Market Talk – March 29, 2021

Posted Mar 29, 2021 by Martin Armstrong |

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ASIA:

Chinese officials on Monday said Sweden’s H&M and other foreign brands should not make rash moves or step into politics after the companies raised concerns about forced labor in Xinjiang, sparking a furious online backlash and boycotts. H&M, Burberry, Nike, Adidas, and other Western brands have been hit by consumer boycotts in China since last week over comments about their sourcing of cotton in Xinjiang. The growing rift comes as the United States and other Western governments increase pressure on China over suspected human rights abuses in the Chinese province.

In the midst of rising economic uncertainty due to a sharp rise in Covid-19 cases across the country, economists and analysts believe that the India’s central bank will maintain a status quo on policy rates during its next monetary policy meeting. The Monetary Policy Committee is scheduled to meet for its bi-monthly policy meeting starting April 7. UBS Securities India also expects the RBI to maintain comfortable liquidity levels in the near term to ensure the least disruption to the government’s borrowing program. “We continue to expect the central bank to pursue policy normalisation [sic] in the second half of FY22 to keep inflationary pressures contained and preserve financial stability, UBS said in a statement.

The major Asian stock markets had a mixed day today:

NIKKEI 225 increased 207.82 points or 0.71% to 29,384.52
Shanghai increased 16.97 points or 0.50% to 3,435.30
Hang Seng increased 1.87 points or 0.01% to 28,338.30
ASX 200 decreased 24.70 points or -0.36% to 6,799.50
Kospi decreased 4.97 points or -0.16% to 3,036.04
SENSEX closed
Nifty50 closed

The major Asian currency markets had a mixed day today:

AUDUSD decreased 0.00008 or -0.01% to 0.76424
NZDUSD increased 0.00467 or 0.67% to 0.70133
USDJPY increased 0.09 or 0.08% to 109.76
USDCNY increased 0.02529 or 0.39% to 6.57116

Precious Metals:

Gold decreased 18.12 USD/t oz. or -1.05% to 1,713.85
Silver decreased 0.29 USD/t. oz or -1.17% to 24.752

EUROPE/EMEA:

The Bank of England (BofE) is demanding that lenders seek its approval before relocating UK jobs or operations, according to a report in the Financial Times. The move comes after the BoE became concerned that European regulators are asking for more to move than is necessary for financial stability post-Brexit. This comes alongside the prospect of an estimated 500 UK citizens forced to leave Spain by its authorities for not having the correct residency paperwork. Under the post-Brexit regulations, British ex-pats must register for residency by the March 31 deadline or they will be classed as illegal immigrants. Ex-pats must prove that they lived in Spain legally prior to December 31, 2020.

A new report from The Centre for Economics and Business Research (CEBR) has estimated the global pandemic cost the UK economy well over £200 billion over the last year. The analysis released by the independent research agency suggests that London was hardest hit in absolute terms, however, the impact of the crisis was worst felt in the West Midlands and East of England, due to the regions’ dependence on wholesale and retail trade. According to that calculation, the UK economy missed out on £251 billion in gross value added (GVA) than estimated.

The major Europe stock markets had a mixed day:

CAC 40 increased 26.70 points or 0.45% to 6,015.51
FTSE 100 decreased 4.42 points or -0.07% to 6,736.17
DAX 30 increased 68.78 points or 0.47% to 14,817.72

The major Europe currency markets had a negative day today:

EURUSD decreased 0.00196 or -0.17% to 1.17750
GBPUSD decreased 0.00191 or -0.14% to 1.37719
USDCHF decreased 0.0016 or -0.17% to 0.93796

Some economic news from Europe today:

UK:

BoE Consumer Credit (Feb) increased from -2.392B to -1.246B

M4 Money Supply (MoM) (Feb) increased from 0.7% to 0.8%

Mortgage Approvals (Feb) decreased from 98.99K to 87.70K

Mortgage Lending (Feb) increased from 5.17B to 6.20B

Net Lending to Individuals increased from 2.6B to 4.9B

US/AMERICAS:

Federal Reserve Governor Christopher Waller spoke critically of the government for increasing the deficit, stating that the Fed’s decision to maintain interest rates is not a signal for the government to add to the deficit. “Monetary policy has not and will not be conducted for these purposes,” Waller stated, “It is simply wrong.” Government debt has surpassed $4.5 trillion, almost a 20% increase, since the pandemic began in March of last year. Estimates from the Congressional Budget Office stated that debt would fall to $2.3 trillion in 2021 but failed to include the recent $1.9 trillion stimulus package. Waller added that Congress is fully aware that the Federal Reserve was created to be independent of government as it could be subject to misuse for political purposes.

The White House announced this Monday that they are conducting an independent study on the origins of the coronavirus. The World Health Organization previously partnered with China to conduct a study that allegedly traced the origins to human contact to infected bats. However, the White House is not ruling out a possible leak from a laboratory in Wuhan, China. The investigation is likely to continue to sour US-China relations.

Nearly 20% of Americans were unable to pay their rent last month, according to the Census Bureau. In response, the CDC announced it would extend its nationwide eviction ban until June 30 to avoid a possible mass displacement. The CDC noted that it would be counterproductive to lift the ban prior to the US government releasing rental assistance, as Congress has already put aside around $45 billion in rental aid. The protections are in place for individuals earning under $99,000 and couples earning under $198,000 annually. However, landlords with less liquidity who do not have access to relief funds are beginning to sell their properties. As housing and rental costs increase across the US, the possibility for a future housing crisis begins to mount.

US Market Closings:

Dow advanced 98.49 points or 0.3% to 33,171.37
S&P 500 declined 3.45 points or -0.09% 3,971.09
Nasdaq declined 79.08 points or -0.06% to 13,059.65
Russell 2000 declined 62.8 points or -2.83% to 2,158.68

Canada Market Closings:

TSX Composite declined 33.36 points or -0.18% to 18,719.22
TSX 60 declined -0.64 of a point or -0.06% to 1,119.87

Brazil Market Closing:

Bovespa advanced 638.1 points or 0.56% to 115,418.72

ENERGY:

The oil markets had a mixed day today:

Crude Oil increased 0.47 USD/BBL or 0.77% to 61.4400
Brent increased 0.26 USD/BBL or 0.40% to 64.8300
Natural gas increased 0.047 USD/MMBtu or 1.84% to 2.6040
Gasoline increased 0.0219 USD/GAL or 1.11% to 1.9892
Heating oil decreased 0.002 USD/GAL or -0.11% to 1.8080

Top commodity gainers: Crude Oil (0.77%), Natural Gas (1.84%), Gasoline (1.11%) and Lumber (1.68%)
Top commodity losers: Palm Oil (-1.52 %), Cocoa (-1.38%), Palladium (-5.63%), and Coffee (-1.40%)

The above data was collected around 14:30 EST on Monday.

BONDS:

Japan 0.08%(-1bp), US 2’s 0.14%(+0.004%), US 10’s 1.72%(+6bps); US 30’s 2.43%(+0.06%), Bunds -0.35% (+4bp), France -0.12% (-1bp), Italy 0.64% (+3bp), Turkey 18.16% (+0bp), Greece 0.88% (+0bp), Portugal 0.21% (+3bp); Spain 0.33% (+4bp) and UK Gilts 0.78% (+3bp).