Market Talk – January 26, 2021

Posted Jan 26, 2021 by Martin Armstrong |

Spread the love

ASIA:

The IMF expects the US and China to be by far the most successful at steering their economies through the pandemic, leaving Europe and other emerging markets trailing in their wake. In its updated forecasts for the global economy, the fund predicts that by 2022 recoveries in the US and China will leave their economies no more than 1.5 percent smaller than projected before the pandemic. IMF said other advanced economies will still be 2.5 percent short of their pre-pandemic path, while emerging economies excluding China will in 2022 be 8 percent smaller than expected in forecasts issued exactly a year ago.

The Reserve Bank of India has proposed tighter, bank-like regulation of the so-called shadow lending sector to prevent the turmoil caused by the collapse of an infrastructure financing firm in 2018. The country’s central bank has gradually moved towards tighter norms for the sector ever since one of its biggest firms, Infrastructure Leasing & Financial Services, collapsed in late 2018 amid fraud allegations. The RBI has proposed introducing a four-tiered structure for better regulation of NBFCs with about 25-30 of the nine thousand plus firms falling under the upper or second layer of the strictest regulations. The top layer will remain empty for now, RBI said.

India’s economy is projected to grow at 7.3 per cent in 2021, even as it is estimated to contract by 9.6 per cent in 2020 as lockdowns and other efforts to control the Covid-19 pandemic slashed domestic consumption, the UN has said. The World Economic Situation and Prospects 2021, produced by the United Nations Department of Economic and Social Affairs (UN DESA), said the global economy shrank by 4.3 per cent last year, over two-and-a-half times more than during the global financial crisis of 2009 and the modest recovery of 4.7 percent expected in 2021 would barely offset the losses of 2020. India’s economic growth is forecast to be 7.3 per cent in 2021, the fastest growing major economy with only China coming in a close second with a 7.2 percent projected growth rate in the calendar year 2021, the report said.

The major Asian stock markets had a negative day today:

NIKKEI 225 decreased 276.11 points or -0.96% to 28,546.18
Shanghai decreased 54.81 points or -1.51% to 3,569.43
Hang Seng decreased 767.75 points or -2.55% to 29,391.26
ASX 200 closed
Kospi decreased 68.68 points or -2.14% to 3,140.31
SENSEX closed
Nifty50 closed

The major Asian currency markets had a mixed day today:

AUDUSD increased 0.00283 or 0.37% to 0.77415
NZDUSD increased 0.00375 or 0.52% to 0.72358
USDJPY decreased 0.09 or -0.08% to 103.67
USDCNY decreased 0.01091 or -0.17% to 6.47604

Precious Metals:

Gold decreased 2.70 USD/t oz. or -0.15% to 1,852.29
Silver increased 0.17 USD/t. oz or 0.67% to 25.469

Some economic news from last night:

Japan：

Corporate Services Price Index (CSPI) (YoY) increased from -0.5% to -0.4%

South Korea:

GDP (YoY) (Q4) decreased from -1.1% to -1.4%

GDP (QoQ) (Q4) decreased from 2.1% to 1.1%

Some economic news from today:

Hong Kong:

Exports (MoM) (Dec) increased from 5.6% to 11.7%

Imports (MoM) (Dec) increased from 5.1% to 14.1%

Trade Balance decreased from -25.6B to -45.7B

Japan:

BoJ Core CPI (YoY) remain the same at -0.1%

Singapore:

Industrial Production (MoM) (Dec) decreased from 7.5% to 2.4%

Industrial Production (YoY) (Dec) decreased from 18.7% to 14.3%

EUROPE/EMEA:

Mastercard will increase fees more than fivefold when a British shopper uses a debit or credit card to buy from an EU-based company, sparking alarm among companies that rely on online payments and concern among MPs over higher consumer prices. Mastercard and Visa levy an “interchange” fee on behalf of banks for every debit or credit card payment that uses their networks. The EU introduced a cap in 2015 after concerns the hidden fees were leading to hundreds of millions of euros in costs for companies and higher prices for consumers.

German Interior Minister Horst Seehofer announced on Tuesday that the German government is considering a ban on almost all international air travel in an effort to stop the spread of new, more virulent strains of the coronavirus. The paper reports that German Chancellor Angela Merkel requested that Seehofer looks into ways the country could defend itself against the spread of mutations on Sunday. On Tuesday, Merkel told lawmakers she was opposed to an all-out travel ban, while at the same time calling for a halt to tourism as the pandemic continues to spread.

The major Europe stock markets had a green day:

CAC 40 increased 51.16 points or 0.94% to 5,523.52
FTSE 100 increased 15.16 points or 0.23% to 6,654.01
DAX 30 increased 227.04 points or 1.66% to 13,870.99

The major Europe currency markets had a mixed day today:

EURUSD increased 0.00121 or 0.10% to 1.21547
GBPUSD increased 0.0057 or 0.42% to 1.37325
USDCHF decreased 0.00072 or -0.08% to 0.88731

Some economic news from Europe today:

UK：

Average Earnings ex Bonus (Nov) increased from 2.8% to 3.6%

Average Earnings Index +Bonus (Nov) increased from 2.8% to 3.6%

Claimant Count Change (Dec) decreased from 38.1K to 7.0K

Employment Change 3M/3M (MoM) (Nov) increased from -144K to -88K

Unemployment Rate (Nov) increased from 4.9% to 5.0%

CBI Distributive Trades Survey (Jan) decreased from -3 to -50

Steel Production (Metric Ton) (Dec) increased from 697.80K to 710.00K

Spain:

Spanish PPI (YoY) increased from -2.8% to -1.4%

US/AMERICAS:

Speaker Nancy Pelosi’s husband, Paul Pelosi, purchased $1 million in Tesla Inc. futures, causing some to wonder if this is foreshadowing future policies under the Biden administration. While those in Congress are barred from purchasing shares in industries that they could potentially influence under the STOCK Act, their spouses are not held to the same standard. Joe Biden has made is clear that he intends to implement additional measures to curb climate change, and a boost in electric vehicle sales may ensue if he were to provide incentives. A dead-end investigation was launched earlier in the year after four Senators and/or their spouses sold holdings before the coronavirus lockdown caused the markets to plummet.

Canadian Prime Minister Justin Trudeau claimed to be “disappointed” in President Biden’s decision to cancel the long-awaited Keyline XL Pipeline, but still praised his commitment to combating climate change. “While we welcome the President’s commitment to fighting climate change, we are disappointed but acknowledge the President’s decision to fulfill his election campaign promise on Keystone XL,” the prime minister stated. The 1,700 pipeline was poised to carry 800,000 barrels of oil per day from Alberta to the US. Alberta Premier Jason Kenney warned that “rescinding the Keystone XL border crossing permit would damage the Canada-US bilateral relationship.” The project was projected to produce $1.6 billion in US gross wages for 11,000 Americans, and countless more for Canadian workers.

Mexico’s economy contracted by 8.8% during 2020, according to a new Reuters analysis. This marks the deepest decline for Mexico’s GDP since the Great Depression era when it experienced a 14.8% decline in 1932. Mexico’s GDP is currently expected to grow by 3.8% during 2021.

US Market Closings:

Dow declined 23.22 points or -0.08% to 30,936.78
S&P 500 declined at 5.78 points or -0.15% to 3,849.58
Nasdaq declined 9.93 points or -0.07% to 13,626.07
Russell 2000 declined 13.42 points or -0.62% to 2,149.86

Canada Market Closings:

TSX Composite declined 126.61 points or -0.71% to 17,779.49
TSX 60 declined 8.61 points or -0.81% to 1,052.18

Brazil Market Closing:

Bovespa declined 942.89 points or -0.8% to 116,436.6

ENERGY:

The oil markets had a mixed day today:

Crude Oil decreased 0.18 USD/BBL or -0.34% to 52.5800
Brent increased 0.01 USD/BBL or 0.02% to 55.8900
Natural gas increased 0.045 USD/MMBtu or 1.73% to 2.6470
Gasoline increased 0.0179 USD/GAL or 1.15% to 1.5790
Heating oil increased 0.0025 USD/GAL or 0.16% to 1.5964
Top commodity gainers: Lumber (3.89%), Wheat (2.24%), Canola (2.55%) and Corn (3.18%)
Top commodity losers: Zinc (-1.87%), Lean Hogs (-0.78%), Cotton (-0.81%), and Rubber (-0.89%)

The above data was collected around 12:59 EST on Tuesday.

BONDS:

Japan 0.04%(+0bp), US 2’s 0.12%(+0.002%), US 10’s 1.04%(-0bps); US 30’s 1.81%(+0.007%), Bunds -0.55% (+3bp), France -0.32% (-0bp), Italy 0.64% (-1bp), Turkey 12.83% (+0bp), Greece 0.68% (-1bp), Portugal 0.05% (+1bp); Spain 0.09% (+1bp) and UK Gilts 0.27% (+1bp).