Market Talk – January 16, 2024

ASIA:

In 2023, the Moscow Exchange reported that trading volume in Chinese yuan surpassed that of the U.S. dollar, marking a significant shift in currency dominance. This development is part of Moscow’s de-dollarization strategy in response to Western sanctions on its financial system. The increasing partnership between Moscow and Beijing, characterized as “no limits,” is evident as Russia becomes more reliant on China due to rising energy supplies and purchases of Chinese goods. The yuan’s share in foreign currency trading on the Moscow Exchange grew to almost 42% in 2023, more than tripling from the previous year. Meanwhile, the dollar’s share decreased to 39.5%. China’s use of yuan to buy Russian commodities has notably increased, with two-way trade reaching a record $240 billion in 2023, a 26.3% increase from the previous year.

The major Asian stock markets had a mixed day today:

• NIKKEI 225 decreased 282.61 points or -0.79% to 35,619.18
• Shanghai increased 7.70 points or 0.27% to 2,893.99
• Hang Seng decreased 350.41 points or -2.16% to 15,865.92
• ASX 200 decreased 81.50 points or -1.09% to 7,414.80
• Kospi decreased 28.40 points or -1.12% to 2,497.59
• SENSEX decreased 199.17 points or -0.27% to 73,128.77
• Nifty50 decreased 65.15 points or -0.29% to 22,032.30

The major Asian currency markets had a mixed day today:

• AUDUSD decreased 0.00734 or -1.10% to 0.65866
• NZDUSD decreased 0.0062 or -1.00% to 0.61370
• USDJPY increased 1.424 or 0.98% to 147.154
• USDCNY increased 0.03658 or 0.51% to 7.21988

The above data was collected around 11:12 EST.

Precious Metals:

• Gold decreased 14.71 USD/t oz. or -0.72% to 2,039.78
• Silver decreased 0.147 USD/t. oz or -0.64% to 23.052

The above data was collected around 11:22 EST.

EUROPE/EMEA:

The European Central Bank (ECB) is expected to lower interest rates from record highs in the coming year, following the end of its rapid interest rate hike cycle in September. However, policymakers are uncertain about the timing of these rate cuts, despite market expectations for an early and aggressive policy reversal. The debate revolves around when the ECB will make the first cut to its record-high 4% deposit rate. Policymakers expressed diverse views on Tuesday, reflecting the uncertainty regarding interest rates and the unexpected fluctuations in both the rapid surge and decline of inflation in the post-pandemic period. While markets are pricing in six rate cuts for the year, with the first anticipated in March or April, some policymakers reject this timeline as too aggressive. A recent ECB survey revealed a decline in consumer inflation expectations, supporting a more dovish stance, with households expecting prices to grow by 3.2% in the next 12 months, down from 4.0% a month earlier, and expectations for inflation three years ahead decreasing to 2.2% from 2.5%.

The major Europe stock markets had a negative day today:

• CAC 40 decreased 13.68 points or -0.18% to 7,398.00
• FTSE 100 decreased 36.57 points or -0.48% to 7,558.34
• DAX 30 decreased 50.54 points or -0.30% to 16.571.68

The major Europe currency markets had a mixed day today:

• EURUSD decreased 0.00545 or -0.50% to 1.08935
• GBPUSD decreased 0.00495 or -0.39% to 1.26755
• USDCHF increased 0.00405 or 0.47% to 0.85945

The above data was collected around 11:24 EST.

US/AMERICAS:

A federal judge has blocked JetBlue Airways’ acquisition of Spirit Airlines, a move that is seen as a significant victory for the U.S. Justice Department. The DOJ had filed a lawsuit to stop the merger, arguing that it would be anticompetitive and lead to higher fares for consumers, particularly those who rely on ultra-low-cost carriers. The proposed $3.8 billion purchase, which would have created the fifth-largest airline in the U.S., was contested on the grounds that it would reduce competition and consumer choice. The decision is part of the Justice Department’s broader efforts to prevent what it views as anticompetitive consolidation in the airline industry. The Biden administration has been actively opposing consolidation in the airline industry, as evidenced by its recent legal challenges against such mergers.

US Market Closings:

• Dow declined 231.86 points or -0.62% to 37.361.12
• S&P 500 declined 17.85 points or -0.37% to 4,765.98
• Nasdaq declined 28.41 points or -0.19% to 14,944.35
• Russell 2000 declined 23.66 points or 1.21% to 1,927.3

Canada Market Closings:

• TSX Composite declined 113.79 points or -0.54% to 20,948.09
• TSX 60 declined 5.84 points or -0.46% to 1,263.8

Brazil Market Closing:

• Bovespa declined 2,226.87 points or -1.69% to 129,294.04

ENERGY:

The oil markets had a mixed day today:

• Crude Oil decreased 0.129 USD/BBL or -0.18% to 72.483
• Brent decreased 0.032 USD/BBL or -0.04% to 78.118
• Natural gas decreased 0.098 USD/MMBtu or -3.17% to 2.9912
• Gasoline increased 0.0211 USD/GAL or 0.99% to 2.1453
• Heating oil increased 0.0501 USD/GAL or 1.89% to 2.7031

The above data was collected around 11:29 EST.

• Top commodity gainers: Heating Oil (1.89%), Sugar (3.15%), Coffee (2.72%) and Potatoes (3.98%)
• Top commodity losers: Palladium (-3.08%), HRC Steel (-2.80%), Wheat (-2.71%) and Natural Gas (-3.17%)

The above data was collected around 11:36 EST.

BONDS:

Japan 0.605% (+4.7bp), US 2’s 4.21% (+0.075%), US 10’s 4.0410% (+9.1bps); US 30’s 4.28% (+0.085%), Bunds 2.222% (+2.4bp), France 2.749% (+1.4bp), Italy 3.827% (+1.4bp), Turkey 24.78% (+7bp), Greece 3.326% (-0.3bp), Portugal 2.9590% (+2.5bp); Spain 3.173% (+1.8bp) and UK Gilts 3.801% (+0.2bp)