Market Talk – August 2, 2023

ASIA:

The Argentine government has reached an agreement with the People’s Bank of China to obtain US$1.7 billion in yuan through currency swaps. This will help them fulfill their payment obligations of US$2.7 billion to the International Monetary Fund. To cover the remaining balance, they will receive a loan of US$1 billion from the Development Bank of Latin America (CAF), based in Caracas, Venezuela. By depositing pesos with the PBOC and receiving renminbi in return, Argentina was able to make the IMF payment without depleting its dollar reserves, which are currently estimated to be in the negative at minus US$8 billion.

The major Asian stock markets had a negative day today:

• NIKKEI 225 decreased 768.89 points or -2.30% to 32,707.69

• Shanghai decreased 29.26 points or -0.89% to 3,261.69

• Hang Seng decreased 493.74 points or -2.47% to 19,517.38

• ASX 200 decreased 96.10 points or -1.29% to 7,354.60

• Kospi decreased 50.60 points or -1.90% to 2,616.47

• SENSEX decreased 676.53 points or -1.02% to 65,782.78

• Nifty50 decreased 207.00 points or -1.05% to 19,526.55

The major Asian currency markets had a mixed day today:

• AUDUSD decreased 0.00625 or -0.95% to 0.65485

• NZDUSD decreased 0.00622 or -1.01% to 0.60858

• USDJPY increased 0.017 or 0.01% to 143.337

• USDCNY increased 0.0201 or 0.28% to 7.20440

Precious Metals:

• Gold decreased 9.31 USD/t oz. or -0.48% to 1,934.77

• Silver decreased 0.625 USD/t. oz or -2.57% to 23.705

Some economic news from last night:

Japan:

Monetary Base (YoY) (Jul) decreased from -1.0% to -1.3%

No economic news from today:

EUROPE/EMEA:

Italy’s government is close to finalizing fiscal reforms, which include tax cuts and increased authority to negotiate with tax evaders. The Senate is expected to approve the reforms soon, and the lower parliamentary house will then confirm it in a final vote. Prime Minister Giorgia Meloni’s right-wing coalition, which holds a majority in both houses, will have two years to implement the reforms. Tax evasion amounted to 90 billion euros in 2020, and while the previous administration aimed to crack down on it, Meloni’s government is adopting a more lenient approach, offering several tax amnesties and considering lower tax evasion reduction targets for Italy’s post-COVID economic recovery plan.

The major Europe stock markets had a negative day today:

• CAC 40 decreased 93.24 points or -1.26% to 7,312.84

• FTSE 100 decreased 104.64 points or -1.36% to 7,561.63

• DAX 30 decreased 220.38 points or -1.36% to 16,020.02

The major Europe currency markets had a mixed day today:

• EURUSD decreased 0.00448 or -0.41% to 1.09372

• GBPUSD decreased 0.00733 or -0.57% to 1.27037

• USDCHF increased 0.00307 or 0.35% to 0.87817

Some economic news from Europe today:

Swiss:

SECO Consumer Climate (Q3) increased from -13 to -8

procure.ch PMI (Jul) decreased from 44.9 to 38.5

Spain:

Spanish Unemployment Change increased from -50.3K to -11.0K

US/AMERICAS:

According to the ADP National Employment Report, the US private sector added 324,000 jobs in July 2023, which is well above expectations. The report also showed that job gains were concentrated in the service-providing sector, which added 278,000 jobs, while the goods-producing sector added 46,000 jobs. The report provides insights into labor market trends and is closely monitored by policymakers and economists. The strong job gains in July suggest that the labor market is continuing to recover from the pandemic-induced recession, and the decline in layoffs indicates that employers are holding onto their workers. The JOLTS report from the Labor Department also showed a decline in layoffs and job openings in June, which is a positive sign for the labor market.

US Market Closings:

• Dow declined 348.16 points or -0.98% to 35,282.52
• S&P 500 declined 63.34 points or -1.38% to 4,513.39
• Nasdaq declined 310.47 points or -2.17% to 13,973.45
• Russell 2000 declined 27.33 points or -1.37% to 1,966.83

Canada Market Closings:

• TSX Composite declined 314.72 points or -1.53% to 20,218.21
• TSX 60 declined 19.71 points or -1.6% to 1,211.91

Brazil Market Closing:

• Bovespa declined 389.67 points or -0.32% to 120,858.72

ENERGY:

The oil markets had a negative day today:

• Crude Oil decreased 2.146 USD/BBL or -2.64% to 79.224

• Brent decreased 2.062 USD/BBL or -2.43% to 82.848

• Natural gas decreased 0.0841 USD/MMBtu or -3.29% to 2.4759

• Gasoline decreased 0.0926 USD/GAL or -3.22% to 2.7804

• Heating oil decreased 0.0591 USD/GAL or -1.95% to 2.9643

The above data was collected around 11:32 EST on Wednesday

• Top commodity gainers: Palm Oil (1.11%), Milk (27.15%), Oat (1.21%) and Coffee (1.34%)

• Top commodity losers: Orange Juice (-3.20%), Zinc (-3.09%), Natural Gas (-3.29%) and Gasoline (-3.22%)

The above data was collected around 11:43 EST Wednesday.

BONDS:

Japan 0.634% (+3.8bp), US 2’s 4.92% (+0.007%), US 10’s 4.0998% (+5.28bps); US 30’s 4.18% (+0.080%), Bunds 2.507% (-1.6bp), France 3.077% (-2.2bp), Italy 4.194% (+0.1bp), Turkey 18.02% (+1bp), Greece 3.837% (-0.4bp), Portugal 3.275% (-2.4bp); Spain 3.581% (-0.1bp) and UK Gilts 4.404% (+0.4bp).