Market Talk – December 11, 2023

ASIA:

Moody’s Investors Service has downgraded the outlook for eight Chinese banks, including major institutions like Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, and China Construction Bank Corporation. This decision followed a similar downgrade of China’s government credit ratings. Additionally, Moody’s lowered Hong Kong’s outlook to negative due to strong political, institutional, economic, and financial connections with mainland China. The list of downgraded banks also includes China Development Bank, Agricultural Development Bank of China, Export-Import Bank of China, and Postal Savings Bank of China Co. These downgrades reflect concerns about China’s increasing debt levels and their potential impact on the country’s GDP growth, signaling uncertainties about the world’s second-largest economy.

The major Asian stock markets had a mixed day today:

• NIKKEI 225 increased 483.94 points or 1.50% to 32,791.80
• Shanghai increased 21.88 points or 0.74% to 2,991.44
• Hang Seng decreased 132.88 points or -0.81% to 16,201.49
• ASX 200 increased 4.10 points or 0.06% to 7,199.00
• Kospi increased 7.51 points or 0.30% to 2,525.36
• SENSEX increased 102.93 points or 0.15% to 69,928.53
• Nifty50 increased 27.70 points or 0.13% to 20,997.10

The major Asian currency markets had a mixed day today:

• AUDUSD decreased 0.00100 or -0.15% to 0.65671
• NZDUSD increased 0.00025 or 0.04% to 0.61235
• USDJPY increased 1.269 or 0.88% to 146.199
• USDCNY increased 0.00856 or 0.12% to 7.19396

The above data was collected around 16:11 EST.

Precious Metals:

• Gold decreased 21.97 USD/t oz. or -1.10% to 1,981.42
• Silver decreased 0.130 USD/t. oz or -0.57% to 22.837

The above data was collected around 16:11 EST.

EUROPE/EMEA:

Euro-area bond yields have recently fallen due to expectations of the European Central Bank implementing significant interest rate cuts next year. The market is pricing in a 25-basis point cut in March and anticipates a total of 150 basis points by 2024. However, this optimism may lead to disappointment for investors as it appears to be ahead of actual developments. German bunds are mirroring the yield decline of US Treasuries, with the latter experiencing a notable drop since mid-October. This decline in yields follows a global shift back into fixed income after a period of low interest in the asset class since April. Additionally, the weakening of the US dollar since early November has further fueled the rise in equities and bonds in the fourth quarter.

The major Europe stock markets had a mixed day today:

• CAC 40 increased 24.98 points or 0.33% to 7,551.53
• FTSE 100 decreased 9.58 points or -0.13% to 7,544.89
• DAX 30 increased 35.21 points or 0.21% to 16.794.43

The major Europe currency markets had a mixed day today:

• EURUSD increased 0.00031 or 0.03% to 1.07641
• GBPUSD increased 0.00106 or 0.08% to 1.25566
• USDCHF decreased 0.00138 or -0.16% to 0.87822

The above data was collected around 16:14 EST.

US/AMERICAS:

This week is expected to be pivotal for central banks throughout the world. The US Federal Reserve will meet this week are the bank is largely expected to hold rates at 5.25%-5.50%. This will be followed by a “Super Thursday” involving the European Central Bank, Bank of England, and others. The markets are keen to decipher the banks’ statements for clues on potential rate cuts in early 2024, as inflation continues to decrease but at a slower than anticipated pace.

US Market Closings:

• Dow advanced 157.06 points or 0.43% to 36,404.93
• S&P 500 advanced 18.07 points or 0.39% to 4,622.44
• Nasdaq advanced 28.51 points or 0.2% to 14,432.49
• Russell 2000 advanced 2.86 points or 0.15% to 1,883.68

Canada Market Closings:

• TSX Composite declined 13.18 points or -0.06% to 20,318.36
• TSX 60 advanced 1.52 points or 0.12% to 1,227.58

Brazil Market Closing:

• Bovespa advanced 46.11 points or 0.08% to 54,439.12

ENERGY:

The oil markets had a mixed day today:

• Crude Oil increased 0.194 USD/BBL or 0.27% to 71.424
• Brent increased 0.373 USD/BBL or 0.49% to 76.213
• Natural gas decreased 0.1412 USD/MMBtu or -5.47% to 2.4398
• Gasoline increased 0.0012 USD/GAL or 0.06% to 2.0510
• Heating oil increased 0.0301 USD/GAL or 1.17% to 2.6111

The above data was collected around 16:15 EST.

• Top commodity gainers: Soybeans (2.36%), Orange Juice (2.69%), Canola (1.98%) and Oat (6.02%)
• Top commodity losers: Wheat (-4.42%), Sugar (-3.81%), Butter (-3.20%) and Natural Gas (-5.47%)

The above data was collected around 16:20 EST.

BONDS:

Japan 0.776% (+0.4bp), US 2’s 4.71% (-0.013%), US 10’s 4.2409% (-0.41bps); US 30’s 4.33% (+0.005%), Bunds 2.254% (-1.4bp), France 2.823% (-0.4bp), Italy 4.068% (+0bp), Turkey 23.83% (-35bp), Greece 3.457% (+0.4bp), Portugal 3.062% (+1.1bp); Spain 3.281% (-1.7bp) and UK Gilts 4.079% (+3.6bp)

The above data was collected around 16:22 EST.