Market Talk – May 26, 2023

ASIA:

Core consumer inflation in Tokyo, Japan’s capital, slowed down in May. However, an important inflation index that excludes the impact of fuel reached a four-decade high, indicating increasing price pressure. This could potentially maintain expectations of a withdrawal from the current loose monetary policy. The Tokyo core consumer price index, which excludes volatile fresh food but includes fuel costs, increased by 3.2% in May compared to the previous year, aligning with the market forecast of 3.3%. Although inflation decreased from the previous month’s 3.5%, it remained above the Bank of Japan’s target of 2% for a full year, supported by steady food price gains counterbalancing the decline in fuel costs. Additional data revealed that the prices charged by service companies to each other rose by 1.6% in April compared to the previous year, marking the 26th consecutive month of gains. This was attributed to the reopening of the economy after pandemic restrictions, which boosted tourism demand.

The major Asian stock markets had a green day today:

• NIKKEI 225 increased 115.18 points or 0.37% to 30,916.31
• Shanghai increased 11.24 points or 0.35% to 3,212.50
• Hang Seng closed
• ASX 200 increased 16.60 points or 0.23% to 7,154.80
• Kospi increased 4.12 points or 0.16% to 2,558.81
• SENSEX increased 629.07 points or 1.02% to 62,501.69
• Nifty50 increased 178.20 points or 0.97% to 18,499.35

The major Asian currency markets had a mixed day today:

• AUDUSD increased 0.00089 or 0.14% to 0.65149
• NZDUSD decreased 0.00171 or -0.28% to 0.60449
• USDJPY increased 0.507 or 0.36% to 140.557
• USDCNY decreased 0.01805 or -0.25% to 7.07275

Precious Metals:

• Gold increased 3.90 USD/t oz. or 0.20% to 1,944.24
• Silver increased 0.475 USD/t. oz or 2.08% to 23.245

Some economic news from last night:

Japan:

Tokyo Core CPI (YoY) (May) decreased from 3.5% to 3.2%

CPI Tokyo Ex Food and Energy (MoM) (May) decreased from 0.7% to 0.2%

Australia:

Retail Sales (MoM) (Apr) decreased from 0.4% to 0.0%

Some economic news from today:

Japan:

Coincident Indicator (MoM) increased from 0.0% to 0.1%

Leading Index (MoM) increased from -0.7% to -0.5%

Leading Index decreased from 98.0 to 97.7

India:

FX Reserves, USD decreased from 599.53B to 593.48B

EUROPE/EMEA:

Irish central bank chief Gabriel Makhlouf stated that the European Central Bank (ECB) is considering two more rate hikes, although the timing of future increases remains uncertain due to persistent inflation. The ECB has already raised rates by 375 basis points since July of the previous year, and discussions now revolve around determining when to stop tightening monetary policy in order to bring the euro zone’s inflation back to the ECB’s 2% target. On the other hand, France’s Francois Villeroy de Galhau expressed a more nuanced perspective, suggesting that peak rates should be reached by the end of September or within the next three meetings. Market expectations currently imply around 65 basis points of rate hikes in the coming months, indicating a belief in further increases.

The major Europe stock markets had a green day today:

• CAC 40 increased 89.91 points or 1.24% to 7,319.18
• FTSE 100 increased 56.33 points or 0.74% to 7,627.20
• DAX 30 increased 190.17 points or 1.20% to 15,983.97

The major Europe currency markets had a mixed day today:

• EURUSD increased 0.00025 or 0.02% to 1.07215
• GBPUSD increased 0.00231 or 0.19% to 1.23441
• USDCHF decreased 0.00023 or -0.03% to 0.90527

Some economic news from Europe today:

UK:

Core Retail Sales (MoM) (Apr) increased from -1.4% to 0.8%

Core Retail Sales (YoY) (Apr) increased from -4.0% to -2.6%

Retail Sales (YoY) (Apr) increased from -3.9% to -3.0%

Retail Sales (MoM) (Apr) increased from -1.2% to 0.5%

Swiss:

Employment Level (Q1) decreased from 5.398M to 5.389M

France:

France Jobseekers Total increased from 2,789.0K to 2,799.8K

US Market Closings:

• Dow advanced 328.69 points or 1% to 33,093.34
• S&P 500 advanced 54.19 points or 1.31% to 4,205.47
• Nasdaq advanced 277.59 points or 2.19% to 12,975.69
• Russell 2000

Canada Market Closings:

• TSX Composite
• TSX 60

Brazil Market Closing:

• Bovespa

US/AMERICAS:

A key gauge for the Federal Reserve showed that inflation rose 0.4% in April and 4.7% from a year ago. This is the highest level since 1990. However, the pace of the increase provided some hope that the cost of living will head lower later this year. The consumer price index, which measures the cost of a broad swath of goods and services, increased 0.4% for the month, in line with the Dow Jones estimate, according to a Labor Department report. The report also showed that inflation has been persistent despite the Fed’s efforts to bring down prices. The CPI reading has cooled considerably since peaking out around 9% in June 2022. However, inflation remains a concern for the economy.

US Market Closings:

• Dow advanced 328.69 points or 1% to 33,093.34
• S&P 500 advanced 54.17 points or 1.3% to 4,205.45
• Nasdaq advanced 277.59 points or 2.19% to 12,975.69
• Russell 2000 advanced 18.41 points or 1.05% to 1,773.02

Canada Market Closings:

• TSX Composite advanced 146.23 points or 0.74% to 19,920.31
• TSX 60 advanced 9.17 points or 0.77% to 1,99.35

Brazil Market Closing:

• Bovespa advanced 851.13 points or 0.77% to 110,905,95.51

ENERGY:

The oil markets had a mixed day today:

• Crude Oil increased 0.645 USD/BBL or 0.90% to 72.475
• Brent increased 0.491 USD/BBL or 0.64% to 76.751
• Natural gas decreased 0.0433 USD/MMBtu or -1.75% to 2.4327
• Gasoline increased 0.0224 USD/GAL or 0.84% to 2.6959
• Heating oil increased 0.0445 USD/GAL or 1.90% to 2.3907

The above data was collected around 13:08 EST on Friday

• Top commodity gainers: Cotton (3.81%), Rice (2.71%), Zinc (3.15%) and Potatoes (4.00%)
• Top commodity losers: Lean Hogs (-1.46%), Soda Ash (-2.59%), Natural Gas (-1.75%) and Cheese (-1.55%)

The above data was collected around 13:15 EST Friday.

BONDS:

Japan 0.419% (-0.8bp), US 2’s 4.56% (+0.054%), US 10’s 3.8061% (-0.89bps); US 30’s 3.97% (-0.037%), Bunds 2.53% (+4.1bp), France 3.102% (+0.2bp), Italy 4.369% (-1.8bp), Turkey 9.04% (+15bp), Greece 3.985% (+9.6bp), Portugal 3.305% (+5.8bp); Spain 3.591% (+1.3bp) and UK Gilts 4.328% (-4.9bp).

The post Market Talk – May 26, 2023 first appeared on Armstrong Economics.