Market Talk – March 6, 2019

Asia:

Another positive day for Chinese stocks. The Shanghai Composite added 47 points (1.54%) to 3101, the highest closing since June 7th 2018. The SENSEX increased 190 points (0.52%) to 36633, Hang Seng and ASX200 rose 76 points (0.26%) to 29,038 and 46.3 points (0.75%) to 6,246 respectfully. However, both the NIKKEI 225 and KOSPI took the opposite route decreasing 129.47 (-0.60%) to 21,597 and 5 (-0.23%) to 2174 respectfully.

Most of the major Asia and Pacific currencies decreased against the USD. Weak GDP growth in Australia was one proponent, causing the AUD to hit an 8-week low, losing 0.8% to 0.7026. The NZD decreased 0.0016 or 0.24% to 0.6773.  The CNY increased 0.0118 or 0.18% to 6.7159 and The HKD increased 0.0002 or 0.00% to 7.8498. The JPY took the opposite direction decreasing 0.2060 or 0.18% to 111.6840.

The Gold and Silver prices following the down trend, dropped again today with Gold decreasing 0.93 USD/t oz. or 0.07% to 1,288.35 and Silver decreasing 0.06 USD/t. oz or 0.41% to 15.05.

Europe:

The European Union states they have “no solution” to break the Brexit deadlock with the UK. In other news the EU appears to be abandoning plans for a tax on digital services, which at one point would have impacted Apple’s sales along with the likes of Amazon, Google, and Facebook.

A mixed day for European stocks: the FTSE 100 increased 12 points or 0.16% to 7195, CAC 40 and DAX took the opposite direction decreased 8 points or 0.15% to 5289 and 32 points or 0.27% to 11589 respectfully.

The GBP and CHF decreased 0.0040 or 0.31% to 1.3135 and 0.0007 or 0.07% to 1.0047 respectfully. The EUR increased 0.0014 or 0.12% to 1.1320.

U.S./Americas:

Wall Street had a weak performance after all major U.S. indexes closed in the red for the third consecutive day. The Dow (-0.52%, 25673.46 close), S&P 500 (-0.65%, 2771.45 close) and Nasdaq Composite (-0.93%, 7505.92 close) each had rough days, while the Russell 2K suffered the largest decline on a percentage basis (-2.01%, 1536.82 close).

The hunt for taxes and revenue continue in Washington, as Democratic Senator Brian Schatz proposed a 0.1% tax rate on stocks, bonds, and derivatives. Supporters claim the tax could raise approximately $750 billion over the course of ten years. Other countries have applied similar taxes, and if implemented as currently described, the tax would apply to every trade made within the United States at the time of purchase (not sale, which is where capital gains tax would apply). Logic would dictate this is very far off of anything that could eventually make its way into a law, but it is reflective of how far “progressives” on the far left are willing to go.

The USD Index remained unchanged from Tuesday’s session (96.87). The USD/CAD rose +0.67% (1.3435).

Canada’s central bank announced today that the interest rate will remain unchanged at 1.75%. In an official statement, the bank noted ongoing geopolitical concerns as a major factor in their decision: “Recent data suggest that the slowdown in the global economy has been more pronounced and widespread than the Bank had forecast in its January Monetary Policy Report (MPR). While the sources of moderation appear to be multiple, trade tensions and uncertainty are weighing heavily on confidence and economic activity.”

Furthermore, the central bank cited that exports and business investments “fell short of expectations.” The statement further projected weaker than anticipated growth for the first half of the year. “After growing at a pace of 1.8 per cent [sic] in 2018, it now appears that the economy will be weaker in the first half of 2019 than the Bank projected in January.”

Canadian indexes remained relatively undisturbed by the news. The TSX Composite closed at 16092.07 (+0.03%), while the TSX 60 had a slightly better day, closing at 960.51 (+0.15%).

Brazil’s Bovespa continued its decline today after falling another -0.41% (94216.87 close).

Energy:

Oil markets declined today due to the EIA report signaling there is a large buildup of Crude, the price subsequently decreased 0.43 USD/BBL or 0.76% to 56.11 and Brent decreased 0.02 USD/BBL or 0.03% to 65.75.

Top commodity losers are Bitumen (-2.02%), Steel (-1.84%) and Cotton (-1.58%). Gains are led by Oat (1.07%), Lean Hogs (0.99%) and Ethanol (0.97%).

Bonds:

Japan’s 30-year JGB Auction sold at 0.590%. UK’s 5-year Treasury Gilt Auction sold at 0.966%, lower than previous sale at 1.018%.

Japan 0.00%(+0bp), US 2’s 2.53% (-2bps), US 10’s 2.70%(-2bps), US 30’s 3.08%(-1bps), Bunds 0.14% (-3bp), France 0.51% (-5bp), Italy 2.63% (-8bp), Turkey 14.94% (+20bp), Greece 3.76% (+6bp), Portugal 1.43% (-3bp), Spain 1.13% (-4bp) and UK Gilts 1.24% (-5bp).