboration between the armed forces, cyber-agencies, and semiconductor companies of the UK and Japan. Additionally, Japanese firms will be investing nearly £18 billion in the UK, with a significant portion allocated to offshore wind and green hydrogen projects in Scotland, Wales, and the Suffolk and Norfolk coastline. These investments aim to strengthen the UK’s position as a leader in clean energy and support its goal of achieving net-zero emissions by 2030. The UK and Japan have a strong economic relationship, with Japan being the fifth largest investor in the UK and bilateral trade amounting to £27.7 billion in goods and services last year.

The major Europe stock markets had a green day today:

• CAC 40 increased 47.45 points or 0.64% to 7,446.89
• FTSE 100 increased 19.07 points or 0.25% to 7,742.30
• DAX 30 increased 212.06 points or 1.33% to 16,163.36

The major Europe currency markets had a mixed day today:

• EURUSD decreased 0.00653 or -0.60% to 1.07737
• GBPUSD decreased 0.00708 or -0.57% to 1.24152
• USDCHF increased 0.00642 or 0.71% to 0.90512

US/AMERICAS:

Dallas Fed President Lorie Logan has stated that the current data does not justify pausing rate hikes yet. Her statement comes amid concerns about the impact of rising interest rates on small and mid-size banks and businesses. Logan’s comments suggest that the Fed may continue to raise interest rates in the near future, despite calls from some experts to pause rate hikes. However, Logan’s statement does not rule out the possibility of a pause in rate hikes if economic conditions change in the coming months.

US Market Closings:

• Dow advanced 115.14 points or 0.34% to 33,535.91
• S&P 500 advanced 39.28 points or 0.94% to 4,198.05
• Nasdaq advanced 188.27 points or 1.51% to 12,688.84
• Russell 2000 advanced 10.36 points or 0.58% to 1,784.86

Canada Market Closings:

• TSX Composite remained unchanged at 20,242.07
• TSX 60 declined by 0.36 of a point or -0.03% to 1,222.93

Brazil Market Closing:

• Bovespa advanced 648.51 points or 0.59% to 110,108.46

ENERGY:

The oil markets had a mixed day today:

• Crude Oil decreased 0.898 USD/BBL or -1.23% to 71.932
• Brent decreased 0.757 USD/BBL or -0.98% to 76.203
• Natural gas increased 0.1513 USD/MMBtu or 6.40% to 2.5163
• Gasoline increased 0.0117 USD/GAL or 0.46% to 2.5809
• Heating oil decreased 0.0196 USD/GAL or -0.81% to 2.4030

The above data was collected around 11:46 EST on Thursday

• Top commodity gainers: Natural Gas (6.40%), Orange Juice (0.81%), Rapeseed (0.95%) and Bitumen (2.36%)
• Top commodity losers: Corn (-2.24%), Zinc (-2.14%), Oat (-1.59%) and Wheat (-3.24%)

The above data was collected around 11:52 EST Thursday.

BONDS:

Japan 0.391% (+3bp), US 2’s 4.22% (+0.064%), US 10’s 3.6381% (+7.4bps); US 30’s 3.90% (+0.025%), Bunds 2.413% (+7.5bp), France 3.041% (+12.1bp), Italy 4.313% (+12.6bp), Turkey 9.27% (+15bp), Greece 4.044% (+6.9bp), Portugal 3.266% (+11.5bp); Spain 3.518% (+11.9bp) and UK Gilts 3.958% (+11.9bp).

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