Market Talk – May 19, 2023

ASIA:

India’s foreign exchange reserves experienced a continuous increase for the third week in a row, reaching $599.53 billion as of May 12. This level represents the highest amount since early June, according to the Reserve Bank of India’s statistical supplement released on Friday. The reserves saw a rise of $3.55 b billion compared to the previous week, following a total increase of $11.7 billion over the preceding two weeks. To prevent significant fluctuations in the rupee, the central bank intervenes in both the spot and forwards markets. The changes in foreign exchange reserves can also be influenced by gains or losses in valuation. According to a Reuters report, several foreign banks that hold a bullish outlook on the rupee are being challenged by the Reserve Bank of India’s ongoing intervention efforts to bolster its reserves. During the week corresponding to the forex reserves data, the rupee experienced a decline of 0.4%, primarily influenced by the overall strength of the dollar index. Throughout the week, the rupee traded within the range of 81.6900 to 82.2250 against the dollar.

The major Asian stock markets had a mixed day today:

• NIKKEI 225 increased 234.42 points or 0.77% to 30,808.35
• Shanghai decreased 13.78 points or -0.42% to 3,283.54
• Hang Seng decreased 276.68 points or -1.40% to 19,450.57
• ASX 200 increased 42.70 points or 0.59% to 7,279.50
• Kospi increased 22.39 points or 0.89% to 2,537.79
• SENSEX increased 19.66 points or 0.03% to 61,451.40
• Nifty50 increased 73.45 points or 0.41% to 18,203.40

The major Asian currency markets had a mixed day today:

• AUDUSD increased 0.00473 or 0.71% to 0.66643
• NZDUSD increased 0.00635 or 1.02% to 0.62895
• USDJPY decreased 0.865 or -0.62% to 137.845
• USDCNY decreased 0.02836 or -0.40% to 7.02124

Precious Metals:

• Gold increased 19.69 USD/t oz. or 1.01% to 1,977.74
• Silver increased 0.391 USD/t. oz or 1.67% to 23.885

Some economic news from last night:

Japan:

National Core CPI (YoY) (Apr) increased from 3.1% to 3.4%

New Zealand:

Trade Balance (YoY) (Apr) decreased from -16,760M to -16,800M

Trade Balance (MoM) (Apr) increased from -1,586M to 427M

Some economic news from today:

Japan:

Tertiary Industry Activity Index (MoM) decreased from 1.7% to -1.7%

EUROPE/EMEA:

The European Central Bank (ECB) plans to continue raising interest rates despite already implementing most of the tightening measures, according to ECB’s Vice President Luis de Guindos. Although the ECB recently increased rates by 25 basis points, indicating further tightening, de Guindos believes more actions are necessary. ECB board member Isabel Schnabel, known for her strict stance on policy, supports this view and emphasizes the need to combat inflation. Schnabel cites rising wages, generous fiscal policies, persistently high inflation expectations, and excessive government spending as factors contributing to inflation. The ECB has been raising interest rates significantly since July last year to address inflation driven by increased energy costs, higher company mark-ups, and pent-up demand resulting from the COVID-19 pandemic.

The major Europe stock markets had a green day today:

• CAC 40 increased 45.07 points or 0.61% to 7,491.96
• FTSE 100 increased 14.57 points or 0.19% to 7,756.87
• DAX 30 increased 112.02 points or 0.69% to 16,275.38

The major Europe currency markets had a mixed day today:

• EURUSD increased 0.00537 or 0.50% to 1.08227
• GBPUSD increased 0.00618 or 0.50% to 1.24698
• USDCHF decreased 0.00655 or -0.72% to 0.89885

Some economic news from Europe today:

Germany:

German PPI (MoM) (Apr) increased from -1.4% to 0.3%

 US/AMERICAS:

Fed Chair Jerome Powell has stated that interest rates may not have to rise as much as expected to curb inflation. Powell’s comments come amid concerns about the impact of rising interest rates on small and mid-size banks and businesses. He stated that the Fed is prepared to do more if greater monetary policy restraint is warranted, but also noted that the Fed has not made a firm decision on whether it will stop raising interest rates. Powell’s remarks reflect a change in the economic outlook since the Fed’s most recent policy meeting in early February, where the central bank raised its key rate by just a quarter-point.

US Market Closings:

• Dow declined 109.28 points or -0.33% to 33,426.63
• S&P 500 declined 6.07 points or -0.14% to 4,191.98
• Nasdaq declined 30.94 points or -0.24% to 12,657.9
• Russell 2000 declined 11.14 points or -0.62% to 1,773.72

Canada Market Closings:

• TSX Composite remained unchanged at 20,242.07
• TSX 60 advanced 3.29 points or 0.27% to 1,226.22

Brazil Market Closing:

• Bovespa advanced 636.05 points or 0.58% to 110,744.51

ENERGY:

The oil markets had a mixed day today:

• Crude Oil decreased 0.25 USD/BBL or -0.35% to 71.610
• Brent decreased 0.099 USD/BBL or -0.13% to 75.761
• Natural gas increased 0.064 USD/MMBtu or 2.47% to 2.6560
• Gasoline increased 0.0221 USD/GAL or 0.86% to 2.5904
• Heating oil decreased 0.0154 USD/GAL or -0.64% to 2.3872

The above data was collected around 13:01 EST on Friday

• Top commodity gainers: Natural Gas (2.47%), Palm Oil (2.62%), Palladium (4.44%) and Cocoa (2.64%)
• Top commodity losers: Methanol (-3.20%), Rapeseed (-1.92%), Oat (-1.60%) and Lean Hogs (-2.24%)

The above data was collected around 13:11 EST Friday.

BONDS:

Japan 0.401% (+1.5bp), US 2’s 4.26% (-0.012%), US 10’s 3.6688% (+2.08bps); US 30’s 3.93% (+0.031%), Bunds 2.439% (+2.6bp), France 3.016% (-1.9bp), Italy 4.264% (-4.4bp), Turkey 9.27% (+15bp), Greece 4.016% (-2.6bp), Portugal 3.238% (-1.9bp); Spain 3.483% (-3.3bp) and UK Gilts 4.009% (+5.2bp).  

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