Market Talk – May 25, 2023

ASIA:

In April, Japan’s core consumer inflation remained well above the central bank’s 2% target, with a key index reaching a four-decade high after excluding fuel effects. This has led to expectations of adjustments to the country’s massive stimulus plan later this year. Recent data revealed that Japan’s economy, the world’s third largest, grew faster than anticipated in the first quarter due to a rebound in consumer spending following the COVID-19 pandemic. The core consumer price index, excluding fresh food but including energy items, increased by 3.4% in April compared to the previous year, in line with market forecasts. Inflation in services rose from 1.5% in March to 1.7% in April, indicating that rising labor costs could be impacting overall consumer inflation. Additionally, food prices experienced a significant jump of 9.0% in April compared to the previous year, accelerating from the 8.2% increase seen in March.

The major Asian stock markets had a mixed day today:

• NIKKEI 225 increased 118.45 points or 0.39% to 30,801.13
• Shanghai decreased 3.49 points or -0.11% to 3,201.26
• Hang Seng decreased 369.01 points or -1.93% to 18,746.92
• ASX 200 decreased 75.60 points or -1.05% to 7,138.20
• Kospi decreased 12.76 points or -0.50% to 2,554.69
• SENSEX increased 98.84 points or 0.16% to 61,872.62
• Nifty50 increased 35.75 points or 0.20% to 18,321.15

The major Asian currency markets had a mixed day today:

• AUDUSD decreased 0.00342 or -0.52% to 0.65088
• NZDUSD decreased 0.00576 or -0.94% to 0.60524
• USDJPY increased 0.366 or 0.26% to 139.826
• USDCNY increased 0.02385 or 0.34% to 7.08695

Precious Metals:

• Gold decreased 11.84 USD/t oz. or -0.61% to 1,945.17
• Silver decreased 0.227 USD/t. oz or -0.98% to 22.859

Some economic news from last night:

Japan:

Foreign Bonds Buying decreased from 1,119.7B to 964.7B

Foreign Investments in Japanese Stocks increased from 808.9B to 867.5B

EUROPE/EMEA:

According to a survey, retail sales in the UK declined this month following a modest increase in April. However, retailers anticipate that sales volumes will stabilize in June as consumer confidence improves and energy prices decrease. The Confederation of retailers is cautiously optimistic about the future outlook. Retailers have also reported significant price pressures, with price growth remaining close to multi-decade highs over the past 12 months. They expect prices to continue rising at the same pace in the upcoming month. In April, the UK’s high inflation rate decreased to 8.7%, which was slightly lower than expected but still significantly higher than previous months. The monthly distributive trades index by the Confederation of British Industry (CBI) fell to -10 in May from +5 in the previous month. However, the measure of expected sales in the upcoming month rose to zero from -7. Martin Sartorius, principal economist at the CBI, made these observations.

The major Europe stock markets had a negative day today:

• CAC 40 decreased 24.19 points or -0.33% to 7,229.27
• FTSE 100 decreased 56.23 points or -0.74% to 7,570.87
• DAX 30 decreased 48.33 points or -0.31% to 15,793.80

The major Europe currency markets had a mixed day today:

• EURUSD decreased 0.00271 or -0.25% to 1.07209
• GBPUSD decreased 0.00401 or -0.32% to 1.23239
• USDCHF increased 0.00155 or 0.17% to 0.90615

Some economic news from Europe today:

Germany:

German GDP (QoQ) (Q1) increased from -0.4% to -0.3%

German GDP (YoY) (Q1) decreased from 0.3% to -0.2%

GfK German Consumer Climate (Jun) increased from -25.8 to -24.2

US/AMERICAS:

Secretary Yellen continued to warn that the United States government might not be able to pay the bills as early as June 1 if Congress does not act to raise or suspend the debt ceiling. Yellen has called early June a “hard deadline” on the issue, and there would be hard choices to make about payments to Americans if Congress failed to raise the $31.4 trillion debt ceiling before Treasury ran out of cash. Yellen has also indicated that the government may be unable to pay all of its bills as soon as June 1. This would mark the first time that US had defaulted on its debt obligations.

US Market Closings:

• Dow declined 35.27 points or -0.11% to 32,764.65
• S&P 500 advanced 36.04 points or 0.88% to 4,151.28
• Nasdaq advanced 213.93 points or 1.71% to 12,698.09
• Russell 2000 declined 12.4 points or -0.7% to 1,754.6

Canada Market Closings:

• TSX Composite declined 153.61 points or -0.77% to 19,774.08
• TSX 60 declined 9.41 points or -0.78% to 1,190.18

Brazil Market Closing:

• Bovespa advanced 1,254.84 points or 1.15% to 110,054.38

ENERGY:

The oil markets had a negative day today:

• Crude Oil decreased 2.6 USD/BBL or -3.50% to 71.740
• Brent decreased 2.529 USD/BBL or -3.23% to 75.831
• Natural gas decreased 0.0704 USD/MMBtu or -2.94% to 2.3276
• Gasoline decreased 0.0915 USD/GAL or -3.36% to 2.6297
• Heating oil decreased 0.0789 USD/GAL or -3.27% to 2.3348

The above data was collected around 11:39 EST on Thursday

• Top commodity gainers: Palm Oil (2.52%), Rapeseed (1.94%), Oat (2.82%) and Potatoes (2.04%)
• Top commodity losers: Zinc (-3.44%), Crude Oil (-3.50%), Gasoline (-3.36%) and Heating Oil (-3.27%)

The above data was collected around 11:49 EST Thursday.

BONDS:

Japan 0.427% (+2.1bp), US 2’s 4.46% (+0.115%), US 10’s 3.7883% (+6.93bps); US 30’s 3.99% (+0.024%), Bunds 2.521% (+6.9bp), France 3.111% (+6.9bp), Italy 4.395% (+6.7bp), Turkey 8.89% (+2bp), Greece 3.927% (+3.2bp), Portugal 3.29% (+6.4bp); Spain 3.585% (+5.7bp) and UK Gilts 4.38% (+16.8bp).

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