Market Talk – August 16, 2023

ASIA:

The People’s Bank of China has reduced interest rates for medium-term lending and reverse repos, with a 15 basis point decrease for MLF (now 2.5%) and a 10 basis point decrease for reverse repos (now 1.8%). This move aims to counter the effects of the tax payment peak and maintain reasonable banking system liquidity. The central bank infused 401 billion yuan ($55 billion) through one-year MLF and executed 204 billion yuan ($28 billion) in seven-day reverse repos. The US dollar/yuan exchange rate has shifted from 7.2 to 7.28.

The major Asian stock markets had a mixed day today:

• NIKKEI 225 decreased 472.07 points or -1.46% to 31,766.82
• Shanghai decreased 26.05 points or -0.82% to 3,150.13
• Hang Seng decreased 251.81 points or -1.36% to 18,329.30
• ASX 200 decreased 109.80 points or -1.50% to 7,195.20
• Kospi decreased 45.23 points or -1.76% to 2,525.64
• SENSEX increased 137.50 points or 0.21% to 65,539.42
• Nifty50 increased 30.45 points or 0.16% to 19,465.00

The major Asian currency markets had a mixed day today:

• AUDUSD decreased 0.00023 or -0.04% to 0.64517
• NZDUSD increased 0.00067 or 0.11% to 0.59557
• USDJPY increased 0.188 or 0.13% to 145.758
• USDCNY increased 0.00742 or 0.10% to 7.32976

Precious Metals:

• Gold increased 2.38 USD/t oz. or 0.13% to 1,903.94
• Silver increased 0.100 USD/t. oz or 0.44% to 22.610

Some economic news from last night:

New Zealand：

RBNZ Interest Rate Decision remain the same at 5.5%

EUROPE/EMEA:

Minister of Municipal, Rural Affairs and Housing, Majed Al-Hogail, held discussions with several Chinese bank leaders in Beijing. The talks focused on investment and development prospects related to infrastructure projects in Saudi cities within the municipal and housing sectors. Al-Hogail shared Saudi Arabia’s initiatives with the Export–Import Bank of China, the China Development Bank, and the Industrial and Commercial Bank of China. These initiatives include housing plans and efforts to elevate sector standards. The Saudi-Chinese Business Forum will further explore investment possibilities and Saudi Arabia’s offerings in infrastructure and housing. The objective is to attract top Chinese firms to invest in the Kingdom, fostering stronger partnerships between the two nations.

The major Europe stock markets had a mixed day today:

• CAC 40 decreased 7.45 points or -0.10% to 7,260.25
• FTSE 100 decreased 32.76 points or -0.44% to 7,356.88
• DAX 30 increased 22.17 points or 0.14% to 15,789.45

The major Europe currency markets had a green day today:

• EURUSD increased 0.00023 or 0.02% to 1.09063
• GBPUSD increased 0.00466 or 0.37% to 1.27496
• USDCHF increased 0.00097 or 0.11% to 0.87897

Some economic news from Europe today:

UK:

CPI (MoM) (Jul) decreased from 0.1% to -0.4%

CPI (YoY) (Jul) decreased from 7.9% to 6.8%

PPI Input (MoM) (Jul) increased from -1.3% to -0.4%

Euro Zone:

GDP (YoY) (Q2) decreased from 1.1% to 0.6%

GDP (QoQ) increased from 0.0% to 0.3%

Industrial Production (MoM) (Jun) increased from 0.2% to 0.5%

US/AMERICAS:

The Federal Reserve’s meeting minutes from June 2023 suggest that the central bank is considering further rate hikes, but at a slower pace. The minutes also indicate that Federal Reserve officials were divided over whether additional interest rate increases would be necessary to bring inflation under control. The Federal Reserve’s next move remains uncertain, with policymakers continuing to leave their options open ahead of their next meeting. The minutes from the June meeting suggest that the central bank is closely monitoring economic indicators, including inflation and employment data.

US Market Closings:

• Dow declined 180.75 points or -0.52% to 34,765.64
• S&P 500 declined 33.59 points or -0.76% to 4,404.27
• Nasdaq declined 156.42 points or -1.15% to 13,474.63
• Russell 2000 declined 24.24 points or 1.28% to 1,871.52

Canada Market Closings:

• TSX Composite declined -0.72% or unchanged to 19,899.07
• TSX 60 advanced 0.32 of a point or 0.03% to 1,191.99

Brazil Market Closing:

• Bovespa declined 579.9 points or -0.5% to 115,591.52

ENERGY:

The oil markets had a mixed day today:

• Crude Oil increased 0.11 USD/BBL or 0.14% to 81.100
• Brent increased 0.049 USD/BBL or 0.06% to 85.079
• Natural gas decreased 0.0746 USD/MMBtu or -2.81% to 2.5844
• Gasoline increased 0.0368 USD/GAL or 1.29% to 2.8844
• Heating oil increased 0.0012 USD/GAL or 0.04% to 3.0292

The above data was collected around 11:38 EST on Wednesday

• Top commodity gainers: Orange Juice (6.43%), Steel (3.38%), Oat (1.89%) and Sugar (1.94%)
• Top commodity losers: Palladium (-1.18%), Methanol (-1.90%), Bitumen (-1.23%) and Natural Gas (-2.81%)

The above data was collected around 11:49 EST Wednesday.

BONDS:

Japan 0.630% (+0.4bp), US 2’s 4.95% (-0.002%), US 10’s 4.2307% (+0.97bps); US 30’s 4.34% (+0.020%), Bunds 2.652% (-2.5bp), France 3.196% (-2.4bp), Italy 4.356% (-0.4bp), Turkey 18.43% (-16bp), Greece 3.976% (-1.6bp), Portugal 3.403% (-0.1bp); Spain 3.703% (-0.9bp) and UK Gilts 4.646% (+5.7bp).