Market Talk – February 20, 2024

ASIA:

China’s central bank, the People’s Bank of China, has reduced the five-year loan prime rate, a mortgage benchmark, by 25 basis points to 3.95% from 4.2%. This significant cut, the largest ever, aims to boost the struggling housing market. The move, which exceeded market expectations, follows the release of 1 trillion yuan ($139 billion) for lending on Feb. 5 by reducing commercial banks’ reserve obligations. This is the first time since December 2021 that both the reserve requirement ratio and the loan prime rate have been lowered in the same month. The Shanghai-listed stocks responded positively to the announcement.

The major Asian stock markets had a mixed day today:

• NIKKEI 225 decreased 106.77 points or -0.28% to 38,363.61
• Shanghai increased 12.19 points or 0.42% to 2,922.73
• Hang Seng increased 91.90 points or 0.57% to 16,247.51
• ASX 200 decreased 6.10 points or -0.08% to 7,659.00
• Kospi decreased 22.47 points or -0.84% to 2,657.79
• SENSEX increased 349.24 points or 0.48% to 73,057.40
• Nifty50 increased 74.70 points or 0.34% to 22,196.95

The major Asian currency markets had a mixed day today:

• AUDUSD increased 0.00141 or 0.22% to 0.65511
• NZDUSD increased 0.00227 or 0.37% to 0.61697
• USDJPY decreased 0.142 or -0.09% to 149.968
• USDCNY decreased 0.0088 or -0.12% to 7.20200

The above data was collected around 13:31 EST.

Precious Metals:

l     Gold increased 10.19 USD/t oz. or 0.51% to 2,027.82

l     Silver increased 0.127 USD/t. oz or 0.55% to 23.087

The above data was collected around 13:34 EST.

EUROPE/EMEA:

The United Kingdom entered a technical recession in the second half of the previous year, as confirmed by official figures from the Office for National Statistics (ONS). The data reveals that the UK’s gross domestic product (GDP) contracted by 0.1 percent in the third quarter and further declined by 0.3 percent in the last three months of 2023, marking two consecutive quarters of negative economic growth.

According to the Bank of England governor, Andrew Bailey, the United Kingdom is displaying signs of recovery from its mild recession. Bailey anticipates that the country’s economy will receive a boost when interest rates start to decrease later in the year. Despite accusations of being “behind the curve” for not cutting borrowing costs amid falling inflation, Bailey emphasized that rate cuts are forthcoming. He clarified that there is no requirement for inflation to return to target before implementing interest rate cuts, responding to pressure from Conservative members of the Treasury committee regarding the UK’s recession in the second half of 2023.

The major Europe stock markets had a mixed day today:

• CAC 40 increased 26.67 points or 0.34% to 7,795.22
• FTSE 100 decreased 9.29 points or -0.12% to 7,719.21
• DAX 30 decreased 23.83 points or -0.14% to 17.068.43

The major Europe currency markets had a mixed day today:

• EURUSD increased 0.00303 or 0.28% to 1.08073
• GBPUSD increased 0.00302 or 0.24% to 1.26232
• USDCHF decreased 0.00054 or -0.06% to 0.88156

The above data was collected around 13:39 EST.

US/AMERICAS:

Capital One has announced its plan to acquire Discover Financial Services for $35 billion in an all-stock transaction, which would make it the largest U.S. credit card company by loan volume. The deal is expected to create a more formidable player in the credit card and payment industries, challenging the dominance of Visa and Mastercard. The acquisition would also allow Capital One to access Discover’s payment processing network, potentially increasing its revenue from transaction fees. However, the deal is subject to regulatory approval, and consumer groups are likely to scrutinize its potential impact on competition and consumer welfare. If completed, the acquisition could lead to significant changes in the credit card and payment sectors, as well as in the competitive landscape for financial services.

US Market Closings:

• Dow declined 64.19 points or -0.17% to 38,563.8
• S&P 500 declined 30.06 points or -0.6% to 4,975.51
• Nasdaq declined 144.87 points or -0.92% to 15,630.78
• Russell 2000 declined 28.6 points or -1.41% to 2,004.15

Canada Market Closings:

• TSX Composite declined 38.08 points or -0.18% to 21,217.53
• TSX 60 declined 0.68 of a point or -0.05% to 1,282.51

Brazil Market Closing:

• Bovespa advanced 780.03 points or 0.6% to 129,815.77

ENERGY:

The oil markets had a mixed day today:

• Crude Oil decreased 0.937 USD/BBL or -1.19% to 77.523
• Brent decreased 0.832 USD/BBL or -1.00% to 82.728
• Natural gas increased 0.0219 USD/MMBtu or 1.41% to 1.5774
• Gasoline decreased 0.0275 USD/GAL or -1.19% to 2.2828
• Heating oil decreased 0.0771 USD/GAL or -2.73% to 2.7424

The above data was collected around 13:41 EST.

• Top commodity gainers: Wheat (3.98%), Coffee (3.72%), Cocoa (5.84%) and Palladium (2.98%)
• Top commodity losers: Steel (-3.19%), Methanol (-1.93%), Heating Oil (-2.73%) and Cotton (-2.56%)

The above data was collected around 13:49 EST.

BONDS:

Japan 0.731% (+0bp), US 2’s 4.60% (-0.053%), US 10’s 4.2596% (-6.09bps); US 30’s 4.43% (-0.047%), Bunds 2.379% (-3.2bp), France 2.855% (-3.1bp), Italy 3.868% (-3.8bp), Turkey 23.57% (+4bp), Greece 3.372% (-3bp), Portugal 3.055% (-1.3bp); Spain 3.292% (-2.5bp) and UK Gilts 4.049% (-6.1p)

The above data was collected around 13:55 EST.