Market Talk – December 5, 2023

ASIA:

Moody’s has downgraded China’s government credit rating outlook from stable to negative due to concerns about potential lower medium-term economic growth and the ongoing contraction of the property sector. Despite this, Moody’s has affirmed China’s A1 long-term local and foreign-currency issuer ratings. The agency predicts a 4% annual GDP growth for China in 2024 and 2025, with an average of 3.8% from 2026 to 2030.

According to S&P Global Ratings, India is expected to remain the fastest-growing major economy for the next three years, positioning it to become the world’s third-largest economy by 2030. S&P forecasts a 6.4% growth for India in the current fiscal year, with an anticipated increase to 7% by fiscal 2027. In contrast, S&P predicts a slowdown in China’s growth to 4.6% by 2026 from an estimated 5.4% this year. Despite India’s robust 7.6% GDP growth in the second quarter of fiscal 2024, S&P emphasizes that India’s future growth depends on a successful transition to a manufacturing-dominated economy from its current services-dominated structure.

The major Asian stock markets had mixed day today:

• NIKKEI 225 decreased 455.45 points or -1.37% to 32,775.82
• Shanghai decreased 50.62 points or -1.67% to 2,972.30
• Hang Seng decreased 318.19 points or -1.91% to 16,327.86
• ASX 200 decreased 63.10 points or -0.89% to 7,061.60
• Kospi decreased 20.67 points or -0.82% to 2,494.28
• SENSEX increased 431.02 points or 0.63% to 69,296.14
• Nifty50 increased 168.30 points or 0.81% to 20,855.10

The major Asian currency markets had a mixed day today:

• AUDUSD decreased 0.00677 or -1.02% to 0.65513
• NZDUSD decreased 0.00350 or -0.57% to 0.61276
• USDJPY increased 0.037 or 0.03% to 147.237
• USDCNY increased 0.02800 or 0.39% to 7.17537

The above data was collected around 15:07 EST.

Precious Metals:

Gold decreased 9.25 USD/t oz. or -0.46% to 2,020.49

Silver decreased 0.304 USD/t. oz or -1.24%% to 24.185

The above data was collected around 15:07 EST.

EUROPE/EMEA:

ECB board member Isabel Schnabel has suggested that the European Central Bank (ECB) could reconsider further interest rate hikes due to a significant decline in inflation. Schnabel’s comments, signaling a more dovish stance, have increased expectations of a potential rate cut. Eurozone inflation fell to 2.4% from over 10% a year earlier, following ten consecutive rate hikes. The ECB’s 2% inflation target is now closer, raising doubts about the previously suggested two-year period of persistent price growth. Investors have responded to Schnabel’s remarks by anticipating 142 basis points of rate cuts next year, up from 130 basis points the previous day, with the first move expected as early as March. This has led to a drop in bond yields, with German 10-year papers reaching their lowest levels since June.

The major Europe stock markets had a mixed day today:

•  CAC 40 increased 54.40 points or 0.74% to 7,386.99
•  FTSE 100 decreased 23.12 points, or -0.31% to 7,489.84
•  DAX 30 increased 128.35 points or 0.78% to 16,533.11

The major Europe currency markets had a mixed day today:

• EURUSD decreased 0.00528 or -0.49% to 1.07832
• GBPUSD decreased 0.00504 or -0.40% to 1.25816
• USDCHF increased 0.00288 or 0.33% to 0.87548

The above data was collected around 15:08 EST.

US/AMERICAS:

Job openings in the US fell to 8.73 million in October, a decline of 617,000 or 6.6%, marking the lowest level since March 2021, according to the Labor Department’s monthly JOLTS report. The decrease brought the ratio of openings to available workers down to 1.3 to 1, signaling a potential loosening of the historically tight labor market. The figure was well below the 9.4 million estimate from Dow Jones and the lowest since March 2021. The decline in vacancies was widespread across various industries, with the biggest sector decline seen in education and health services, followed by financial activities, leisure and hospitality, and retail.

US Market Closings:

• Dow declined 79.88 points or -0.22% to 36,124.56
• S&P 500 declined 2.6 points or -0.06% to 4,567.18
• Nasdaq advanced 44.42 points or 0.31% to 14,229.91
• Russell 2000 declined 25.98 points or -1.38% to 1,856.04

Canada Market Closings:

• TSX Composite declined 34.28 points or -0.17% to 20,375.93
• TSX 60 advanced 0.28 of a point or 0.02% to 1,230.8

Brazil Market Closing:

• Bovespa advanced 100.46 points or 0.08% to 126,903.25

ENERGY:

The oil markets had a mixed day today:

• Crude Oil decreased 0.599 USD/BBL or -0.82% to 72.441
• Brent decreased 0.718 USD/BBL or -0.92% to 77.312
• Natural gas increased 0.0186 USD/MMBtu or 0.69% to 2.7126
• Gasoline decreased 0.0226 USD/GAL or -1.06% to 2.1116
• Heating oil decreased 0.0203 USD/GAL or -0.76% to 2.6394

The above data was collected around 15:08 EST.

•   Top commodity gainers: Cheese (2.41%), Wheat (5.62%), Butter (1.89%), and Feeder Cattle (1.83%)
•   Top commodity losers: Palladium (-4.19%), Sugar (-3.29%), Cocoa (-3.61%), and Orange Juice (-4.35%)

The above data was collected around 15:13 EST.

BONDS:

Japan 0.675%(-1.5bp), US 2’s 4.57% (-0.083%), US 10’s 4.1725%(-11.35bps); US 30’s 4.31% (-0.127%), Bunds 2.248% (-10.2bp), France 2.801% (-12.2bp), Italy 3.994% (-12.5bp), Turkey 22.99% (-22bp), Greece 3.432% (-10.1bp), Portugal 2.929% (-10bp), Spain 3.257% (-10.8bp) and UK Gilts 4.028% (-16.9bp).

The above data was collected around 15:15 EST.