Market Talk – June 28, 2023

ASIA:

In the first five months of the year, China’s industrial firms experienced a significant decline in annual profits, with a 18.8% year-on-year slump. This decline follows a contraction of 20.6% in profits from January to April. The weakening demand and squeezed margins indicate that the country’s post-COVID economic recovery is faltering. Various indicators, including retail sales, exports, property investment, and the youth jobless rate reaching a new high of 20.8%, suggest that the economy is losing momentum. In May alone, industrial earnings contracted by 12.6% compared to the previous year. These figures highlight the ongoing challenges faced by China’s industrial sector, with profits also down 18.2% in April.

The major Asian stock markets had a mixed day today:

• NIKKEI 225 increased 655.66 points or 2.02% to 33,193.99
• Shanghai decreased 0.07 points or 0.00% to 3,189.38
• Hang Seng increased 23.92 points or 0.12% to 19,172.05
• ASX 200 increased 78.30 points or 1.10% to 7,196.50
• Kospi decreased 17.20 points or -0.67% to 2,564.19
• SENSEX increased 499.39 points or 0.79% to 63,915.42
• Nifty50 increased 154.70 points or 0.82% to 18,972.10

The major Asian currency markets had a mixed day today:

• AUDUSD decreased 0.00663 or -0.99% to 0.66177
• NZDUSD decreased 0.00761 or -1.23% to 0.60859
• USDJPY increased 0.077 or 0.05% to 144.147
• USDCNY increased 0.01649 or 0.23% to 7.24139

Precious Metals:

• Gold decreased 1.27 USD/t oz. or -0.07% to 1,912.08
• Silver decreased 0.066 USD/t. oz or -0.29% to 22.819

Some economic news from last night:

Australia:

CPI (YoY) decreased from 6.8% to 5.6%

Some economic news from today:

India:

M3 Money Supply increased from 10.5% to 10.6%

EUROPE/EMEA:

According to a Reuters poll of economists, the Bank of England is expected to raise borrowing costs by 50 basis points in two quarter-point increments, which is higher than previously anticipated. The decision is a response to the challenges of curbing elevated inflation, which has proven more difficult to lower than initially expected. The central bank’s recent surprise interest rate increase of half a percentage point brought the Bank Rate to 5.00%. It also indicated that persistently high inflation in Britain would take longer to subside. The poll suggests that Bank Rate is projected to reach a peak of 5.50% in the next quarter, with 25 basis point hikes anticipated at the Bank of England’s August and September meetings. As a result, mortgage rates have already risen, leading to increased repayment obligations for around 800,000 borrowers seeking to refinance this year and an additional 1.6 million homeowners next year.

The major Europe stock markets had a green day today:

• CAC 40 increased 70.74 points or 0.98% to 7,286.32
• FTSE 100 increased 39.03 points or 0.52% to 7,500.49
• DAX 30 increased 102.14 points or 0.64% to 15,949.00

The major Europe currency markets had a mixed day today:

• EURUSD decreased 0.00422 or -0.39% to 1.09168
• GBPUSD decreased 0.0096 or -0.75% to 1.26500
• USDCHF increased 0.00257 or 0.29% to 0.89617

Some economic news from Europe today:

Germany:

GfK German Consumer Climate (Jul) decreased from -24.4 to -25.4

Italy:

Italian CPI (MoM) (Jun) decreased from 0.3% to 0.0%

US/AMERICAS:

Federal Reserve Chairman Jerome Powell has stated that he expects multiple interest rate increases ahead and possibly at an aggressive pace. Powell has also said that the Fed believes there is more restriction coming, and the strong labor market is driving it. The Fed has pledged to leave interest rates near zero for years, through at least 2023, and will tolerate periods of higher inflation as they try to revive the labor market and economy. However, Powell has also indicated that the Fed may need more aggressive interest rate hikes to fight inflation. The Federal Reserve kept its key interest rate unchanged on June 14th after having raised it 10 straight times to combat high inflation, but signaled that it may raise rates twice more this year, beginning as soon as next month

US Market Closings:

• Dow declined 74.08 points or -0.22% to 33,852.66
• S&P 500 declined 1.55 points or -0.04% to 4,376.86
• Nasdaq advanced 36.08 points or 0.27% to 13,591.75
• Russell 2000 advanced 8.78 points or 0.47% to 1,858.71

Canada Market Closings:

• TSX Composite advanced 85.76 points or 0.43% to 19,818.85
• TSX 60 advanced 5.21 points or 0.44% to 1,194.5

Brazil Market Closing:

• Bovespa declined 841.55 points or -0.72% to 116,681.32

ENERGY:

The oil markets had a mixed day today:

• Crude Oil increased 1.682 USD/BBL or 2.49% to 69.382
• Brent increased 1.572 USD/BBL or 2.18% to 73.832
• Natural gas decreased 0.0597 USD/MMBtu or -2.14% to 2.7293
• Gasoline increased 0.067 USD/GAL or 2.66% to 2.5838
• Heating oil increased 0.0146 USD/GAL or 0.61% to 2.4136

The above data was collected around 13:16 EST on Wednesday

• Top commodity gainers: Gasoline (2.66%), Crude Oil (2.49%), Brent (2.18%) and HRC Steel (3.10%)
• Top commodity losers: Milk (-3.95%), Canola (-4.10%), Corn (-5.21%) and Wheat (-4.02%)

The above data was collected around 13:24 EST Wednesday.

BONDS:

Japan 0.385% (+1.3bp), US 2’s 4.73% (-0.038%), US 10’s 3.7136% (-5.44bps); US 30’s 3.81% (-0.033%), Bunds 2.311% (-5.4bp), France 2.841% (-4.1bp), Italy 3.979% (-1.4bp), Turkey 16.34% (+13bp), Greece 3.606% (+4.8bp), Portugal 3.045% (-1.9bp); Spain 3.286% (-3.3bp) and UK Gilts 4.306% (-6.9bp).       

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