Market Talk – October 3, 2023

ASIA:

The World Bank has maintained its economic growth forecast for India at 6.3% for the fiscal year 2024 (FY24), which is the same as its previous estimate in April. This growth projection is attributed to a slowdown from the 7.2% growth observed in FY23, primarily due to adverse global factors affecting foreign demand and consumption growth. This forecast aligns with projections from other institutions such as the OECD, Asian Development Bank, and Fitch, but it is slightly slower than the estimates provided by the Indian government and the Reserve Bank of India, which put India’s growth at 6.5%. S&P Ratings, on the other hand, pegged India’s growth estimates at 6%.

In the April-June quarter, India’s economy experienced a strong growth of 7.8%, driven by robust services activity and demand. The World Bank anticipates continued fiscal consolidation in FY24, with the central government’s fiscal deficit expected to decrease from 6.4% to 5.9% of GDP. The World Bank’s India director, Auguste Tano Kouame, expressed confidence that there are minimal risks of fiscal slippages, even with the upcoming general elections, as they do not expect a relaxation in the government’s stated fiscal consolidation path.

The report also predicts a cooling of inflation as food prices normalize and government measures increase the supply of essential commodities. In July, India’s retail inflation accelerated to 7.8% due to rising prices of food items like wheat and rice caused by adverse weather conditions.

The major Asian stock markets had a negative day today:

• NIKKEI 225 decreased 521.94 points or -1.64% to 31,237.94
• Shanghai closed
• Hang Seng decreased 478.44 points or -2.69% to 17,331.22
• ASX 200 decreased 89.80 points or -1.28% to 6,943.40
• Kospi closed
• SENSEX decreased 316.31 points or -0.48% to 65,512.10
• Nifty50 decreased 109.55 points or -0.56% to 19,528.75

The major Asian currency markets had a mixed day today:

• AUDUSD decreased 0.00725 or -1.14% to 0.62895
• NZDUSD decreased 0.00556 or -0.94% to 0.58894
• USDJPY decreased 0.655 or -0.44% to 149.195
• USDCNY increased 0.0008 or 0.01% to 7.32220

The above data was collected around 11.43 EST.

Precious Metals:

• Gold decreased 3.71 USD/t oz. or -0.20% to 1,823.69
• Silver increased 0.123 USD/t. oz or 0.58% to 21.193

The above data was collected around 11:47 EST.

Some economic news from last night:

Australia:

Building Approvals (MoM) (Aug) increased from -7.4% to 7.0%

Home Loans (MoM) increased from -1.9% to 2.6%

RBA Interest Rate Decision (Oct) remain the same at 4.10%

New Zealand:

NZIER Business Confidence (Q3) increased from -63% to -52%

No economic news from today:

EUROPE/EMEA:

The Bank of England has announced that it will conduct a ‘stress test’ on general insurers in 2025 to assess their financial health. This stress test will involve subjecting insurers to a series of rapid shocks, and it comes as capital rules for the sector are being relaxed. Such stress tests have been implemented by regulators since the global financial crisis in 2008 to ensure that banks and insurers have adequate capital reserves and to uncover any hidden risks in their portfolios. The Association of British Insurers supports this upcoming test and believes it can help identify practical issues related to different scenarios. Additionally, the Bank of England will provide transparency by publishing insurer-by-insurer results in this 2025 stress test, a significant change from past practices. Meanwhile, the European Union is also easing insurance capital rules to encourage more investment, and EU lawmakers are considering giving insurance watchdog EIOPA the authority to publish insurer-specific results in stress tests, similar to the current practice for bank stress tests.

The major Europe stock markets had a negative day today:

• CAC 40 decreased 71.11 points or -1.01% to 6,997.05
• FTSE 100 decreased 40.56 points or -0.54% to 7,470.16
• DAX 30 decreased 162.00 points or -1.06% to 15,085.21

The major Europe currency markets had a mixed day today:

• EURUSD decreased 0.00227 or -0.22% to 1.04533
• GBPUSD decreased 0.00185 or -0.15% to 1.20675
• USDCHF increased 0.00493 or 0.54% to 0.92303

The above data was collected around 11:50 EST.

Some economic news from Europe today:

Spain:

Spanish Unemployment Change decreased from 24.8K to 19.8K

Swiss:

CPI (MoM) (Sep) decreased from 0.2% to -0.1%

US/AMERICAS:

The average rate on the 30-year fixed mortgage has risen to 7.72%, reaching a high not seen since the end of 2000. Mortgage rates follow the yield on the 10-year Treasury, which has been climbing due to strong economic data. This trend of increasing rates has been ongoing since the beginning of the year when the 30-year fixed rate dropped to around 6%. The current surge in rates has caused a drop in sales, despite strong demand. For borrowers purchasing a $400,000 home with a 20% down payment on a 30-year fixed loan, the monthly payment has significantly increased. This rise in mortgage rates is part of a broader trend of increasing interest rates, which has implications for various forms of consumer debt, including credit cards and car loans.

US Market Closings:

• Dow declined 430.97 points or -1.29% to 33,00.38
• S&P 500 declined 58.94 points or -1.37% to 4,229.45
• Nasdaq declined 248.31 points or -1.87% to 13,059.47
• Russell 2000 declined 29.66 points or -1.69% to 1,727.15

Canada Market Closings:

• TSX Composite declined 156.26 points or -0.81% to 19,020.92
• TSX 60 declined 9.5 points or -0.83% to 1,141.8

Brazil Market Closing:

• Bovespa declined 1,756.53 points or -1.53% to 113,300.33

ENERGY:

The oil markets had a mixed day today:

• Crude Oil increased 1.3 USD/BBL or 1.46% to 90.120
• Brent increased 0.404 USD/BBL or 0.45% to 91.114
• Natural gas increased 0.1065 USD/MMBtu or 3.75% to 2.9465
• Gasoline decreased 0.0493 USD/GAL or -2.04% to 2.3629
• Heating oil decreased 0.0514 USD/GAL or -1.60% to 3.1711

The above data was collected around 11:53 EST.

• Top commodity gainers: Natural Gas (3.75%), Crude Oil (1.46%), Orange Juice (0.80%) and Canola (1.05%)
• Top commodity losers: Coal (-3.23%), HRC Steel (-3.18%), Cocoa (-2.31%) and Zinc (-2.86%)

The above data was collected around 11:59 EST.

BONDS:

Japan 0.775% (-0.2bp), US 2’s 5.13% (+0.019%), US 10’s 4.7808% (+9.78bps); US 30’s 4.93% (+0.129%), Bunds 2.964% (+5.3bp), France 3.533% (+5bp), Italy 4.943% (+13.1bp), Turkey 24.94% (-58bp), Greece 4.495% (+10.3bp), Portugal 3.708% (+5.6bp); Spain 4.066% (+6.4bp) and UK Gilts 4.596% (+2.9bp)

The above data was collected around 12:02 EST.