Market Talk – April 17, 2019

Asia:

China’s GDP rose 6.4% in the first quarter, outperforming many of analysts’ expectations. Some see this as a promising sign for China as last year the GDP decelerated every quarter.

Prime Minister Mahathir of Malaysia has approved a “mega link” project that connects both sides of Malaysia, spanning up toward Thailand, as part of the new Chinese Belt road initiative. Initially, the project was due to commence but it had been postponed due to a scare with regards to the amount of debt it will bring to the country. However, new PM Mahathir announced it will go ahead with the project after estimations of the price tag were reduced from 15.9 billion to 10.7 billion under the new terms. A good bit of business from the Malaysian PM.

The Asian markets had a mixed day today. NIKKEI 225 increased 56.31 points (0.25%) to 22,277.97, and Shanghai increased 9.52 points (0.29%) to 3,263.12. However KOSPI, ASX 200, and Hang Seng took the opposite route. KOSPI decreased 2.74 points (-0.12%) to 2,245.89; ASX 200 decreased 21.00 points (-0.33%) to 6,256.40, and Hang Seng decreased 5.19 points (-0.017%) to 30,124.68.

Most of the major Asian currency markets had a negative day: The AUDUSD decreased 0.00093 or -0.13% to 0.71657; the NZDUSD decreased 0.0048 or 0.71% to 0.6713; and the USDCNY decreased 0.0276 or 0.41% to 6.6846. However, the USDJPY took the opposite route and increased 0.0070 or 0.01% to 111.9970.

Gold decreased 2.76 USD/t oz. or -0.22% to 1,273.31 and silver increased 0.002 USD/t. oz or 0.01% to 14.9961.

Some economic news from Asia:

New Zealand:

• CPI (YoY) (Q1) remain the same at 1.9%
• CPI (QoQ) (Q1) remain the same at 0.1%

Japan:

• Adjusted Trade Balance decreased from 0.03T ro -0.18T
• Exports (YoY) (Mar) decreased from -1.2% to -2.4%
• Imports (YoY) (Mar) increased from -6.6% to 1.1%
• Trade Balance (Mar) increased from 335B to 529B
• Capacity Utilization (MoM) (Feb) increased from -4.0% to 1.0%
• Industrial Production (MoM) (Feb) decreased from 1.4% to 0.7%

Australia:

• MI Leading Index (MoM) increased from 0.0% to 0.2%

Singapore:

• Non-Oil Exports (MoM) (Mar) decreased from 16.00% to -14.30%
• Non-Oil Exports (YoY) (Mar) decreased from 4.80% to -11.70%
• Trade Balance decreased from 5.200B to 3.620B

China:

• Fixed Asset Investment (YoY) (Mar) increased from 6.1% to 6.3%
• GDP (QoQ) (Q1) decreased from 1.5% to 1.4%
• GDP (YoY) (Q1) remain the same at 6.4%
• Industrial Production (YoY) (Mar) increased from 5.3% to 8.5%
• Retail Sales (YoY) (Mar) increased from 8.2% to 8.7%
• Chinese Unemployment Rate decreased from 5.3% to 5.2%

Europe:

A new law in the EU shields whistle blowers from retaliation by creating “safe channels” to allow them to report breaches of EU law. In other news, 100 historians have signed an agreement to reconstruct the history books to strengthen the bond amongst the European countries. They wish to implement “shared memory” works instead of reflecting on divided memories. An attempt to alter the history books could be a solution for future generations to feel more bonded amongst the Europeans.

Latvian Prime Minister made a statement in Strasbourg that he wants to make the Latvian banking system the cleanest in Europe. Last year, a major bank was found aiding money laundering.

Meanwhile, as if there isn’t enough going on, trade tensions are heating up for the EU after the U.S. issued a lengthy list last week of products imported from EU countries that it would target for tariffs – calling out a goal to mitigate $11 billion of impact the U.S. says are caused by EU subsidies for Airbus. In response, the EU today issued its own list of U.S. imports representing $20 billion it could target with tariffs of its own.

There does seem to be large divides amongst the world today. Allies who used to be inseparable are being questioned. Recently, Putin’s ministry announced that they have ceased all cooperation with NATO. During times like this the U.S. and EU should have a stronger bond than ever, but interestingly it seems as if it is weaker than ever with the US questioning the importance of their contributions to NATO. One can hope this will all work itself out, but interesting times indeed.

The major European stock markets had a green day today: CAC 40 increased 34.43 points or 0.62% to 5,563.09; the FTSE 100 increased 1.40 points or 0.02% to 7,471.32; and DAX increased 51.75 points or 0.43% to 12,153.07.

The major Asian currency markets had a mixed day today.  The EURUSD increased 0.0018 or 0.16% to 1,1298, and the USDCHF increased 0.0025 or 0.25% to 1.0103. The GBPUSD took the opposite route and decreased 0.0010 or 0.07% to 1.3039.

Some economic news from Europe:

Italy:

• Italian CPI (MoM) (Mar) remain the same at 0.3%
• Italian CPI (YoY) (Mar) remain the same at 1.0%
• Italian HICP (MoM) (Mar) remain the same at 2.3%
• Italian HICP (YoY) (Mar) remain the same at 1.1%
• Italian Trade Balance (Feb) increased from 0.322B to 3.268B
• Italian Trade Balance EU (Feb) increased from 0.91B ro 1.11B

Eurozone：

• Core CPI (MoM) (Mar) decreased from 1.3% to 1.0%
• Core CPI (YoY) (Mar) remain the same at 0.8%
• CPI (MoM) (Mar) increased from 0.3% to 1.0%
• CPI (YoY) (Mar) remain the same at 1.4%
• CPI ex Tobacco (MoM) (Mar) increased from 0.3% to 1.0%
• CPI ex Tobacco (YoY) (Mar) decreased from 1.4% to 1.3%
• Trade Balance (Feb) increased from 1.5B to 17.9B
• Current Account (Feb)decreased from 37.1B to 26.8B
• Current Account n.s.a. (Feb) increased from 10.6B to 15.5B

UK：

• Core CPI (YoY) (Mar) remain the same at 1.8%
• Core PPI Output (MoM) (Mar) decreased from 0.2% to 0.0%
• Core PPI Output (YoY) (Mar) decreased from 2.3% to 2.2%
• Core RPI (MoM) (Mar) decreased from 0.7% to 0.0%
• Core RPI (YoY) (Mar) remain the same at 2.4%
• CPI (MoM) (Mar) decreased from 0.5% to 0.2%
• CPI (YoY) (Mar) remain the same at 1.9%
• CPIH (YoY) remain the same at 1.8%
• House Price Index (YoY) decreased from 1.7% to 0.6%
• PPI Input (YoY) (Mar) decreased from 4.0% to 3.7%
• PPI Input (MoM) (Mar) decreased from 1.0% to -0.2%
• PPI Output (MoM) (Mar) remain the same at 0.3%
• PPI Output (YoY) (Mar) remain the same at 2.4%
• RPI (MoM) (Mar) decreased from 0.7% to 0.0%
• RPI (YoY) (Mar) decreased from 2.5% to 2.4%

U.S./Americas:

All major U.S. indexes closed in the red today. The Dow remained, essentially, unchanged (-0.01%, closing at 26,449.54); the Nasdaq had a similar day, declining only -0.05%, but was enough to close below the 8,000 mark (7,996.08 close); the S&P 500 lost -0.23% but narrowly remained above the 2,900 mark (2,900.45 close); and the Russell 2000 had the steepest decline of the day, down -0.96% (1,567.60 close).

The healthcare sector declined for the second consecutive day. As mentioned yesterday, the future of the American healthcare system has become a growing concern that is dividing political party lines – and will no doubt play a major role in the 2020 election run-up. Numerous presidential hopefuls, including Bernie Sanders, plan to propose an elimination of privatized healthcare in favor of a government-funded system.

In other news, Netflix beat analysts’ first-quarter expectations, revealing a $0.76 EPS compared to an expected $0.57 EPS. The streaming service added 1.47 million new domestic subscribers in addition to 7.86 million international subscribers. On a YoY basis, the company’s revenue rose 22.2%, and current revenue stands at $4.52 billion. However, the stock closed down -1.31% today, with some expressing concerns of rising competition (e.g. Disney+).

Mortgage applications reached a nine-year high this week. Application volume is up 14% on a YoY basis, and, largely due to lower mortgage rates, refinances are up 26% on a YoY basis. Yet, mortgage rates are beginning to creep back up. The average rate for a 30-year fixed-rate mortgage stood at 4.44% this week compared to 4.40% the week prior.

The USD Index declined -0.04% (last reading 97.01). The USDCAD declined -0.08% (last reading 1.3338).

Jason Kenney and the United Conservative Party won a majority government during yesterday’s provincial election in Alberta, Canada. “Today, our great province has sent a message to Canada and the world: Alberta is open for business,” the new Premier-designate announced. Kenney’s campaign promise was to bring jobs back to Alberta and revive their struggling energy sector. The Trans Mountain pipeline, which runs from Alberta to B.C., has been a hot button issue as many groups have lobbied to prevent an expansion that would create jobs and boost Alberta’s energy market. “With this election, we begin to stand up for ourselves, for our jobs and for our future. Today, we Albertans begin to fight back,” Kenney declared.

The Canadian markets closed in the green today. The TSX Composite gained 42.04 points (+0.25%), closing at 16,544.24, while the TSX 60 gained 2.10 points (+0.21%), closing at 990.61.

Brazil’s Bovespa retreated today, down 1,048.56 points (-1.11%), closing at 93,284.75.

Energy:

The latest EIA report states that US crude stockpiles have fallen by 1.4 million barrels, causing crude oil to hit a 2019 high of 72 USD per barrel. China’s industrials data and growth rate figures have also influenced the crude price today.

The oil markets had a mixed day today. Brent increased 0.13 USD/BBL or 0.18% to 71.7272, and gasoline increased 0.0166 USD/GAL or 0.82% to 2.0520. Crude oil, natural gas, and heating oil took the opposite route. Crude Oil decreased 0.01 USD/BBL or -0.02% to 63.9146; natural gas and heating oil decreased 0.048 USD/MMBtu or -1.87% to 2.5211 and 0.0066 USD/GAL or -0.32% to 2.0714 respectfully.

Top commodity gainers were Palladium (4.00%), Cocoa (1.52%), Oat (1.36%), and Copper (1.35%). The biggest losers were Coffee (-4.09%), Natural Gas (-1.91%), Rubber (-1.83%), and Sugar (-1.52%).

The above data was collected around 13:35 EST time on Wednesday.

Bonds:

Japan -0.01%(+1bp), US 2’s 2.42% (+2bps), US 10’s 2.59%(+4bps), US 30’s 2.99%(+3bps), Bunds 0.08% (+1bp), France 0.43% (+1bp), Italy 2.61% (+1bp), Turkey 17.46% (-4bp), Greece 3.37% (+6bp), Portugal 1.22% (+2bp), Spain 1.11% (+0bp) and UK Gilts 1.24% (+2bp)

German 30-year Bund Auction decreased from 0.740% to 0.680%.