Market Talk – August 11, 2020

Posted Aug 11, 2020 by Martin Armstrong |

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ASIA:

China will continue to implement its part of the phase one trade deal with the United States and will fulfill financial opening-up pledges despite worsening bilateral relations between the world’s two largest economies, China’s central bank governor said in an interview with the official Xinhua news agency. US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin, who led the US negotiating team, are expected to hold a video conference with Vice-Premier Liu He this week to review the implementation of the deal.

China is stepping up military drills around East Asia as a war of words with the United States heats up over Washington’s military activities and the visit of a US cabinet secretary to Taiwan. Beijing has stepped up the pace of its war games in recent weeks, after the US sent two aircraft carrier strike groups on rare dual-carrier exercises in the South China Sea twice in the month of July.

Business sentiment among workers in Japan with jobs sensitive to economic trends in July almost returned to levels seen before the coronavirus outbreak, as social and economic activities gradually resumed, government data showed Tuesday. The diffusion index of confidence among “economy watchers” such as taxi drivers and restaurant staff, released by the Cabinet Office, rose 2.3 points from June to 41.1, compared with 41.9 logged in January when the fallout from the virus outbreak in China was yet to be felt in Japan.

The major Asian stock markets had a mixed day today:

NIKKEI 225 increased 420.30 points or 1.88% to 22,750.24
Shanghai decreased 38.96 points or -1.15% to 3,340.29
Hang Seng increased 513.25 points or 2.11% to 24,890.68
ASX 200 increased 28.50 points or 0.47% to 6,138.70
Kospi increased 32.29 points or 1.35% to 2,418.67
SENSEX increased 224.93 points or 0.59% to 38,407.01
Nifty50 increased 52.35 points or 0.46% to 11,322.50

The major Asian currency markets had a mixed day today:

AUDUSD decreased 0.00025 or -0.03% to 0.71507
NZDUSD decreased 0.00072 or -0.11% to 0.65847
USDJPY increased 0.66 or 0.62% to 106.66
USDCNY decreased 0.01951 or -0.28% to 6.94185

Precious Metals:

Gold decreased 106.75 USD/t oz. or -5.26% to 1,922.55
Silver decreased 3.68 USD/t. oz or -12.63% to 25.454

Some economic news from last night:

Japan:

Adjusted Current Account increased from 0.82T to 1.05T

Bank Lending (YoY) (Jul) increased from 6.2% to 6.3%

Current Account n.s.a. (Jun) decreased from 1.177T to 0.168T

Australia:

NAB Business Confidence (Jul) decreased from 0 to -14

NAB Business Survey (Jul) increased from -8 to 0

New Zealand:

Electronic Card Retail Sales (YoY) (Jul) increased from 8.0% to 11.4%

Electronic Card Retail Sales (MoM) (Jul) decreased from 15.6% to 1.1%

Indonesia:

Retail Sales (YoY) (Jun) increased from -20.6% to -17.1%

Singapore:

GDP (YoY) (Q3) decreased from -12.6% to -13.2%

GDP (QoQ) (Q3) decreased from -2.1% to -42.9%

Some economic news from today:

China:

M2 Money Stock (YoY) (Jul) decreased from 11.1% to 10.7%

New Loans (Jul) decreased from 1,810.0B to 992.7B

Outstanding Loan Growth (YoY) (Jul) decreased from 13.2% to 13.0%

Chinese Total Social Financing (Jul) decreased from 3,434.2B to 1,690.0B

Japan:

Economy Watchers Current Index (Jul) increased from 38.8 to 41.1

India:

Cumulative Industrial Production (Jun) decreased from -0.70% to -35.90%

Industrial Production (YoY) (Jun) increased from -18.3% to -16.6%

Manufacturing Output (MoM) (Jun) increased from -22.4% to -17.1%

The major Asian stock markets had a mixed day today:

NIKKEI 225 increased 420.30 points or 1.88% to 22,750.24
Shanghai decreased 38.96 points or -1.15% to 3,340.29
Hang Seng increased 513.25 points or 2.11% to 24,890.68
ASX 200 increased 28.50 points or 0.47% to 6,138.70
Kospi increased 32.29 points or 1.35% to 2,418.67
SENSEX increased 224.93 points or 0.59% to 38,407.01
Nifty50 increased 52.35 points or 0.46% to 11,322.50

The major Asian currency markets had a mixed day today:

AUDUSD decreased 0.00025 or -0.03% to 0.71507
NZDUSD decreased 0.00072 or -0.11% to 0.65847
USDJPY increased 0.66 or 0.62% to 106.66
USDCNY decreased 0.01951 or -0.28% to 6.94185

Precious Metals:

Gold decreased 106.75 USD/t oz. or -5.26% to 1,922.55
Silver decreased 3.68 USD/t. oz or -12.63% to 25.454

Some economic news from last night:

Japan:

Adjusted Current Account increased from 0.82T to 1.05T

Bank Lending (YoY) (Jul) increased from 6.2% to 6.3%

Current Account n.s.a. (Jun) decreased from 1.177T to 0.168T

Australia:

NAB Business Confidence (Jul) decreased from 0 to -14

NAB Business Survey (Jul) increased from -8 to 0

New Zealand:

Electronic Card Retail Sales (YoY) (Jul) increased from 8.0% to 11.4%

Electronic Card Retail Sales (MoM) (Jul) decreased from 15.6% to 1.1%

Indonesia:

Retail Sales (YoY) (Jun) increased from -20.6% to -17.1%

Singapore:

GDP (YoY) (Q3) decreased from -12.6% to -13.2%

GDP (QoQ) (Q3) decreased from -2.1% to -42.9%

Some economic news from today:

China:

M2 Money Stock (YoY) (Jul) decreased from 11.1% to 10.7%

New Loans (Jul) decreased from 1,810.0B to 992.7B

Outstanding Loan Growth (YoY) (Jul) decreased from 13.2% to 13.0%

Chinese Total Social Financing (Jul) decreased from 3,434.2B to 1,690.0B

Japan:

Economy Watchers Current Index (Jul) increased from 38.8 to 41.1

India:

Cumulative Industrial Production (Jun) decreased from -0.70% to -35.90%

Industrial Production (YoY) (Jun) increased from -18.3% to -16.6%

Manufacturing Output (MoM) (Jun) increased from -22.4% to -17.1%

EUROPE/EMEA:

Russia claimed on Tuesday it has developed the world’s first vaccine offering “sustainable immunity” against the coronavirus, as the pandemic marked another bleak milestone with 20 million infections globally. Western scientists have raised concerns about the speed with which Russia has developed the vaccine, suggesting that researchers might be cutting corners. And the World Health Organization on Tuesday warned that any approval of the Russian vaccine would require rigorous review of data to show its safety and efficacy.

Heathrow Airport’s boss has warned quarantine restrictions are “strangling the UK economy”, and renewed calls for Covid-19 testing at airports. Thousands of jobs are being lost because Britain is being cut off from key markets, said chief executive John Holland-Kaye. The warning came as Heathrow reported passenger traffic in July plunged 88%.

Investor sentiment in Germany picked up more than expected in August, a ZEW survey showed on Tuesday, reflecting hopes that Europe’s biggest economy is on the road to recovery after the devastation caused by the coronavirus pandemic. The ZEW – Leibniz Centre for European Economic Research – in Mannheim, an economic research institute and a member of the Gottfried Wilhelm Leibniz Scientific Community said in its survey report investors’ economic sentiment rose to 71.5 from 59.3 points the previous month, far exceeding a forecast for 58.0 in a Reuters poll of economists.

The major Europe stock markets had a green day:

CAC 40 increased 118.48 points or 2.41% to 5,027.99
FTSE 100 increased 103.75 points or 1.71% to 6,154.34
DAX 30 increased 259.36 points or 2.04% to 12,946.89

The major Europe currency markets had a mixed day today:

EURUSD decreased 0.00089 or -0.08% to 1.17332
GBPUSD decreased 0.00217 or -0.17% to 1.30524
USDCHF increased 0.00194 or 0.21% to 0.91733

Some economic news from Europe today:

UK:

BRC Retail Sales Monitor (YoY) (Jul) decreased from 10.9% to 4.3%

Average Earnings ex Bonus (May) decreased from 1.7% to -0.2%

Average Earnings Index +Bonus (Jun) decreased from -0.3% to -1.2%

Claimant Count Change (Jul) increased from -28.1K to 94.4K

Employment Change 3M/3M (MoM) (May) decreased from 6K to -220K

Unemployment Rate (Jun) remain the same at 3.9%

Germany:

German ZEW Current Conditions (Aug) decreased from -80.9 to -81.3

German ZEW Economic Sentiment (Aug) increased from 59.3 to 71.5

US/AMERICAS:

President Trump stated that he is considering a capital gains tax cut, a move he says will help to create more jobs. The current long-term capital gains tax stands at 20%, and any change to the rate must be approved by Congress. However, the president could use a loophole that would permit him to index gains to inflation.

Joe Biden, Democratic presidential nominee, has selected Senator Kamala Harris as his running mate ahead of the November 3 election. Biden previously vowed to choose a female vice president, and Kamala’s nomination makes her the first woman of color to run for a vice president position for a major political party in the US. “You make a lot of important decisions as president. But the first one is who you select to be your Vice President. I’ve decided that Kamala Harris is the best person to help me take this fight to Donald Trump and Mike Pence and then to lead this nation starting in January 2021,” Biden stated in a campaign email this Tuesday.

Walmart announced a new partnership with Instacart that will allow the chain to offer same-day grocery deliveries across the US. The move will allow Walmart to compete with Amazon, who offers same-day delivery through Amazon Prime Now and Amazon Fresh through Whole Foods.

Former Bank of Canada and Bank of England Governor Mark Carney is assisting the Trudeau administration in handling the fallout of the coronavirus crisis. Carney’s career with the Bank of England recently came to an end, leaving many to speculate whether Carney will seek the office of finance minister or another leadership role.

US Market Closings:

Dow declined 104.53 points or -0.38% to 27,686.91
S&P 500 declined 26.78 points or -0.8% to 3,333.69
Nasdaq declined 185.53 points or 1.69% to 10,782.82
Russell 2000 declined 9.57 points or -0.6% to 1,575.1

Canada Market Closings:

TSX Composite declined 108.49 points or -0.65% to 16,497.01
TSX 60 declined 4.01 points or -0.4% to 991.09

Brazil Market Closing:

Bovespa declined 1,270.08 points or -1.23% to 102,174.4

ENERGY:

The oil markets had a negative day today:

Crude Oil decreased 0.31 USD/BBL or -0.74% to 41.6300
Brent decreased 0.44 USD/BBL or -0.98% to 44.5500
Natural gas decreased 0.01 USD/MMBtu or -0.46% to 2.1460
Gasoline decreased 0.0293 USD/GAL or -2.37% to 1.2050
Heating oil decreased 0.0004 USD/GAL or -0.03% to 1.2390

The above data was collected around 15:32 EST on Tuesday.

Top commodity gainers: Ethanol (14.56%), Lumber (2.49%), Orange Juice (1.73%), and Aluminum (1.55%)
Top commodity losers: Palladium (-4.82%), Silver (-12.63%), Gold (-5.26%), and Platinum (-4.02%)

The above data was collected around 15:35 EST on Tuesday.

BONDS:

Japan 0.03%(+1bp), US 2’s 0.15% (+2bps), US 10’s 0.63%(+5bps); US 30’s 1.31%(+6bps), Bunds -0.47% (+5bp), France -0.20% (+4bp), Italy 1.01% (+3bp), Turkey 13.86% (-12bp), Greece 1.08% (+3bp), Portugal 0.32% (+3bp); Spain 0.29% (+2bp) and UK Gilts 0.19% (+6bp).