Market Talk – July 7, 2023

ASIA:

Singapore’s central bank, the Monetary Authority of Singapore (MAS), has provided a somber assessment of the country’s economy. The MAS predicts ongoing challenges, including sluggish growth, inflation, and the possibility of a technical recession. Although the MAS has lowered its inflation forecast for 2023, it acknowledges that the battle against rising consumer prices is far from over. Hopes for a post-pandemic economic rebound in China boosting Singapore’s growth have diminished, as China’s economic recovery slows down. Singapore’s economy contracted in the first quarter, and the MAS expects weak growth in the near term, with key sectors like manufacturing and financial services remaining stagnant. The global economy is also anticipated to slow down in the second half of 2023.

The major Asian stock markets had a negative day today:

•  NIKKEI 225 decreased 384.60 points or -1.17% to 32,388.42
•  Shanghai decreased 8.97 points or -0.28% to 3,196.61
•  Hang Seng decreased 167.35 points or -0.90% to 18,365.70
•  ASX 200 decreased 121.10 points or -1.69% to 7,042.30
•  Kospi decreased 29.58 points or -1.16% to 2,526.71
•  SENSEX decreased 505.19 points or -0.77% to 65,280.45
•  Nifty50 decreased 165.50 points or -0.85% to 19,331.80

The major Asian currency markets had a mixed day today:

•  AUDUSD increased 0.00598 or 0.90% to 0.66848
•  NZDUSD increased 0.00534 or 0.87% to 0.62084
•  USDCNY decreased 0.02814 or -0.39% to 7.22616

Precious Metals:

Gold increased 18.34 USD/t oz. or 0.96% to 1,929.14

Silver increased 0.324 USD/t. oz or 1.42%% to 23.064

Some economic news from last night:

Japan:

Household Spending (YoY) (May) increased from -4.4% to -4.0%

Household Spending (MoM) (May) increased from -1.3% to -1.1%

Some economic news from today:

China:

FX Reserves (USD) (Jun) increased from 3.177T to 3.193T

India:

FX Reserves, USD decreased from 596.10B to 595.05B

EUROPE/EMEA:

Germany’s hopes for a swift economic recovery have been dampened by a surprising decline in industrial production. Data from the federal statistical office showed a 0.2% drop in output in May compared to the previous month, contrary to analysts’ expectations of stagnation. This decrease serves as a reminder of the challenges Germany faces in overcoming a recession, despite a slight increase in May orders that sparked some optimism. Carsten Brzeski, chief economist at ING, highlighted factors such as a bleak outlook, low order volumes, the need for inventory buildup, and structural issues like the conflict in Ukraine and the shift toward cleaner energy as contributing to the difficult situation.

The major Europe stock markets had a mixed day today:

•   CAC 40 increased 29.59 points or 0.42% to 7,111.88
•   FTSE 100 decreased 23.56 points, or -0.32% to 7,256.94
•   DAX 30 increased 74.86 points or 0.48% to 15,603.40

The major Europe currency markets had a mixed day today:

•  EURUSD increased 0.00711 or 0.65% to 1.09581
•  GBPUSD increased 0.00976 or 0.77% to 1.28376
•  USDCHF decreased 0.00573 or -0.64% to 0.88927

Some economic news from Europe today:

UK:

Halifax House Price Index (YoY) (Jun) decreased from -1.1% to -2.6%

Halifax House Price Index (MoM) (Jun) increased from -0.2% to -0.1%

Labour Productivity (Q1) decreased from 0.4% to -1.4%

Mortgage Rate (GBP) (Jun) increased from 7.44% to 7.54%

Swiss:

Unemployment Rate n.s.a. (Jun) remain the same at 1.9%

Germany:

German Industrial Production (MoM) (May) decreased from 0.3% to -0.2%

US/AMERICAS:

The Securities and Exchange Commission (SEC) is seeking a rule change that could cause fund managers to take less risk. The proposed rule would amend the current rules for open-end management investment companies regarding liquidity risk management programs. The rule and form amendments would change how funds manage their liquidity risks. Mutual funds would be required to implement liquidity management tools, and provide for more timely and detailed reporting of fund information. The proposal seeks to improve these funds’ liquidity classifications by establishing new minimum standards for classification analyses, including some that incorporate stressed conditions, and by updating the liquidity categories to limit the extent of a fund’s investments in securities that do not settle within seven days. These changes are designed to help better prepare funds for stressed conditions and prevent funds from over-estimating the liquidity of their investments. The SEC’s proposed rule change is part of a broader effort to improve the regulatory framework governing funds’ use of derivatives and to establish a systematic approach that more meaningfully limits fund risk-taking.

US Market Closings:

• Dow declined 187.38 points or -0.55% to 33,734.88
• S&P 500 declined 12.64 points or -0.29% to 4,398.95
• Nasdaq declined 18.33 points or -0.13% to 13,660.72
• Russell 2000 advanced 22.43 points or 1.22% to 1,864.66

Canada Market Closings:

• TSX Composite advanced 20.35 points or 0.1% to 19,831.04
• TSX 60 declined -0.82 of a point or -0.07% to 1,191.69

Brazil Market Closing:

• Bovespa advanced 1,472.29 points or 1.25% to 118,897.99

ENERGY:

The oil markets had a green day today:

•   Crude Oil increased 1.119 USD/BBL or 1.56% to 72.919
•   Brent increased 1.218 USD/BBL or 1.59% to 77.728
•   Natural gas increased 0.0075 USD/MMBtu or 0.29% to 2.6165
•   Gasoline increased 0.0379 USD/GAL or 1.49% to 2.5817
•   Heating oil increased 0.082 USD/GAL or 3.31% to 2.5614

The above data was collected around 11:54 EST on Friday.

Top commodity gainers: Heating Oil (3.31%), Brent (1.59%), Coffee (1.63%), and Sugar (1.63%)

Top commodity losers: Rice (-1.13%), Soybeans (-1.47%), Palm Oil (-1.97%), and Steel (-1.58%)

The above data was collected around 11:59 EST on Friday.

BONDS:

Japan 0.441%(+3.5bp), US 2’s 4.93% (-0.077%), US 10’s 4.0356%(-0.54bps); US 30’s 4.03% (+0.022%), Bunds 2.636% (+0.8bp), France 3.188% (-0.3bp), Italy 4.362% (-3.2bp), Turkey 16.22% (-6bp), Greece 3.989% (+3.1bp), Portugal 3.385% (+0.4bp), Spain 3.689% (-1.5bp) and UK Gilts 4.648% (-1.2bp).