Market Talk – June 6, 2023

ASIA:

According to the World Bank, India’s economic growth is expected to slow down further to 6.3% in the financial year FY 2023/24. This is a downward revision of 0.3 percentage points from the previous estimate of 6.6%. The main reason for the slowdown is attributed to constrained private consumption caused by high inflation. However, the World Bank still considers India to be one of the fastest-growing economies. The slowdown is explained by private consumption being affected by high inflation and rising borrowing costs, as well as government consumption being impacted by fiscal consolidation. Despite the slowdown, India is expected to remain the fastest-growing economy among the largest Emerging Market and Developing Economies (EMDEs) in terms of both aggregate and per capita GDP. The World Bank also mentions that unexpected resilience in private consumption and investment, along with robust growth in the services sector, have led to an upward revision of growth projections for 2023.

Market watchers are predicting that Japan’s central bank may engage in larger interventions due to the weakness of the country’s currency. The Japanese yen recently traded above 140 against the U.S. dollar for the first time since November, indicating a potential need for intervention. In the past, Japan’s Finance Ministry intervened by purchasing large amounts of yen using dollar reserves, totaling approximately $68 billion last year. These interventions are typically unannounced and aim to strengthen the yen.

The major Asian stock markets had a mixed day today:

• NIKKEI 225 increased 289.35 points or 0.90% to 32,506.78
• Shanghai decreased 37.10 points or -1.15% to 3,195.34
• Hang Seng decreased 9.22 points or -0.05% to 19,099.28
• ASX 200 decreased 86.70 points or -1.20% to 7,129.60
• Kospi closed
• SENSEX increased 5.41 points or 0.01% to 62,792.88
• Nifty50 increased 5.15 points or 0.03% to 18,599.00

The major Asian currency markets had a green day today:

• AUDUSD increased 0.00595 or 0.90% to 0.66745
• NZDUSD increased 0.00063 or 0.10% to 0.60753
• USDJPY increased 0.121 or 0.09% to 139.661
• USDCNY increased 0.00988 or 0.14% to 7.12798

Precious Metals:

• Gold increased 1.39 USD/t oz. or 0.07% to 1,963.15
• Silver decreased 0.013 USD/t. oz or -0.06% to 23.572

Some economic news from last night:

Japan:

Household Spending (MoM) (Apr) decreased from -0.8% to -1.3%

Household Spending (YoY) (Apr) decreased from -1.9% to -4.4%

Australia:

Building Approvals (MoM) decreased from -1.0% to -8.1%

Current Account (Q1) increased from 11.7B to 12.3B

Some economic news from today:

Australia:

RBA Interest Rate Decision (Jun) increased from 3.85% to 4.10%

New Zealand:

GlobalDairyTrade Price Index remain the same at -0.9%

EUROPE/EMEA:

Christine Lagarde, the President of the European Central Bank (ECB), has indicated that more interest rate hikes may be on the horizon in an effort to combat inflation. Lagarde emphasized the ECB’s responsibility to ensure price stability during a hearing at the European Parliament. Although inflation in the euro zone decreased in May, it remains high at 6.1%, well above the ECB’s target of 2.0% for stability. Lagarde stated that the ECB will adjust policy rates to restrict levels to achieve a timely return of inflation to the 2% medium-term target. It is expected that there will be a further quarter-percentage-point increase on June 15, according to some central bank chiefs. Joachim Nagel, the President of the German Bundesbank, also anticipates additional interest rate hikes, suggesting that the interest rate peak may not be reached as early as this summer.

The major Europe stock markets had a green day today:

• CAC 40 increased 8.09 points or 0.11% to 7,209.00
• FTSE 100 increased 28.11 points or 0.37% to 7,628.10
• DAX 30 increased 28.55 points or 0.18% to 15,992.44

The major Europe currency markets had a mixed day today:

• EURUSD decreased 0.00203 or -0.19% to 1.06917
• GBPUSD decreased 0.00187 or -0.15% to 1.24183
• USDCHF increased 0.00155 or 0.17% to 0.90765

Some economic news from Europe today:

Germany:

German Factory Orders (MoM) (Apr) increased from -10.9% to -0.4%

Euro Zone:

Retail Sales (MoM) (Apr) increased from -0.4% to 0.0%

UK:

Construction PMI (May) increased from 51.1 to 51.6

US/AMERICAS:

The US Securities and Exchange Commission (SEC) has filed a lawsuit against Coinbase, alleging that the company has been operating as an unregistered securities exchange, broker, and clearing agency since 2019 through its staking-as-a-service program. The SEC alleges that the program is an investment contract or a note, and that customers are “investing” in the program rather than lending the USDC they hold on Coinbase’s platform in connection with their existing relationship. Coinbase has been proactively engaging with the SEC about the program for nearly six months, and has argued that the program doesn’t qualify as a security.

US Market Closings:

• Dow advanced 10.42 points or 0.03% to 33,573.28
• S&P 500 advanced 10.06 points or 0.24% to 4,283.85
• Nasdaq advanced 46.99 points or 0.36% to 13,276.42
• Russell 2000 advanced 48.69 points or 2.69% to 1,855.4

Canada Market Closings:

• TSX Composite advanced 123.98 points or 0.62% to 20,055.6
• TSX 60 advanced 7.22 points or 0.6% to 1,204.88

Brazil Market Closing:

• Bovespa advanced 1,913.78 points or 1.7% to 114,610.1

ENERGY:

The oil markets had a mixed day today:

• Crude Oil decreased 0.376 USD/BBL or -0.52% to 71.774
• Brent decreased 0.389 USD/BBL or -0.51% to 76.321
• Natural gas increased 0.0015 USD/MMBtu or 0.07% to 2.2465
• Gasoline increased 0.0239 USD/GAL or 0.95% to 2.5483
• Heating oil decreased 0.0131 USD/GAL or -0.55% to 2.3644

The above data was collected around 12:25 EST on Tuesday

• Top commodity gainers: Canola (1.88%), Zinc (1.62%), Live Cattle (1.51%) and Lean Hogs (2.56%)
• Top commodity losers: Aluminum (-1.63%), Orange Juice (-2.97%), Palm Oil (-1.92%) and Soda Ash (-1.52 %)

The above data was collected around 12:30 EST Tuesday.

BONDS:

Japan 0.425% (-1.1bp), US 2’s 4.52% (+0.042%), US 10’s 3.7062% (+1.32bps); US 30’s 3.89% (-0.005%), Bunds 2.365% (-0.9bp), France 2.914% (-0.3bp), Italy 4.148% (+10.1bp), Turkey 13.99% (+55bp), Greece 3.77% (+0.7bp), Portugal 3.076% (+0.7bp); Spain 3.361% (-1.4bp) and UK Gilts 4.20% (-0.7bp).

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