Market Talk – February 15, 2024

ASIA:

S&P Global Ratings predicts that funding conditions in India will likely restrict loan growth for many banks, leading to a potential 200 basis points decrease in credit expansion in the next fiscal year. The rating agency anticipates a moderation in system-level credit growth to 14% in FY25, starting April 1, down from about 16% in the first three quarters of FY24, with a corresponding decline in margins. HDFC Bank, India’s largest private lender, is under additional pressure due to its 2023 merger with Housing Development Finance Corp Ltd, resulting in a weakened funding profile. S&P suggests it may take several years for HDFC Bank to return to pre-merger levels. The rating agency expects a slip in system-wide net interest margin to 2.9% in FY25 from 3% in the current fiscal year but believes rated private banks should endure the challenges without a major decline in their credit profile.

The major Asian stock markets had a mixed day today:

• NIKKEI 225 increased 454.62 points or 1.21% to 38,157.94
• Shanghai closed
• Hang Seng increased 65.25 points or 0.41% to 15,944.63
• ASX 200 increased 58.00 points or 0.77% to 7,605.70
• Kospi decreased 6.62 points or -0.25% to 2,613.80
• SENSEX increased 227.55 points or 0.32% to 72,050.38
• Nifty50 increased 70.70 points or 0.32% to 21,910.75

The major Asian currency markets had a mixed day today:

• AUDUSD increased 0.00244 or 0.38% to 0.65144
• NZDUSD increased 0.00179 or 0.29% to 0.61039
• USDJPY decreased 0.544 or -0.36% to 150.006
• USDCNY decreased 0.00435 or -0.06% to 7.21775

The above data was collected around 13:12 EST.

Precious Metals:

• Gold increased 12.04 USD/t oz. or 0.60% to 2,004.43
• Silver increased 0.542 USD/t. oz or 2.42% to 22.912

The above data was collected around 13:15 EST.

EUROPE/EMEA:

Top ministers in Prime Minister Benjamin Netanyahu’s government rejected the idea of Palestinian statehood, responding to a Washington Post report that the United States, Israel’s main ally, was progressing plans for a Palestinian state. The report stated that the U.S. was collaborating with Arab countries, including Egypt, Jordan, UAE, Qatar, and Saudi Arabia, to establish a post-war plan with a clear timeline for a Palestinian state. However, key Israeli officials dismissed the notion, while the Palestinian Ministry of Foreign Affairs insisted that any political initiative not starting with Palestinian statehood at the UN would be doomed to failure.

Shares of smaller AI firms experienced a rally after Nvidia, the leading AI chipmaker, revealed stakes in them, providing insights into its growth strategy. Nvidia’s increasing influence in the AI sector, coupled with its soaring market value, has made it the third most valuable U.S. company. The company’s largest investment, amounting to $147.3 million, was in Arm Holdings, a chip designer that Nvidia attempted to acquire in an $80 billion deal two years ago, but the transaction faced antitrust challenges. Nvidia’s disclosure of its stakes, as of December 31, in a 13F filing on Wednesday, indicates its continued strategic moves and is noteworthy as such filings are typically associated with fund managers rather than public companies.

The major Europe stock markets had a green day today:

• CAC 40 increased 66.07 points or 0.86% to 7,743.42
• FTSE 100 increased 29.13 points or 0.38% to 7,597.53
• DAX 30 increased 101.21 points or 0.60% to 17.046.69

The major Europe currency markets had a mixed day today:

• EURUSD increased 0.00393 or 0.37% to 1.07643
• GBPUSD increased 0.00253 or 0.20% to 1.25903
• USDCHF decreased 0.00559 or -0.63% to 0.88021

The above data was collected around 13:23 EST.

US/AMERICAS:

In January, U.S. retail sales experienced a significant decline, dropping 0.8% from the previous month, more than the expected 0.3% decrease. This decrease was influenced by weak sales in various sectors, including building materials and garden stores, misc. stores, and motor vehicle parts and retailers. The report also highlighted a 1.7% decline in gas station sales due to lower fuel prices. However, there was a 0.7% increase in sales at restaurants and bars but a separate report showed that the cost of dining out is drastically rising. Despite this sharp drop, some economists believe that it does not indicate a fundamental shift in consumer spending.

Additionally, the report showed that initial claims for unemployment insurance decreased to 212,000, indicating a resilient labor market. While the retail sales decline is a cause for concern, consumer spending remains relatively healthy due to a strong labor market and rising household purchasing power as inflation subsides

US Market Closings:

• Dow advanced 348.85 points or 0.91% to 38,773.12
• S&P 500 advanced 29.11 points or 0.58% to 5,029.73
• Nasdaq advanced 47.03 points or 0.3% to 15,906.17
• Russell 2000 advanced 49.38 points or 2.45% to 2,061.48

Canada Market Closings:

• TSX Composite advanced 333.29 points or 1.6% to 21,222.69
• TSX 60 advanced 19.98 points or 1.58% to 1,281.03

Brazil Market Closing:

• Bovespa advanced 754.94 points or 0.59% to 127,773.23

ENERGY:

The oil markets had a mixed day today:

• Crude Oil increased 1.307 USD/BBL or 1.71% to 77.947
• Brent increased 1.219 USD/BBL or 1.49% to 82.819
• Natural gas decreased 0.0064 USD/MMBtu or -0.40% to 1.6026
• Gasoline decreased 0.0091 USD/GAL or -0.39% to 2.3078
• Heating oil increased 0.0278 USD/GAL or 0.99% to 2.8379

The above data was collected around 13:27 EST.

• Top commodity gainers: Crude Oil (1.71%), Silver (2.42%), Palladium (2.15%) and Zinc (2.16%)
• Top commodity losers: Wheat (-3.27%), Palm Oil (-1.85%), Cheese (-1.85%) and Sugar (-2.48%)

The above data was collected around 13:34 EST.

BONDS:

Japan 0.725% (-3.1bp), US 2’s 4.56% (-0.017%), US 10’s 4.2378% (-2.92bps); US 30’s 4.42% (-0.029%), Bunds 2.352% (+0.3bp), France 2.835% (+0.7bp), Italy 3.848% (-1.2bp), Turkey 23.85% (+0bp), Greece 3.385% (-2.3bp), Portugal 3.028% (-1.2bp); Spain 3.261% (-0.6bp) and UK Gilts 4.05% (-0.4p)

The above data was collected around 13:37 EST.