Market Talk – September 14, 2023

ASIA:

China’s central bank, the People’s Bank of China (PBOC), has announced a second reduction in the reserve requirement ratio (RRR) for banks this year. This move, effective from September 15, involves a 25 basis point cut for all banks, excluding those with a 5% reserve ratio already in place. The reduction is aimed at increasing liquidity and supporting the country’s economic recovery, as China’s economy faces challenges in maintaining its post-pandemic growth. Following this decision, the offshore yuan weakened, causing the dollar to rise to 7.2921 against the yuan, up by 0.3% on the day. After this cut, the weighted average RRR for financial institutions in China now stands at approximately 7.4%.

The major Asian stock markets had a green day today:

• NIKKEI 225 increased 461.58 points or 1.41% to 33,168.10
• Shanghai increased 3.48 points or 0.11% to 3,126.55
• Hang Seng increased 38.70 points or 0.21% to 18,047.92
• ASX 200 increased 32.60 points or 0.46% to 7,186.50
• Kospi increased 38.19 points or 1.51% to 2,572.89
• SENSEX increased 52.01 points or 0.08% to 67,519.00
• Nifty50 increased 33.10 points or 0.16% to 20,103.10

The major Asian currency markets had a mixed day today:

• AUDUSD increased 0.00237 or 0.37% to 0.64447
• NZDUSD increased 0.00026 or 0.04% to 0.59196
• USDJPY decreased 0.355 or -0.24% to 147.095
• USDCNY increased 0.01466 or 0.20% to 7.28622

The above data was collected around 12.15 EST.

Precious Metals:

• Gold increased 4.37 USD/t oz. or 0.23% to 1,910.67
• Silver decreased 0.156 USD/t. oz or -0.68% to 22.679

The above data was collected around 12:18 EST.

Some economic news from last night:

Australia:

Employment Change (Aug) increased from -1.4K to 64.9K

Full Employment Change (Aug) increased from -18.7K to 2.8K

Unemployment Rate (Aug) remain the same at 3.7%

Some economic news from today:

Japan:

Industrial Production (MoM) (Jul) increased from -2.4% to -1.8%

India:

WPI Inflation (YoY) (Aug) increased from -1.36% to -0.52%

EUROPE/EMEA:

The European Central Bank (ECB) increased interest rates for the 10th consecutive meeting to address persistent inflation but hinted that it may stop tightening its policy. The ECB raised its deposit rate to 4% from 3.75%, reaching an all-time high. However, it is expected that this tightening will be the last for now, with a potential extended period of unchanged rates and rate cuts anticipated in the latter part of the next year. Market expectations shifted toward a rate hike after the ECB suggested it would revise its 2024 inflation projection upward in new forecasts. These changes in the ECB’s economic outlook could raise concerns about stagflation, characterized by economic stagnation accompanied by high inflation. In the updated projections, inflation is now expected to be 3.2% next year, up from the previous forecast of 3.0%, while growth forecasts were lowered to 0.7% for this year and 1.0% for 2024.

The major Europe stock markets had a green day today:

• CAC 40 increased 86.10 points or 1.19% to 7,308.67
• FTSE 100 increased 147.09 points or 1.95% to 7,673.08
• DAX 30 increased 151.26 points or 0.97% to 15,805.29

The major Europe currency markets had a mixed day today:

• EURUSD decreased 0.0072 or -0.67% to 1.06560
• GBPUSD decreased 0.00732 or -0.59% to 1.24148
• USDCHF increased 0.00158 or 0.18% to 0.89518

The above data was collected around 12:21 EST.

Some economic news from Europe today:

Swiss:

PPI (MoM) (Aug) decreased from -0.1% to -0.2%

Euro Zone:

Deposit Facility Rate (Sep) increased from 3.75% to 4.00%

ECB Marginal Lending Facility increased from 4.50% to 4.75%

ECB Interest Rate Decision (Sep) increased from 4.25% to 4.50%

US/AMERICAS:

The US Bureau of Labor Statistics has reported that the producer price index (PPI) increased a seasonally adjusted 0.7% in August, higher than the 0.4% estimate and the biggest monthly gain since June 2022. However, excluding food and energy, core PPI rose 0.2%, in line with the estimate. The data comes a day after the more closely followed consumer price index showed a rise of 0.6% on a monthly basis and 3.7% from a year ago. Elsewhere, retail sales climbed a higher-than-expected 0.6% in August, well above the 0.1% estimate, and initial jobless claims nudged up to 220,000 for the week ended Sept. 9, below the 225,000 estimate.

US Market Closings:

• Dow advanced 331.58 points or 0.96% to 34,907.11
• S&P 500 advanced 37.66 points or 0.84% to 4,505.1
• Nasdaq advanced 112.47 points or 0.81% to 13,926.05
• Russell 2000 advanced 25.79 points or 1.4% to 1,866.63

Canada Market Closings:

• TSX Composite advanced 288.9 points or 1.42% to 20,567.84
• TSX 60 advanced 17.76 points or 1.46% to 1,235.01

Brazil Market Closing:

• Bovespa advanced 1,215.58 points or 1.03% to 119,391.55

ENERGY:

The oil markets had a green day today:

• Crude Oil increased 1.507 USD/BBL or 1.70% to 90.027
• Brent increased 1.78 USD/BBL or 1.94% to 93.660
• Natural gas increased 0.0366 USD/MMBtu or 1.37% to 2.7166
• Gasoline increased 0.0124 USD/GAL or 0.45% to 2.7508
• Heating oil increased 0.0564 USD/GAL or 1.64% to 3.4918

The above data was collected around 12:24 EST.

• Top commodity gainers: Brent (1.94%), Rapeseed (3.36%), Sugar (2.00%) and Methanol (1.89%)
• Top commodity losers: Coal (-1.08%), Bitumen (-1.03%), Oat (-1.53%) and Silver (-0.68%)

The above data was collected around 12:29 EST.

BONDS:

Japan 0.719% (+0.9bp), US 2’s 4.99% (+0.011%), US 10’s 4.2843% (+3.63bps); US 30’s 4.39% (+0.055%), Bunds 2.596% (-5.7bp), France 3.129% (-7.4bp), Italy 4.354% (-11.1bp), Turkey 23.31% (+127bp), Greece 4.012% (-5.5bp), Portugal 3.3350% (-8bp); Spain 3.64% (-8.7bp) and UK Gilts 4.289% (-5.8bp)

The above data was collected around 12:33 EST.