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Market Talk – August 3, 2022

ASIA:

China announced on Tuesday that its People’s Liberation Army (PLA) would launch a series of targeted military operations on the island in response to House Speaker Nancy Pelosi’s visit to Taiwan and its resolute defense of national sovereignty and territorial integrity. The announcement came shortly after Pelosi landed in Taiwan, the first time in 25 years for a speaker of the US House of Representatives. China considers Taiwan its “breakaway province”. However, Taipei has insisted on its independence since 1949. The PLA’s Eastern Theater Command also announced that it would hold joint military operations around Taiwan, with joint naval and air exercises in the north, southwest and southeast of the island, long-range artillery fire in Taiwan Strait and launched conventional missiles in maritime areas east of the island starting Tuesday evening, China’s Global Times reported.

Japan and the United States plan to combine their economic influence to prevent China from turning its vast resources into strategic victories. Foreign Secretary Antony Blinken, Commerce Secretary Gina Raimondo and their Japanese counterparts stopped short, citing the concept of an “economic NATO” proposed by some US lawmakers and allies. Friday’s meeting fell under the banner of the US-Japan Economic Policy Advisory Committee, a new format for the quartet of diplomatic and economic policymakers to coordinate their efforts to “make our economies more competitive and resilient.”

 

The major Asian stock markets had a mixed day today:

 

  • NIKKEI 225 increased 147.17 points or 0.53% to 27,741.90

 

  • Shanghai decreased 22.59 points or -0.71% to 3,163.67

 

  • Hang Seng increased 77.88 points or 0.40% to 19,767.09

 

  • ASX 200 decreased 22.20 points or -0.32% to 6,975.90

 

  • Kospi increased 21.83 points or 0.89% to 2,461.45

 

  • SENSEX increased 214.17 points or 0.37% to 58,350.53

 

  • Nifty50 increased 42.70 points or 0.25% to 17,388.15

 

The major Asian currency markets had a mixed day today:

 

  • AUDUSD increased 0.00363 or 0.53% to 0.69395

 

  • NZDUSD increased 0.00014 or 0.02% to 0.62574

 

  • USDJPY increased 0.845 or 0.63% to 134.179

 

  • USDCNY decreased 0.01604 or -0.24% to 6.76116

 

Precious Metals:

 

l Gold increased 1.14 USD/t oz. or 0.06% to 1,764.41

 

l Silver increased 0.021 USD/t. oz or 0.11% to 19.988

 

Some economic news from last night:

 

China:

 

Caixin Services PMI (Jul) increased from 54.5 to 55.5

 

Hong Kong:

 

Manufacturing PMI (Jul) decreased from 52.4 to 52.3

 

Japan:

 

Services PMI (Jul) decreased from 54.0 to 50.3

 

South Korea:

 

FX Reserves – USD (Jul) increased from 438.28B to 438.61B

 

Australia:

 

AIG Construction Index (Jul) decreased from 46.2 to 45.3

 

Services PMI decreased from 52.6 to 50.9

 

Retail Sales (MoM) decreased from 0.9% to 0.2%

 

Retail Sales (QoQ) (Q2) increased from 1.0% to 1.4%

 

New Zealand:

 

ANZ Commodity Price Index (MoM) decreased from -0.4% to -2.2%

 

Employment Change (QoQ) (Q2) remain the same at 0.0%

 

Labor Cost Index (YoY) (Q2) increased from 3.1% to 3.4%

 

Labor Cost Index (QoQ) (Q2) increased from 0.7% to 1.3%

 

Participation Rate (Q2) decreased from 70.90% to 70.80%

 

Unemployment Rate (Q2) increased from 3.2% to 3.3%

 

Some economic news from today:

 

India:

 

Nikkei Services PMI (Jul) decreased from 59.2 to 55.5

 

EUROPE/EMEA:

The Bank of England (BoE) has made it clear that it will act forcefully to control record-high inflation, and markets are all but certain of a rare half-percentage-point interest rate hike this Thursday. A 50-basis point increase to 1.75% will be the highest interest rate in 27 years and will accelerate a historic tightening of monetary policy to stifle the highest level of inflation in 40 years. Inflation hit 9.4% in June, and the Bank of England expects it to peak at 11% by the end of the year, well above its 2% target.

The European Central Bank (ECB) prefers CBDCs as a mode of payment across borders over Bitcoin (BTC), banking, and stable coins, among others, a report published by a major online daily reported. While the study featured Bitcoin’s inherent scaling and speed issues, it neglected the upgrades required by Taproot and Lightning Network, which upgraded the network performance, presuming that “The underlying technology (and in particular its ‘proof-of-work’ layer) is inherently expensive and wasteful.” On the contrary, the ECB recognized CBDCs as a more prominent counterpart for cross-border payments having better compatibility with forex exchange(FX) transformations, as its benefits include the safeguarding of monetary power and the comfort of instant payments through middlemen identical to central banks.

 

The major Europe stock markets had a green day:

 

l CAC 40 increased 62.26 points or 0.97% to 6,472.06

 

l FTSE 100 increased 36.57 points or 0.49% to 7,445.68

 

l DAX 30 increased 138.36 points or 1.03% to 13,587.56

 

The major Europe currency markets had a mixed day today:

 

  • EURUSD decreased 0.0003 or -0.03% to 1.01534

 

  • GBPUSD decreased 0.00076 or -0.06% to 1.21429

 

  • USDCHF increased 0.00492 or 0.51% to 0.96232

 

Some economic news from Europe today:

 

Germany:

 

German Exports (MoM) (Jun) increased from 1.3% to 4.5%

 

German Imports (MoM) (Jun) decreased from 3.2% to 0.2%

 

German Trade Balance (Jun) increased from 0.8B to 6.4B

 

German Composite PMI (Jul) decreased from 51.3 to 48.1

 

German Services PMI (Jul) decreased from 52.4 to 49.7

 

Swiss:

 

CPI (MoM) (Jul) decreased from 0.5% to 0.0%

 

CPI (YoY) (Jul) remain the same at 3.4%

 

Spain:

 

Spanish Services PMI (Jul) decreased from 54.0 to 53.8

 

Italy:

 

Italian Composite PMI (Jul) decreased from 51.3 to 47.7

 

Italian Services PMI (Jul) decreased from 51.6 to 48.4

 

Italian Retail Sales (YoY) (Jun) decreased from 6.8% to 1.4%

 

Italian Retail Sales (MoM) (Jun) decreased from 2.0% to -1.1%

 

France:

 

French Government Budget Balance (Jun) increased from -82.3B to -76.1B

 

French S&P Global Composite PMI (Jul) decreased from 52.5 to 51.7

 

French Services PMI (Jul) decreased from 53.9 to 53.2

 

Euro Zone:

 

S&P Global Composite PMI (Jul) decreased from 52.0 to 49.9

 

Services PMI (Jul) decreased from 53.0 to 51.2

 

PPI (YoY) (Jun) decreased from 36.2% to 35.8%

 

PPI (MoM) (Jun) increased from 0.5% to 1.1%

 

Retail Sales (YoY) (Jun) decreased from 0.4% to -3.7%

 

Retail Sales (MoM) (Jun) decreased from 0.4% to -1.2%

 

UK:

 

Composite PMI (Jul) decreased from 53.7 to 52.1

 

Services PMI (Jul) decreased from 54.3 to 52.6

US/AMERICAS:

St. Louis Fed President James Bullard voiced hawkish sentiments this Wednesday has he believes the central bank will need to raise rates once they meet again in September. His message comes as no surprise as the Fed has said they will need to see compelling evidence of inflation declining for multiple months. Bullard, a voting member, would like to see rates rise to 3.75% to 4% by the end of the year. In September, however, he sees another 1.5 percentage point hike.

In more news from the central bank, San Francisco Fed President Mary Daly stressed that the fight on inflation is far from over. “The number of people who can’t afford this week what they paid for with ease six months ago just means our work is far from done,” she told CNBC on Tuesday. Despite recent large rate increases, Daly warned that it is no indication that the Fed will relent before consistent data indicating a decrease in inflationary pressures is available.

US Market Closings:

  • Dow advanced 416.33 points or 1.29% to 38,812.5
  • S&P 500 advanced 63.98 points or 1.56% to 4,155.17
  • Nasdaq advanced 319.4 points or 2.59% to 12,668.16
  • Russell 2000 advanced 26.48 points or 1.41% to 1,908.93

 

Canada Market Closings:

  • TSX Composite advanced 40.61 points or 0.21% to 19,545.94
  • TSX 60 advanced 4.06 points or 0.21% to 19,545.94

 

Brazil Market Closing:

  • Bovespa advanced 412.98 points or 0.4% to 103,774.68

 

ENERGY:

 

The oil markets had a mixed day today:

 

l Crude Oil decreased 3.73 USD/BBL or -3.95% to 90.816

 

l Brent decreased 3.81 USD/BBL or -3.79% to 96.600

 

l Natural gas increased 0.541 USD/MMBtu or 7.02% to 8.2319

 

l Gasoline decreased 0.1542 USD/GAL or -5.04% to 2.9018

 

l Heating oil increased 0.0251 USD/GAL or 0.74% to 3.4042

 

The above data was collected around 14:55 EST on Wednesday

 

l Top commodity gainers: Natural Gas (7.02%), Coffee(2.26%), Orange Juice (2.76%) and Butter (1.94%)

 

l Top commodity losers: Lumber (-4.99%), Cheese (-10.05%), Milk (-10.56%) and Gasoline (-5.04%)

 

The above data was collected around 15:05 EST on Wednesday.

 

BONDS:

 

Japan 0.189%(+1.4bp), US 2’s 3.10% (+0.019%), US 10’s 2.7464% (+0.54bps); US 30’s 2.98% (-0.008%), Bunds 0.8740% (+9.2bp), France 1.4400% (+6.1bp), Italy 3.023% (-0.8bp), Turkey 16.81% (-19bp), Greece 3.046% (+8.9bp), Portugal 1.914% (+4.6bp); Spain 1.984% (+5bp) and UK Gilts 1.9140% (+4.8bp).

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