Market Talk – April 6, 2021

Posted Apr 6, 2021 by Martin Armstrong |

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ASIA:

China’s factory activity in March expanded at the slowest pace in almost a year on softer overall domestic demand, but underlying economic conditions remained positive even as input and output inflationary pressures intensified for manufacturers. The Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) dropped to 50.6 last month — the lowest level since April 2020 — from February’s 50.9, missing analyst expectations for an uptick to 51.3. The findings contrast with those in an official survey, which showed manufacturing activity grew at a stronger pace as large firms ramped up production after a brief lull during the Lunar New Year holidays. The Caixin survey focuses on small, private and export-oriented firms, while the official survey typically polls large and state-owned manufacturers.

The Indian government and central bank have agreed to retain the bank’s inflation target of 2%-6% for the next five years, India’s finance ministry said. The monetary policy framework, signed by Prime Minister Narendra Modi’s government with the Reserve Bank of India in 2015, set up a monetary policy committee with a mandate to achieve 2%-6% headline retail inflation. India’s retail inflation accelerated to 5.03% year-on-year, a three-month high, in February on higher fuel prices. After cutting the repo rate by 115 basis points to sustain the economy during the coronavirus crisis, the central bank has kept the policy rate unchanged since May 2020.

The major Asian stock markets had a mixed day today:

NIKKEI 225 decreased 392.62 points or -1.30% to 29,696.63
Shanghai decreased 1.42 points or -0.04% to 3,482.97
Hang Seng closed
ASX 200 increased 57.20 points or 0.84% to 6,885.90
Kospi increased 6.25 points or 0.20% to 3,127.08
SENSEX increased 42.07 points or 0.09% to 49,201.39
Nifty50 increased 45.70 points or 0.31% to 14,683.50

The major Asian currency markets had a negative day today:

AUDUSD decreased 0.00017 or -0.02% to 0.76563
NZDUSD decreased 0.00206 or -0.29% to 0.70458
USDJPY decreased 0.37 or -0.33% to 109.81
USDCNY decreased 0.01487 or -0.23% to 6.54098

Precious Metals:

Gold increased 16.19 USD/t oz. or 0.94% to 1,744.63
Silver increased 0.33 USD/t. oz or 1.32% to 25.229

Some economic news from last night:

China:

Caixin Services PMI (Mar) increased from 51.5 to 54.3

Chinese Composite PMI (Mar) increased from 51.7 to 53.1

Japan:

Average Cash Earnings (YoY) increased from -0.8% to -0.2%

Household Spending (MoM) (Feb) increased from -7.3% to 2.4%

Household Spending (YoY) (Feb) decreased from -6.1% to -6.6%

Overall wage income of employees (Feb) increased from -1.3% to -0.2%

Overtime Pay (YoY) (Feb) decreased from -6.60% to -9.30%

Australia:

ANZ Job Advertisements (MoM) decreased from 8.8% to 7.4%

Some economic news from today:

Australia:

RBA Interest Rate Decision (Apr) remain the same at 0.10%

New Zealand:

GlobalDairyTrade Price Index increased from -3.8% to 0.3%

EUROPE/EMEA:

According to the UK’s Office for National Statistics, trade between the EU and the UK was hit hard in January, with exports down by 40.7% compared with December and imports from the EU down by 28% in the same period. This is the biggest overall fall in exports since records began, yet the decline for some sectors has been even worse. Analysis by the Food & Drink Federation published last week showed that exports in January dropped to £7 million — or about $9.6 million — from £45 million year-on-year, while whisky exports dropped to £40 million from £105 million.

The European Union’s former Brexit negotiator, Michel Barnier, said on Wednesday the reality of Britain’s decision to leave the bloc was only now being felt, years after the British 2016 referendum on membership. Listing the changes that Brexit has brought since Jan. 1, when Britain ended a transition out of the bloc, Barnier said trade barriers, limits on citizens’ movement and work visas were inevitable. Exports of food and drink from Britain to the EU plunged by 75.5% in January, Britain’s Food and Drink Federation has said, attributing much of the fall to post-Brexit barriers.

The major Europe stock markets had a green day:

CAC 40 increased 28.38 points or 0.47% to 6,131.34
FTSE 100 increased 86.25 points or 1.28% to 6,823.55
DAX 30 increased 105.51 points or 0.70% to 15,212.68

The major Europe currency markets had a mixed day today:

EURUSD increased 0.00298 or 0.25% to 1.18455
GBPUSD decreased 0.00594 or -0.43% to 1.38520
USDCHF decreased 0.00352 or -0.38% to 0.93279

Some economic news from Europe today:

Spain:

Spanish Unemployment Change decreased from 44.4K to -59.1K

Spanish Consumer Confidence increased from 65.9 to 73.0

UK:

Car Registration (MoM) (Mar) increased from -43.1% to 453.4%

Car Registration (YoY) increased from -35.5% to 11.5%

Italy:

Italian Monthly Unemployment Rate (Feb) increased from 9.8% to 10.2%

Norway:

Manufacturing PMI (Mar) increased from 57.5 to 60.4

Euro Zone:

Sentix Investor Confidence (Apr) increased from 5.0 to 13.1

Unemployment Rate (Feb) remain the same at 8.3%

US/AMERICAS:

US Treasury Secretary Janet Yellen is fighting for a minimum global tax rate. In part, Yellen hopes that the imposition would prevent companies from offshoring their headquarters once the Biden Administration raises the corporate tax rate to 28% from 21%. The Trump Administration had lowered the rate to 21% from 35% to attract and retain business in the US. Under the G7, the average corporate tax rate is 24%, providing an incentive for companies to leave the US under the proposed heightened taxes. “It is about making sure that governments have stable tax systems that raise sufficient revenue to invest in essential public goods and respond to crises, and that all citizens fairly share the burden of financing government,” Yellen stated about her proposal.

International Monetary Fund Chief Economist Gita Gopinath stated today that rising government debt in the US “is not something we’re flagging as a major concern.” Gopinath is responding to concerns that the latest $1.9 trillion coronavirus relief package will would cause upheaval. Contrary, the IMF believed the relief package will help the US economy recovery ahead of schedule and improve the overall outlook for global economic growth.

The Canadian economy advanced 0.7% this January, according to data provided by Statistics Canada. The gain marked a notable improvement from December’s 0.1% advancement and outperformed the agency’s original forecast of 0.5% growth. This marks the ninth consecutive month of expansion for the Canadian economy, providing optimism that it is beginning to heal from the pandemic. However, economic activity is still 3% beneath pre-pandemic levels. Numerous analysts have forecast a 0.5% rise in economic growth for February. The Bank of Montreal issued a private forecast calling for a 3.5% first-quarter growth in GDP, which is in stark contrast to calls for a negative contraction in Q1 issued a few months prior.

US Market Closings:

Dow declined 96.95 points or -0.29% to 33,430.24
S&P 500 declined 3.97 points or -0.1% to 4,073.94
Nasdaq declined 7.21 points or -0.05% to 13,698.38
Russell 2000 declined 5.73 points or -0.25% to 2,259.15

Canada Market Closings:

TSX Composite advanced 77.35 points or 0.41% to 19,104.14
TSX 60 advanced 2.94 points or 0.26% to 1,138.25

Brazil Market Closing:

Bovespa declined 19.57 points or -0.02% to 117,498.87

ENERGY:

The oil markets had a green day today:

Crude Oil increased 1.41 USD/BBL or 2.40% to 60.0600
Brent increased 1.28 USD/BBL or 2.06% to 63.4300
Natural gas increased 0.017 USD/MMBtu or 0.68% to 2.5280
Gasoline increased 0.0331 USD/GAL or 1.69% to 1.9942
Heating oil increased 0.034 USD/GAL or 1.92% to 1.8064

Top commodity gainers: Coffee (2.78%), Cotton (3.43%), Tin (2.68%) and Cocoa (3.13%)
Top commodity losers: Bitumen (-1.85%), Copper (-0.71%), Lean Hogs (-0.59%), and Rubber (-0.75%)

The above data was collected around 11:51 EST on Tuesday.

BONDS:

Japan 0.11%(-1bp), US 2’s 0.16%(-0.013%), US 10’s 1.66%(-6bps); US 30’s 2.32%(-0.040%), Bunds -0.32% (+1bp), France -0.07% (+1bp), Italy 0.70% (+7bp), Turkey 17.61% (+0bp), Greece 0.85% (+3bp), Portugal 0.25% (+4bp); Spain 0.35% (+3bp) and UK Gilts 0.80% (-0bp).