Market Talk – June 9, 2020

Posted Jun 9, 2020 by Martin Armstrong |

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ASIA:

China is warning its students to reconsider plans to study in Australia due to an increase in racist attacks as it steps up a campaign to punish Australia economically for supporting an international probe into coronavirus. The travel warning on Tuesday follows last week’s advice for Chinese tourists to stay away from Australia and is a potential blow for the university sector, which was already expected to lose $12 billion in revenue from Chinese students this year, an online news agency reported.

India is considering raising import taxes on edible oils as the country seeks to become self-reliant by boosting local oilseed production with the help of tax revenues, two government and two industry officials told Reuters. Industry sources told that the tax could be raised by 5% but the decision has not been taken yet. India currently levies 37.5% and 45% import tax respectively on crude and refined palm oil. Imports of crude soybean oil, crude sunflower oil, and rapeseed oil attract 35% import duty.

Indian Oil Corp, India’s top refiner, is seeking to buy up to 24 million barrels of US oil for delivery between October 2020 and March 2021, tender documents showed, as part of its efforts to diversify supply. The move will help IOC to hedge against unpredictable pricing moves by Middle East producers, a source familiar with the matter said.

The major Asian stock markets had a mixed day today:

NIKKEI 225 decreased 87.07 points or -0.38% to 23,091.03
Shanghai increased 18.34 points or 0.62% to 2,956.11
Hang Seng increased 280.45 points or 1.13% to 25,057.22
ASX 200 increased 146.20 points or 2.44% to 6,144.90
Kospi increased 4.63 points or 0.21% to 2,188.92
SENSEX decreased 413.89 points or -1.20% to 33,956.69

The major Asian currency markets had a mixed day today:

AUDUSD decreased 0.0058 or -0.83% to 0.69677
NZDUSD decreased 0.0044 or -0.67% to 0.65231
USDJPY decreased 0.6830 or -0.63% to 107.71
USDCNY increased 0.0201 or 0.28% to 7.07815

Precious Metals:

Gold increased 17.45 USD/t oz. or 1.03% to 1,715.95
Silver decreased 0.04 USD/t. oz or -0.23% to 17.6745

Some economic news from last night:

Japan:

Average Cash Earnings (YoY) decreased from 0.1% to -0.6%

Overall wage income of employees (Apr) decreased from 0.1% to -0.6%

Overtime Pay (YoY) (Apr) decreased from -4.00% to -12.20%

M2 Money Stock (YoY) increased from 3.7% to 5.1%

M3 Money Supply (May) increased from 1,843.1T to 1,856.1T

Australia:

ANZ Job Advertisements (MoM) increased from -53.4% to 0.5%

NAB Business Confidence (May) increased from -46 to -20

NAB Business Survey (May) increased from -34 to -24

EUROPE/EMEA:

The UK government will tell the EU on Friday it is not going to seek an extension to the Brexit transition period, the paymaster general, Penny Mordaunt, has said. She told the House of Commons in an update on Brexit talks that she and Michael Gove would “emphasize that we will not be extending the transition period” when they meet EU counterparts at a Brexit joint committee meeting on Friday.

Germany plans to extend a travel ban for non-European countries until Aug. 31, government sources told Reuters on Tuesday, adding Berlin was also strongly advising against any cruises due to the special risks related to coronavirus. Germany is set to lift a travel ban for European Union member states plus Britain, Iceland, Norway, Liechtenstein, and Switzerland from June 15 as long as there are no entry bans or large-scale lockdowns in those countries. The German cabinet is expected to approve the removal of blanket travel warning for third countries with low infection rates on Wednesday, sources said.

France has unveiled a €15bn support plan for the aerospace industry, warning that 100,000 jobs in the sector are on the line after the Covid-19 pandemic led to worldwide border closures and travel curbs. Airbus chief executive Guillaume Faury welcomed the government’s aid package in the midst of what he described as an “unprecedented crisis”.

The major Europe stock markets had a negative today:

CAC 40 decreased 80.41 points or -1.55% to 5,095.11
FTSE 100 decreased 136.87 points or -2.11% to 6,335.72
DAX 30 decreased 201.60 points or -1.57% to 12,617.99

The major Europe currency markets had a mixed day today:

EURUSD increased 0.0044 or 0.39% to 1.13466
GBPUSD increased 0.0006 or 0.04% to 1.27408
USDCHF decreased 0.0083 or -0.87% to 0.94924

Some economic news from Europe today:

Swiss:

Unemployment Rate n.s.a. (May) increased from 3.3% to 3.4%

Unemployment Rate s.a. (May) increased from 3.1% to 3.4%

Germany:

Gemran Current Account Balance n.s.a (Apr) decreased from 25.6B to 7.7B

German Exports (MoM) (Apr) decreased from -11.7% to -24.0%

German Imports (MoM) (Apr) decreased from -5.0% to -16.5%

German Trade Balance (Apr) decreased from 12.8B to 3.2B

France:

French Current Account (Apr) decreased from -2.80B to -5.40B

French Exports (Apr) decreased from 35.1B to 23.7B

French Imports (Apr) decreased from 38.3B to 28.7B

French Trade Balance (Apr) decreased from -3.2B to -5.0B

Norway:

Norges Bank regional network Survey decreased from 0.83 to 0.08

Euro Zone:

Employment Change (YoY) (Q1) decreased from 1.1% to 0.4%

Employment Change (QoQ) (Q1) decreased from 0.3% to -0.2%

Employment Overall (Q1) increased from 160,363.0K to 160,370.7K

GDP (YoY) (Q1) increased from -3.2% to -3.1%

GDP (QoQ) (Q1) increased from -3.8% to -3.6%

US/AMERICAS:

The Nasdaq reached a record high this Tuesday after pushing past the 10,000 level during midday trading. The tech-heavy Nasdaq’s historical performance today was led by AMD after advancing 6.11%, followed by Netflix (3.33%), Amazon (3.15%), and Apple (3.13%).

Boeing reversed its direction this Tuesday after declining -5.86%, pushing down the Dow. The company announced this Tuesday that cancelations exceeded new orders in May. The airliner delivered only four aircrafts in May compared to six in April, which is an -87% decrease YoY. In the midst of global travel restrictions, Boeing is focusing on its cargo jets and has converted some passenger aircrafts to carry cargo. The International Air Transport Association announced today that the airline industry is expected to decline by $110 billion over the next year.

According to the World Bank, the global economy is expected to decline by -5.2%, marking the worst global recession in 80 years. America, the world’s largest economy, is projected to contract by -6.1% this year. However, the World Bank foresees the US economy recovering in 2021.

The Trump administration launched a $2.96 billion in Emergency Solutions Grants (ESG) to help those facing homelessness or displacement due to job loss, illness, or a decrease in pay. “We are taking care of our nation’s most vulnerable citizens,” President Trump announced.

Canada has increased its orders of personal protective equipment (PPE) in an effort to reopen the economy. Additionally, most of the new PPE will be manufactured in Canada. Prime Minister Trudeau stated that his administration signed a contract for 1.2 million domestically made medical gowns, and a separate contract for 15 million shoe covers and 5 million disinfectant wipes.

US Market Closings:

Dow declined 300.14 points or -1.09% to 27,272.30
S&P 500 declined 25.21 points or -0.78% to 3,207.18
Nasdaq advanced 29.01 points or 0.29% to 9,953.75
Russell 2000 declined 29.84 points or -1.94% to 1,507.05

Canada Market Closings:

TSX Composite declined 141.17 points or -0.88% to 15,833.74
TSX 60 declined 7.43 points or -0.77% to 954.25

Brazil Market Closing:

Bovespa declined 898.12 points or -0.92% to 96,746.55

ENERGY:

Asian refiners had anticipated state oil giant Saudi Aramco would raise July crude prices, despite weak refining margins, to track a jump in Middle East benchmarks, but the increase to Asian buyers was more than expected. Saudi Aramco hiked the selling prices for its crude grades to all destinations for July, a day after OPEC, led by Riyadh, and its allies agreed to extend record output cuts to the end of July. For Asian buyers, Aramco raised the July official selling price (OSP) for its Arab light crude to Asia to plus $0.20 a barrel, up $6.10 from June.

The oil markets had a mixed day today:

Crude Oil increased 0.75 USD/BBL or 1.96% to 38.9400
Brent increased 0.41 USD/BBL or 1.01% to 41.1700
Natural gas decreased 0.046 USD/MMBtu or -2.54% to 1.7670
Gasoline increased 0.001 USD/GAL or 0.08% to 1.2097
Heating oil increased 0.0229 USD/GAL or 2.02% to 1.1540

The above data was collected around 14.34 EST on Tuesday.

Top commodity gainers: Milk (2.04%), Cocoa (2.94%), Live Cattle (2.28%), and Ethanol (11.99%)
Top commodity losers: Palladium (-3.67%), Natural Gas (-2.54%), Rice (-7.87%), and Lumber (-3.56%)

The above data was collected around 14:35 EST on Tuesday.

BONDS:

Japan 0.02%(-2bp), US 2’s 0.21% (-2bps), US 10’s 0.82%(-6bps); US 30’s 1.57%(-9bps), Bunds -0.31% (+1bp), France 0.09% (+4bp), Italy 1.49% (+8bp), Turkey 11.89% (+14bp), Greece 1.47% (+7bp), Portugal 0.63% (+9bp); Spain 0.68% (+12bp) and UK Gilts 0.34% (+1bp).