Market Talk – June 5, 2023

ASIA:

According to Macquarie’s Chief China Economist Larry Hu, China’s economic recovery from the pandemic is expected to expand, indicating that the country is not currently facing the same stagnation issues as Japan. However, recent economic data has disappointed investors who were hoping for a strong rebound in the world’s second-largest economy after the lifting of Covid restrictions in December. In April, youth unemployment reached a record high of over 20%. In a meeting led by Premier Li Qiang, the State Council, China’s top executive body, emphasized the need to improve the business environment and remove local barriers to market access. Additionally, the country plans to extend purchase incentives for new energy vehicles to stimulate consumption. It was acknowledged during the meeting that the foundation of China’s economic recovery is not yet solid.

The major Asian stock markets had a green day today:

• NIKKEI 225 increased 693.21 points or 2.20% to 32,217.43
• Shanghai increased 2.37 points or 0.07% to 3,232.44
• Hang Seng increased 158.56 points or 0.84% to 19,108.50
• ASX 200 increased 71.20 points or 1.00% to 7,216.30
• Kospi increased 14.05 points or 0.54% to 2,615.41
• SENSEX increased 240.36 points or 0.38% to 62,787.47
• Nifty50 increased 59.75 points or 0.32% to 18,593.85

The major Asian currency markets had a mixed day today:

• AUDUSD increased 0.00111 or 0.17% to 0.66221
• NZDUSD increased 0.00147 or 0.24% to 0.60757
• USDJPY decreased 0.19 or -0.14% to 139.750
• USDCNY increased 0.00707 or 0.10% to 7.11627

Precious Metals:

• Gold increased 10.48 USD/t oz. or 0.54% to 1,958.11
• Silver decreased 0.043 USD/t. oz or -0.18% to 23.544

Some economic news from last night:

China:

Caixin Services PMI (May) increased from 56.4 to 57.1

Chinese Composite PMI increased from 52.9 to 55.6

Japan:

Services PMI (May) increased from 55.4 to 55.9

Australia:

Company Gross Operating Profits (QoQ) (Q1) decreased from 12.7% to 0.5%

Some economic news from today:

India:

Nikkei Services PMI (May) decreased from 62.0 to 61.2

EUROPE/EMEA:

Bank of England policymaker Catherine Mann stated that Britain is facing a more significant inflation issue compared to the United States or the euro zone. The country is experiencing high headline price increases, and there are indications of persistent underlying pressures. Mann, who has been advocating for interest rate hikes since joining the Bank of England in 2021, also expressed concerns about potential financial market volatility as the global economy adjusts to higher borrowing costs. British consumer price inflation reached a 41-year high of 11.1% in October, and in April, it stood at 8.7%, the joint highest among major advanced economies alongside Italy. This led to a sell-off in the bond market as investors anticipated further rate increases by the Bank of England. Core inflation, which excludes volatile food and energy prices and is considered a better indicator of future inflation trends, reached its highest level on record at 6.8% last month. Mann suggested that leftover savings from the COVID-19 pandemic have helped households absorb price increases by companies, and the increased minimum wage, which rose by 9.7% in April, may have had cascading effects on higher pay scale.

The major Europe stock markets had a negative day today:

• CAC 40 decreased 69.78 points or -0.96% to 7,200.91
• FTSE 100 decreased 7.29 points or -0.10% to 7,599.99
• DAX 30 decreased 87.34 points or -0.54% to 15,963.89

The major Europe currency markets had a mixed day today:

• EURUSD increased 0.00031 or 0.03% to 1.07091
• GBPUSD decreased 0.0019 or -0.15% to 1.24290
• USDCHF decreased 0.00323 or -0.36% to 0.90567

Some economic news from Europe today:

Swiss:

CPI (MoM) (May) increased from 0.0% to 0.3%

Spain:

Spanish Services PMI (May) decreased from 57.9 to 56.7

Italy:

Italian Services PMI (May) decreased from 57.6 to 54.0

France:

French Services PMI (May) decreased from 54.6 to 52.5

Germany:

German Services PMI (May) increased from 56.0 to 57.2

German Trade Balance (Apr) increased from 14.9B to 18.4B

Euro Zone:

S&P Global Composite PMI (May) decreased from 54.1 to 52.8

Services PMI (May) decreased from 56.2 to 55.1

UK:

Composite PMI (May) decreased from 54.9 to 54.0

Services PMI (May) decreased from 55.9 to 55.2

US/AMERICAS:

Apple hosted its annual Worldwide Developers Conference (WWDC) from June 5 to June 9, in an online format, with a special in-person experience at Apple Park on opening day. The event was free for all developers and highlighted the latest advancements in iOS, iPadOS, macOS, watchOS, and tvOS. The keynote address was available via Apple.com, the Apple Developer app, the Apple TV app, and YouTube, with on-demand playback available after the conclusion of the stream. Apple was expected to introduce a major update for iPhone users with iOS 17 and a redesigned interface for Apple Watch users with watchOS 10. The company announced its first new product since 2014, the Vision Pro.

US Market Closings:

• Dow declined 199.9 points or -0.59% to 33,562.86
• S&P 500 declined 8.58 points or -0.2% to 4,273.79
• Nasdaq declined 11.34 points or -0.09% to 13,229.43
• Russell 2000 declined 24.19 points or -1.32% to 1,806.71

Canada Market Closings:

• TSX Composite declined 93.01 points or -0.46% to 19,931.62
• TSX 60 declined 5.94 points or -0.49% to 1,197.66

Brazil Market Closing:

• Bovespa advanced 138.17 points or 0.12% to 112,696.32

ENERGY:

The oil markets had a green day today:

• Crude Oil increased 0.803 USD/BBL or 1.12% to 72.543
• Brent increased 1.191 USD/BBL or 1.56% to 77.321
• Natural gas increased 0.0956 USD/MMBtu or 4.40% to 2.2676
• Gasoline increased 0.0321 USD/GAL or 1.28% to 2.5328
• Heating oil increased 0.0283 USD/GAL or 1.20% to 2.3852

The above data was collected around 13:37 EST on Monday

• Top commodity gainers: Natural Gas (4.40%), Platinum (2.63%), HRC Steel (3.07%) and Rapeseed (3.69%)
• Top commodity losers: Rhodium (-3.76%), Orange Juice (-2.05%), Corn (-2.04%) and Soda Ash (-2.94 %)

The above data was collected around 13:46 EST Monday.

BONDS:

Japan 0.434% (+1.8bp), US 2’s 3.90% (+0.012%), US 10’s 3.7023% (+0.93bps); US 30’s 4.50% (-0.008%), Bunds 2.398% (+9bp), France 2.946% (+8.1bp), Italy 4.071% (+8.6bp), Turkey 13.44% (+123bp), Greece 3.804% (+10.6bp), Portugal 3.089% (+8.5bp); Spain 3.397% (+8bp) and UK Gilts 4.219% (+6.2bp).

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