Market Talk – February 4, 2021

Posted Feb 4, 2021 by Martin Armstrong |

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ASIA:

Britain’s broadcasting regulator said on Thursday that it had withdrawn the license for China Global Television Network, an international news channel owned by a Chinese state broadcaster, to operate in the United Kingdom in part because its affiliation with the Chinese Communist Party violates broadcasting laws. The regulator said that those that most likely controlled programming, including the state-media network China Central Television, or CCTV, which owns CGTN, would be disqualified from holding a license because of affiliations with the Chinese Communist Party. In response, CGTN said it would transfer the license to a corporation under the CGTN name.

Growth in India’s dominant services sector picked up in January as demand improved and consumer optimism was buoyed by the start of a huge COVID-19 vaccination drive, although firms continued to shed jobs, a private survey showed on Wednesday. The Nikkei/IHS Markit Services Purchasing Managers’ Index rose to 52.8 in January from 52.3 in December, staying above the 50-level mark separating growth from contraction for the fourth straight month. But Firms continued to shed jobs, as they have in most months since the pandemic began.

Japanese Prime Minister Yoshihide Suga looks set to extend a state of emergency for major metropolitan areas that will inflict more pain on the economy, as he tries to stem the latest wave of Covid-19 cases and reverse a fall in public support. The emergency covering 11 areas, including Tokyo, Osaka, and Nagoya, has helped halt a rapid acceleration of virus cases threatening the developed world’s oldest population. While infection numbers have started to drop under the guidelines, Suga’s government has said the number of cases remains worryingly high. Suga will extend the emergency by one month to March 7, after consulting with an advisory panel on Tuesday, Kyodo News reported.

The major Asian stock markets had a mixed day today:

NIKKEI 225 decreased 304.55 points or -1.06% to 28,341.95
Shanghai decreased 15.45 points or -0.44% to 3,501.86
Hang Seng decreased 193.96 points or -0.66% to 29,113.50
ASX 200 decreased 59.10 points or -0.87% to 6,765.50
Kospi decreased 42.13 points or -1.35% to 3,087.55
SENSEX increased 358.54 points or 0.71% to 50,614.29
Nifty50 increased 105.70 points or 0.71% to 14,895.65

The major Asian currency markets had a mixed day today:

AUDUSD decreased 0.00421 or -0.55% to 0.75929
NZDUSD decreased 0.00687 or -0.95% to 0.71499
USDJPY increased 0.47 or 0.45% to 105.46
USDCNY increased 0.01706 or 0.26% to 6.47602

Precious Metals:

Gold decreased 42.24 USD/t oz. or -2.30% to 1,791.52
Silver decreased 0.613 USD/t. oz or -2.28% to 26.252

Some economic news from last night:

Japan：

Foreign Bonds Buying decreased from 756.2B to 729.6B

Foreign Investments in Japanese Stocks decreased from 209.8B to -187.5B

Australia:

Exports (MoM) (Dec) remain the same at 3%

Imports (MoM) (Dec) decreased from 10% to -2%

NAB Quarterly Business Confidence increased from -8 to 14

Trade Balance (Dec) increased from 5.022B to 6.785B

EUROPE/EMEA:

European Commission vice-president Maros Sefcovic has asked Boris Johnson to focus on the “proper implementation” of post-Brexit trade rules in Northern Ireland, rather than threatening to suspend them. Maros Sefcovic, the European Commission vice-president, will travel to London next week to try to defuse growing tensions in Northern Ireland and head off calls for a radical rewriting of the Brexit protocol covering the region. Mr Johnson said he would legislate if necessary or use emergency override powers — Article 16 in the Northern Ireland protocol, which forms part of the UK’s 2019 Brexit treaty with Brussels — to maintain the free flow of trade between Great Britain and the region.

Spain’s economy shrank 11% in 2020, according to data released on last Friday by the National Statistics Institute (INE). This is the biggest contraction since the days of the Spanish Civil War in the late 1930s. This dismal figure is a result of the restrictions imposed last year to curb the spread of the coronavirus, particularly the 94 days of strict home confinement that nearly brought the economy to a halt between March and June. Economic output fell 17.8% in the second quarter, and even though there was some recovery during the second half of the year, it was not enough to make up for the damage. The Spanish government, led by a center-left coalition of the Socialist Party (PSOE) and Unidas Podemos, had estimated a GDP contraction of 11.2% in 2020, and it is now forecasting a 7.2% rebound in 2021 without factoring in the impact of European recovery funds.

The major Europe stock markets had a mixed day:

CAC 40 increased 45.49 points or 0.82% to 5,608.54
FTSE 100 decreased 4.10 points or -0.06% to 6,503.72
DAX 30 increased 126.66 points or 0.91% to 14,060.29

The major Europe currency markets had a mixed day today:

EURUSD decreased 0.00789 or -0.66% to 1.19610
GBPUSD increased 0.00116 or 0.08% to 1.36604
USDCHF increased 0.0055 or 0.61% to 0.90400

Some economic news from Europe today:

France:

French Industrial Investments (Q1) increased from 4% to 10%

Swiss:

SECO Consumer Climate (Q1) decreased from -13 to -15

Germany:

IHS Markit Construction PMI (Jan) decreased from 47.1 to 46.6

Euro Zone:

Retail Sales (MoM) (Dec) increased from -5.7% to 2.0%

Retail Sales (YoY) (Dec) increased from -2.2% to 0.6%

UK:

Construction PMI (Jan) decreased from 54.6 to 49.2

BoE MPC vote cut (Feb) remain the same at 0

BoE MPC vote hike (Feb) remain the same at 0

BoE MPC vote unchanged (Feb) remain the same at 9

BoE QE Total (Feb) remain the same at 875B

BoE Interest Rate Decision (Feb) remain the same at 0.10%

US/AMERICAS:

It was a green day on Wall Street after all major US indexes advanced by over 1%. The S&P 500 reached an all-time high this Thursday after gaining 41.57 points (1.09%). Align Technology spurred the index’s advancement after gaining 13.14%, followed by L Brands (8.6%), PayPal (6.82%), and Snap-On (6.27%).

The US labor force is slowly but steadily improving, according to weekly data by the Labor Department. Weekly new jobless claims came in at 779,000, representing a two-month low. The previous week’s figure was revised down to 812,000. Continuing claims also declined to 4.6 million, reflecting a 193,000 decline. The total number of Americans receiving unemployment aid fell to 17.8 million. However, unemployment remains elevated from pre-pandemic levels. The Labor Department will issue the nonfarm payrolls data for January this Friday, and analysts are expecting the unemployment rate to sit at 6.7%.

US bankruptcies are declining, according to data from Epiq. In January, filings dropped 6% from December and 44% YoY. Nearly 32,398 commercial and non-commercial bankruptcies were filed last month, marking the lowest number of filings since February 2006.

The US Court of International Trade voted to uphold tariffs on steel imports enacted under the Trump administration. New Jersey-based Universal Steel Products Inc had brought the matter to court in an effort to remove them. However, the court cited section 232 of the Trade Expansion Act of 1962 that states the tariffs are legal and deemed to be in the interest of US national security.

US Market Closings:

Dow advanced 332.26 points or 1.08% to 31,055.86
S&P 500 advanced 41.57 points or 1.09% to 3,871.74
Nasdaq advanced 167.2 points or 1.23% to 13,777.74
Russell 2000 advanced 42.72 points or 1.98% to 2,202.42

Canada Market Closings:

TSX Composite advanced 126.06 points or 0.7% to 18,041.97
TSX 60 advanced 8.23 points or 0.78% to 1,068.98

Brazil Market Closings:

Bovespa declined 463.9 points or -0.39% to 119,260.82

ENERGY:

The oil markets had a mixed day today:

Crude Oil increased 0.59 USD/BBL or 1.06% to 56.2800
Brent increased 0.37 USD/BBL or 0.63% to 58.8300
Natural gas increased 0.124 USD/MMBtu or 4.45% to 2.9130
Gasoline decreased 0.0031 USD/GAL or -0.19% to 1.6455
Heating oil increased 0.0069 USD/GAL or 0.41% to 1.6974

Top commodity gainers: Natural Gas (4.45%), Palm Oil (1.15%), Orange Juice (1.43%) and Cotton (4.25%)
Top commodity losers: Lean Hogs (-2.07%), Wheat (-1.93%), Gold (-2.30%), and Silver (-2.28%)

The above data was collected around 14:06 EST on Thursday.

BONDS:

Japan 0.06%(+0bp), US 2’s 0.12%(-0.002%), US 10’s 1.14%(+1bps); US 30’s 2.00%(+0.02%), Bunds -0.46% (+4bp), France -0.23% (+1bp), Italy 0.56% (-3bp), Turkey 12.69% (-2bp), Greece 0.65% (+1bp), Portugal 0.05% (-0bp); Spain 0.13% (+0bp) and UK Gilts 0.45% (+7bp).