Market Talk – July 5, 2023

ASIA:

A working group of the Reserve Bank of India has stated that the increased use of the Indian rupee in international trade and capital account transactions will lead to the currency gaining international acceptance. The group suggests promoting the rupee for import and export without any limits, allowing non-residents to open rupee accounts both in India and abroad, and integrating Indian payment systems with other countries for cross-border transactions. The Reserve Bank of India clarified that the report and its recommendations do not represent its official stance and that further examination will be conducted before implementation.

The major Asian stock markets had a mixed day today:

• NIKKEI 225 decreased 83.82 points or -0.25% to 33,338.70
• Shanghai decreased 22.40 points or -0.69% to 3,222.95
• Hang Seng decreased 305.30 points or -1.57% to 19,110.38
• ASX 200 decreased 25.80 points or -0.35% to 7,253.20
• Kospi decreased 14.31 points or -0.55% to 2,579.00
• SENSEX decreased 33.01 points or -0.05% to 65,446.04
• Nifty50 increased 9.50 points or 0.05% to 19,398.50

The major Asian currency markets had a mixed day today:

• AUDUSD decreased 0.00216 or -0.32% to 0.66694
• NZDUSD increased 0.00009 or 0.01% to 0.61889
• USDJPY increased 0.067 or 0.05% to 144.517
• USDCNY increased 0.0286 or 0.40% to 7.25820

Precious Metals:

• Gold decreased 1.27 USD/t oz. or -0.07% to 1,923.82
• Silver increased 0.267 USD/t. oz or 1.16% to 23.217

Some economic news from last night:

China:

Caixin Services PMI (Jun) decreased from 57.1 to 53.9

Chinese Composite PMI decreased from 55.6 to 52.5

Japan:

Services PMI (Jun) decreased from 55.9 to 54.0

Australia:

AIG Manufacturing Index (Jun) decreased from -5.1 to -19.8

Retail Sales (MoM) increased from 0.0% to 0.7%

Some economic news from today:

India:

Nikkei Services PMI (Jun) decreased from 61.2 to 58.5

EUROPE/EMEA:

In June, major central banks around the world surprised markets by delivering the highest number of interest rate hikes seen so far this year. Out of the nine central banks overseeing the most heavily traded currencies, seven raised rates, two kept them unchanged, and only one reduced rates. Norway and the Bank of England made larger-than-expected 50 basis point moves, while Canada and Australia resumed their rate hiking cycles. Sweden, Switzerland, and the European Central Bank also tightened policy. The total number of rate hikes in June reached 225 basis points, following six hikes in May. In 2023, G10 central banks have now implemented a total of 28 rate hikes, amounting to 950 basis points. Since the start of the rate hiking cycle in September 2021, major central banks have raised interest rates by a cumulative total of 3,765 basis points.

The major Europe stock markets had a negative day today:

• CAC 40 decreased 59.12 points or -0.80% to 7,310.81
• FTSE 100 decreased 77.62 points or -1.03% to 7,442.10
• DAX 30 decreased 101.59 points or -0.63% to 15,937.58

The major Europe currency markets had a mixed day today:

• EURUSD decreased 0.00032 or -0.03% to 1.08738
• GBPUSD increased 0.0006 or 0.05% to 1.27180
• USDCHF increased 0.00087 or 0.10% to 0.89757

Some economic news from Europe today:

UK:

Composite PMI (Jun) decreased from 54.0 to 52.8

Services PMI (Jun) decreased from 55.2 to 53.7

Spain:

Spanish Services PMI (Jun) decreased from 56.7 to 53.4

Italy:

Italian Services PMI (Jun) decreased from 54.0 to 52.2

France:

French Services PMI (Jun) decreased from 52.5 to 48.0

Germany:

German Services PMI (Jun) decreased from 57.2 to 54.1

Euro Zone:

S&P Global Composite PMI (Jun) decreased from 52.8 to 49.9

Services PMI (Jun) decreased from 55.1 to 52.0

US/AMERICAS:

The Federal Reserve released its June meetings report this Wednesday, and indicated more rate hikes are to be expected. Rates are likely to rise at a slower pace after 10 consecutive hikes followed by a pause. Voting members believed the pause in June was necessary to assess the success of their policies. FOMC member believed “leaving the target range unchanged at this meeting would allow them more time to assess the economy’s progress toward the Committee’s goals of maximum employment and price stability.” Only two members of 18 voting participants feel additional rate hikes are not necessary. The Committee further deliberated that the rapid 75 bps hikes are no longer appropriate, but will continue raising the target rate until inflation declines to 2% range.

US Market Closings:

• Dow declined 129.83 points or -0.38% to 34,288.64
• S&P 500 declined 8.77 points or -0.2% to 4,446.82
• Nasdaq declined 25.12 points or -0.18% to 13,791.65
• Russell 2000 declined 23.87 points or -1.26% to 1,872.91

Canada Market Closings:

• TSX Composite declined 100.98 points or -0.5% to 20,103.89
• TSX 60 declined 5.53 points or -0.45% to 1,211.18

Brazil Market Closing:

• Bovespa advanced 472.84 points or 0.4% to 119,549.21

ENERGY:

The oil markets had a mixed day today:

• Crude Oil increased 0.719 USD/BBL or 1.01% to 71.873
• Brent increased 0.365 USD/BBL or 0.48% to 76.615
• Natural gas decreased 0.0749 USD/MMBtu or -2.73% to 2.6716
• Gasoline increased 0.0222 USD/GAL or 0.88% to 2.5351
• Heating oil increased 0.0649 USD/GAL or 2.67% to 2.4937

The above data was collected around 11:36 EST on Wednesday

• Top commodity gainers: Orange Juice (3.72%), Heating Oil (2.67%), Wheat (2.70%) and Copper (2.67%)
• Top commodity losers: Zinc (-2.41%), Corn (-1.28%), Methanol (-2.03%) and Natural Gas (-2.73%)

The above data was collected around 11:42 EST Wednesday.

BONDS:

Japan 0.385% (+0.9bp), US 2’s 4.93% (+0.019%), US 10’s 3.9058% (+6.5bps); US 30’s 3.91% (+0.057%), Bunds 2.48% (+2.5bp), France 3.02% (+1.8bp), Italy 4.17% (-3.6bp), Turkey 16.08% (+7bp), Greece 3.806% (+1.4bp), Portugal 3.212% (+0.5bp); Spain 3.532% (+6.4bp) and UK Gilts 4.496% (+8.1bp).