Market Talk – October 26, 2023

ASIA:

China kept its benchmark lending rates unchanged in line with market expectations during the monthly fixing. The one-year loan prime rate (LPR) remained at 3.45%, and the five-year LPR was steady at 4.20%. This decision was influenced by economic data indicating a stabilizing economy and a weaker yuan, limiting the need for further monetary easing. Better-than-expected third-quarter GDP and retail sales data suggested an improving economic recovery, reducing the requirement for additional monetary support. A survey of analysts and traders had predicted this outcome. Additionally, the central bank’s decision to maintain the interest rate on maturing medium-term policy loans was consistent with the steady LPR fixings, as the medium-term lending facility (MLF) rate serves as a guide to the LPR and is seen as a precursor to changes in lending benchmarks.

The major Asian stock markets had a mixed day today:

• NIKKEI 225 decreased 668.14 points or -2.14% to 30,601.78
• Shanghai increased 14.19 points or 0.48% to 2,988.30
• Hang Seng decreased 40.72 points or -0.24% to 17,044.61
• ASX 200 decreased 42.00 points or -0.61% to 6,812.30
• Kospi decreased 64.09 points or -2.71% to 2,299.08
• SENSEX decreased 900.91 points or -1.41% to 63,148.15
• Nifty50 decreased 264.90 points or -1.39% to 18,857.25

The major Asian currency markets had a mixed day today:

• AUDUSD increased 0.00015 or 0.02% to 0.63095
• NZDUSD increased 0.00127 or 0.22% to 0.58147
• USDJPY increased 0.165 or 0.11% to 150.375
• USDCNY decreased 0.00046 or -0.01% to 7.32824

The above data was collected around 12:35 EST.

Precious Metals:

• Gold increased 3.54 USD/t oz. or 0.18% to 1,983.16
• Silver decreased 0.156 USD/t. oz or -0.68% to 22.735

The above data was collected around 12:40 EST.

No economic news from last night:

No economic news from today:

EUROPE/EMEA:

The Bank of England is expected to keep its Bank Rate at 5.25% on November 2, as suggested by a majority of economists in a Reuters poll. While inflation remained at 6.7% in September, the highest among major advanced economies, 61 out of 73 economists surveyed anticipate no change in the Bank’s policy rate next week, aligning with market expectations. The data was close to what the Bank had predicted, and there was encouragement in the slowdown of core inflation, which excludes food and energy prices. Inflation is expected to gradually decrease but won’t reach the target until the second quarter of 2025, averaging 3.0% next year and 2.2% in 2025. Most economists predict the first rate cut won’t happen until at least July, with a median forecast for a 25 basis point reduction in the third quarter, although some believe it might occur earlier.

The major Europe stock markets had a negative day today:

• CAC 40 decreased 26.11 points or -0.38% to 6,888.96
• FTSE 100 decreased 59.77 points or -0.81% to 7,354.57
• DAX 30 decreased 161.13 points or -1.08% to 14.731.05

The major Europe currency markets had a mixed day today:

• EURUSD decreased 0.00344 or -0.33% to 1.05286
• GBPUSD decreased 0.00055 or -0.05% to 1.21025
• USDCHF increased 0.00366 or 0.41% to 0.90036

The above data was collected around 12:47 EST.

Some economic news from Europe today:

Euro Zone:

Deposit Facility Rate (Oct) remain the same at 4.00%

ECB Marginal Lending Facility remain the same at 4.75%

ECB Interest Rate Decision (Oct) remain the same at 4.50%

US/AMERICAS:

The US economy grew at a 4.9% annualized pace in Q3 2023, exceeding expectations and marking the biggest gain since Q4 2021. The increase was due to contributions from consumer spending, increased inventories, exports, residential investment, and government spending. Consumer spending increased 4% for the quarter, and gross private domestic investment surged 8.4%. The sales in Boeing’s commercial aircraft unit rose 25% to $7.88 billion from the third quarter of 2022, boosted by deliveries of wide-body 787 Dreamliner planes, though lower 737 deliveries and abnormal production costs led to a negative operating margin of 8.6%. The company’s net loss narrowed to nearly $1.64 billion, or $2.70 a share, for the third quarter compared with the year-earlier period when it had a loss of $3.31 billion, or $5.49 a share.

US Market Closings:

• Dow declined 251.63 points or -0.76% to 32,784.3
• S&P 500 declined 49.54 points or -1.18% to 4,137.23
• Nasdaq declined 225.62 points or -1.76% to 12,595.6
• Russell 2000 advanced 5.57 points or 0.34% to 1,657

Canada Market Closings:

• TSX Composite declined 72.54 points or -0.38% to 18,875.31
• TSX 60 declined 4.67 points or -0.41% to 1,134.36

Brazil Market Closing:

• Bovespa advanced 1,940.32 points or 1.72% to 114,770.29

ENERGY:

The oil markets had a mixed day today:

• Crude Oil decreased 1.487 USD/BBL or -1.74% to 83.903
• Brent decreased 1.583 USD/BBL or -1.76% to 88.547
• Natural gas increased 0.1597 USD/MMBtu or 5.31% to 3.1697
• Gasoline decreased 0.0338 USD/GAL or -1.48% to 2.2504
• Heating oil decreased 0.0037 USD/GAL or -0.12% to 3.0268

The above data was collected around 12:49 EST.

• Top commodity gainers: Natural Gas (5.31%), Palm Oil (2.26%), HRC Steel (7.83%) and Cocoa (2.33%)
• Top commodity losers: Crude Oil (-1.74%), Brent (-1.76%), Sugar (-2.14%) and Zinc (-1.94%)

The above data was collected around 12:57 EST.

BONDS:

Japan 0.885% (+3bp), US 2’s 5.04% (-0.077%), US 10’s 4.8976% (-5.54bps); US 30’s 5.04% (-0.049%), Bunds 2.847% (-4bp), France 3.480% (-3.7bp), Italy 4.868% (-4.8bp), Turkey 25.85% (-5bp), Greece 4.181% (-9.7bp), Portugal 3.569% (-3.4bp); Spain 3.960% (-4.5bp) and UK Gilts 4.584% (-2.9bp)

The above data was collected around 13:07 EST.