Market Talk – August 7, 2023

ASIA:

China raised its gold reserves for a ninth straight month in July as central bank purchases continue to underpin prices of the precious metal. Bullion held by the People’s Bank of China rose by 740,000 troy ounces, the central bank said on Monday. That’s equivalent to about 23 tons. Total stockpiles now sit at 2,137 tons, with around 188 tons added in a run of purchases that began in November.

China’s central bank governor, Pan Gongsheng, has promised to direct more financial resources towards the private economy, indicating a renewed commitment from Beijing to boost confidence among private companies as the economy faces weakening momentum. During a meeting with several private firms, including those in property, aluminum, and agribusiness sectors, Pan Gongsheng announced that the People’s Bank of China (PBOC) will introduce guidelines to support these private enterprises. This move follows recent policy measures aimed at aiding private businesses, which have been negatively impacted by COVID-19 restrictions and a regulatory crackdown on various industries. The PBOC plans to facilitate local governments in addressing arrears owed to firms, understanding their financial needs, and addressing their concerns and appeals.

The major Asian stock markets had a mixed day today:

• NIKKEI 225 increased 61.81 points or 0.19% to 32,254.56
• Shanghai decreased 19.25 points or -0.59% to 3,268.83
• Hang Seng decreased 1.54 points or -0.01% to 19,537.92
• ASX 200 decreased 16.10 points or -0.22% to 7,309.20
• Kospi decreased 22.09 points or -0.85% to 2,580.71
• SENSEX increased 232.23 points or 0.35% to 65,953.48
• Nifty50 increased 80.30 points or 0.41% to 19,597.30

The major Asian currency markets had a mixed day today:

• AUDUSD decreased 0.00045 or -0.07% to 0.65645
• NZDUSD decreased 0.00009 or -0.01% to 0.60971
• USDJPY increased 0.776 or 0.55% to 142.526
• USDCNY increased 0.017 or 0.24% to 7.20380

Precious Metals:

• Gold decreased 6.83 USD/t oz. or -0.35% to 1,934.79
• Silver decreased 0.460 USD/t. oz or -1.95% to 23.140

Some economic news from last night:

Japan；

Foreign Reserves (USD) (Jul) increased from 1,247.2B to 1,253.7B

Some economic news from today:

China:

FX Reserves (USD) (Jul) increased from 3.193T to 3.204T

EUROPE/EMEA:

An analysis by Bloomberg suggests that if the European Central Bank (ECB) continues aggressive rate hikes, it could have a negative impact on the euro area’s economy, reducing its economic output by 3.8 percent in 2024. This is due to the combination of high interest rates and limited government capacity to stimulate growth, which could hinder economic expansion. The ECB has already raised key interest rates by 425 basis points since the previous July in an effort to control high inflation above its 2 percent target. Despite this, the central bank has not announced further rate hikes, emphasizing that interest rates will remain the primary tool in combating inflation.

The major Europe stock markets had a mixed day today:

• CAC 40 increased 4.69 points or 0.06% to 7,319.76
• FTSE 100 decreased 9.88 points or -0.13% to 7,554.49
• DAX 30 decreased 1.10 points or -0.01% to 15,950.76

The major Europe currency markets had a mixed day today:

• EURUSD decreased 0.00092 or -0.08% to 1.10008
• GBPUSD increased 0.00258 or 0.20% to 1.27738
• USDCHF increased 0.00121 or 0.14% to 0.87391

Some economic news from Europe today:

Germany:

German Industrial Production (MoM) (Jun) decreased from -0.1% to -1.5%

UK:

Mortgage Rate (GBP) increased from 7.54% to 7.68%

Halifax House Price Index (YoY) (Jul) increased from -2.6% to -2.4%

Halifax House Price Index (MoM) (Jul) decreased from -0.1% to -0.3%

US/AMERICAS:

In a recent statement, Senator Chris Coons emphasized the need for Congress to address the national debt without cutting Social Security, citing concerns raised by Fitch Ratings. The Biden administration has taken steps to address the debt issue, including the forgiveness of $39 billion in student loan debt for 804,000 borrowers through fixes to the income-driven repayment plan. However, the issue of the national debt has been a long-standing concern, as highlighted in a House report on a balanced budget constitutional amendment. Senator Coons has also expressed opposition to adding to the national debt, as seen in a tweet from 2017. The Federal Reserve has been monitoring economic indicators, including figures for June, which have been widely discussed.

US Market Closings:

• Dow advanced 407.51 points or 1.16% to 35,473.13
• S&P 500 advanced 40.41 points or 0.9% to 4,518.44
• Nasdaq advanced 85.16 points or 0.61% to 13,994.4
• Russell 2000 advanced 1.47 points or 0.08% to 1,958.94

Canada Market Closings:

• TSX Composite advanced 115.3 points or 0.57% to 20,236.04
• TSX 60 advanced 6.95 points or 0.58% to 1,211.22

Brazil Market Closing:

• Bovespa declined 128.18 points or -0.11% to 119,379.5

ENERGY:

The oil markets had a mixed day today:

• Crude Oil decreased 0.529 USD/BBL or -0.64% to 82.291
• Brent decreased 0.524 USD/BBL or -0.61% to 85.716
• Natural gas increased 0.1566 USD/MMBtu or 6.08% to 2.7336
• Gasoline increased 0.0341 USD/GAL or 1.23% to 2.8172
• Heating oil decreased 0.0301 USD/GAL or -0.98% to 3.0321

The above data was collected around 13:04 EST on Monday

• Top commodity gainers: Natural Gas (6.08%), Gasoline (1.23%), Cheese (2.21%) and Wheat (4.26%)
• Top commodity losers: Palm Oil (-2.25%), Cocoa (-1.99%), Soybeans (-2.20%) and Silver (-1.95%)

The above data was collected around 13:14 EST Monday.

BONDS:

Japan 0.631% (-1.2bp), US 2’s 4.77% (-0.025%), US 10’s 4.0864% (+2.44bps); US 30’s 4.26% (+0.043%), Bunds 2.563% (+2.5bp), France 3.127% (+3.8bp), Italy 4.246% (+3.3bp), Turkey 17.65% (-8bp), Greece 3.916% (+7.8bp), Portugal 3.354% (+5.9bp); Spain 3.632% (+4.5bp) and UK Gilts 4.453% (+7.6bp).