Market Talk – June 14, 2023

ASIA:

India’s wholesale price-based inflation fell by 3.48 per cent in May on an annual basis as against a contraction of 0.92 per cent in April, the Department for Promotion of Industry and Internal Trade, Ministry of Commerce & Industry stated on Wednesday. The inflation rate for the food index witnessed a contraction of 1.59 per cent in May. For primary articles, inflation contracted by 1.79 per cent in May. Fuel & power inflation was reduced by 9.17 per cent in May. Meanwhile, inflation in manufactured products, which accounts for a major chunk of the WPI, declined 2.97 per cent against a contraction of 2.42 per cent in April. India’s retail (CPI) inflation had also moderated further in May to hit a two-year low of 4.25 per cent against 4.7.

The major Asian stock markets had a mixed day today:

• NIKKEI 225 increased 483.77 points or 1.47% to 33,502.42
• Shanghai decreased 4.68 points or -0.14% to 3,228.99
• Hang Seng decreased 113.00 points or -0.58% to 19,408.42
• ASX 200 increased 22.80 points or 0.32% to 7,161.70
• Kospi decreased 18.87 points or -0.72% to 2,619.08
• SENSEX increased 88.03 points or 0.14% to 63,231.19
• Nifty50 increased 39.75 points or 0.21% to 18,755.90

The major Asian currency markets had a mixed day today:

• AUDUSD increased 0.00692 or 1.02% to 0.68352
• NZDUSD increased 0.00868 or 1.41% to 0.62348
• USDJPY decreased 0.856 or -0.61% to 139.354
• USDCNY decreased 0.02254 or -0.31% to 7.15236

Precious Metals:

• Gold increased 12.13 USD/t oz. or 0.62% to 1,955.46
• Silver increased 0.361 USD/t. oz or 1.52% to 24.041

Some economic news from last night:

New Zealand:

Current Account (QoQ) (Q1) increased from -10.07B to -5.22B

Current Account (YoY) (Q1) increased from -34.39B to -33.03B

Some economic news from today:

India:

WPI Inflation (YoY) (May) decreased from -0.92% to -3.48%

EUROPE/EMEA:

The British Pound Sterling strengthened against the US dollar after data revealed modest growth in the UK economy for April. The Office for National Statistics reported a 0.2% month-on-month growth in the economy, mainly driven by the retail and film industries, indicating slow growth rather than a recession. However, the manufacturing and construction sectors experienced contractions. The data also showed a record-breaking annual wage growth of 7.2% (excluding bonuses) in the three months leading up to April. This prompted traders to increase their predictions for future interest rate hikes by the Bank of England (BoE). There is a 79% chance of a 25-basis-point rate increase at the upcoming BoE meeting, and a 21% chance of a 50-basis-point increase. Traders are speculating that the BoE’s Bank Rate, currently at 4.5%, could reach as high as 5.7% by the end of 2023. The BoE has already raised rates 12 times since late 2021 in an attempt to curb inflation.

The major Europe stock markets had a green day today:

• CAC 40 increased 37.73 points or 0.52% to 7,328.53
• FTSE 100 increased 7.96 points or 0.10% to 7,602.74
• DAX 30 increased 80.11 points or 0.49% to 16,310.79

The major Europe currency markets had a mixed day today:

• EURUSD increased 0.00698 or 0.65% to 1.08608
• GBPUSD increased 0.0085 or 0.67% to 1.26970
• USDCHF decreased 0.00822 or -0.91% to 0.89678

Some economic news from Europe today:

UK:

NIESR Monthly GDP Tracker decreased from 0.1% to 0.0%

GDP (MoM) (Apr) increased from -0.3% to 0.2%

GDP (YoY) (Apr) increased from 0.3% to 0.5%

Industrial Production (MoM) (Apr) decreased from 0.7% to -0.3%

Manufacturing Production (MoM) (Apr) decreased from 0.7% to -0.3%

Monthly GDP 3M/3M Change (Apr) remain the same at 0.1%

Trade Balance (Apr) increased from -16.36B to -15.00B

Trade Balance Non-EU (Apr) increased from -5.46B to -5.04B

Euro Zone:

Industrial Production (MoM) (Apr) increased from -3.8% to 1.0%

US/AMERICAS:

The Federal Reserve voted to hold interest rates, but that does not mean they’re taking a dovish stance. Although the FOMC decided to pause what would have been the eleventh consecutive hike, the committee said they believe additional hikes will be necessary later this year. “We have raised our policy interest rate by five percentage points, and we’ve continued to reduce our security holdings at a brisk pace. We’ve covered a lot of ground and the full effects of our tightening have yet to be felt,” Fed Chair Jerome Powell commented. The central bank said they will need to wait another six weeks to see if their policies are working to combat inflation.

US Market Closings:

• Dow declined 232.79 points or -0.68% to 33,979.33
• S&P 500 advanced 3.58 points or 0.08% to 4,372.59
• Nasdaq advanced 53.16 points or 0.39% to 13,626.48
• Russell 2000 declined 22.24 points or -1.17% to 1,874.1

Canada Market Closings:

• TSX Composite advanced 24.69 points or 0.12% to 20,015.09
• TSX 60 advanced 1.96 points or 0.16% to 1,204.35

Brazil Market Closing:

• Bovespa advanced 2,326.06 points or 1.99% to 119,068.77

ENERGY:

The oil markets had a mixed day today:

• Crude Oil decreased 0.038 USD/BBL or -0.06% to 69.382
• Brent decreased 0.304 USD/BBL or -0.41% to 73.986
• Natural gas increased 0.0057 USD/MMBtu or 0.24% to 2.3457
• Gasoline increased 0.0125 USD/GAL or 0.49% to 2.5704
• Heating oil decreased 0.023 USD/GAL or -0.96% to 2.3725

The above data was collected around 12:33 EST on Wednesday

• Top commodity gainers: Sugar (2.70%), Bitumen (3.54%), Palladium (3.05%) and Zinc (4.47%)
• Top commodity losers: HRC Steel (-2.19%), Feeder Cattle (-1.94%), Rapeseed (-2.84%) and Rice (-3.44%)

The above data was collected around 12:42 EST Wednesday.

BONDS:

Japan 0.435% (+1.4bp), US 2’s 4.63% (-0.063%), US 10’s 3.792% (-4.7bps); US 30’s 3.90% (-0.037%), Bunds 2.453% (+2.7bp), France 2.982% (+3bp), Italy 4.085% (+1.2bp), Turkey 17.09% (-23bp), Greece 3.758% (+5.1bp), Portugal 3.162% (+5.5bp); Spain 3.419% (+4.3bp) and UK Gilts 4.381% (-5.2bp).

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