Market Talk – April 19, 2021

Posted Apr 19, 2021 by Martin Armstrong |

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ASIA:

Cai Fang, a member of China’s central bank’s monetary policy committee, said China’s population is set to peak in just four years and a significant downturn in consumer demand will mark the milestone. Cai, who joined the central bank’s advisory body last month after retiring from the Chinese Academy of Social Sciences, said the number of Chinese who are working-age had been declining since 2010, which had mainly affected the supply side of the economy. His comments came after the PBOC recently published a paper highlighting the imminent problems caused by China’s falling birth rate, and calling for further liberalization of the two-child policy and an increase in support measures for women to encourage them to have more babies.

Ant Group is exploring options for founder Jack Ma to divest his stake in the financial technology giant and give up control, as meetings with Chinese regulators signaled to the company that the move could help draw a line under Beijing’s scrutiny of its business, Reuters reported. Officials from the central bank, People’s Bank of China (PBOC), and financial regulator China Banking and Insurance Regulatory Commission (CBIRC) held talks between January and March with Ma and Ant separately, where the possibility of the tycoon’s exit from the company was discussed.

India pledged on Friday to raise monthly production of its own COVID-19 vaccine about tenfold to nearly 100 million doses by September, as immunizations have slowed in the country despite a surge in new infections. The ministry added that the government would provide $17 million in funding to boost Covaxin output. Apart from Bharat Biotech, two state-sector firms – Haffkine Biopharmaceutical and Indian Immunologicals Ltd – will develop a combined monthly capacity of up to 35 million doses in the coming months, under the plan.

The major Asian stock markets had a mixed day today:

NIKKEI 225 increased 2.00 points or 0.01% to 29,685.37
Shanghai increased 50.93 points or 1.49% to 3,477.55
Hang Seng increased 136.44 points or 0.47% to 29,106.15
ASX 200 increased 2.10 points or 0.03% to 7,065.60
Kospi increased 0.22 points or 0.01% to 3,198.84
SENSEX decreased 882.61 points or -1.81% to 47,949.42
Nifty50 decreased 258.40 points or -1.77% to 14,359.45

The major Asian currency markets had a mixed day today:

AUDUSD increased 0.0021 or 0.28% to 0.77554
NZDUSD increased 0.0032 or 0.45% to 0.71757
USDJPY decreased 0.7080 or -0.65% to 108.08
USDCNY decreased 0.0165 or -0.25% to 6.51073

Precious Metals:

Gold decreased 4.69 USD/t oz. or -0.26% to 1,771.62
Silver decreased 0.22 USD/t. oz or -0.83% to 25.740

Some economic news from last night:

Japan:

Adjusted Trade Balance increased from -0.01T to 0.30T

Exports (YoY) (Mar) increased from -4.5% to 16.1%

Imports (YoY) (Mar) decreased from 11.8% to 5.7%

Trade Balance (Mar) increased from 215.9B to 663.7B

Australia:

HIA New Home Sales (MoM) increased from 22.9% to 90.3%

Some economic news from today:

Japan:

Capacity Utilization (MoM) (Feb) decreased from 3.2% to -2.8%

Industrial Production (MoM) (Feb) increased from -2.1% to -1.3%

EUROPE/EMEA:

Robert Holzmann, the governor of Austria’s central bank, told CNBC Thursday that he believed the European Central Bank might be able to start reducing its bond purchases during the summer. The ECB put forward an emergency bond-buying program in March of 2020 to deal with the economic shock from the pandemic. This program, known as the PEPP, is currently set to last until March 2022 and total up to 1.85 trillion euros ($2.2 trillion). Hawkish members of the eurozone’s central bank are less keen to use the full amount provided by the emergency purchase program, wary of a long and significant intervention in markets. But dovish members of the ECB are more cautious about lifting the stimulus pedal too soon, given that the eurozone economy is still too fragile.

The German constitutional court has questioned the legality of the ECB’s original asset purchase program, one that was introduced before the pandemic to deal with the 2011 sovereign debt crisis. More recently, the court also stopped the approval of EU-wide fiscal funds, due to concerns that European laws do not allow the 27 EU member states to package up and issue new debt jointly. Some experts are worried that the court will soon question the ECB’s pandemic purchase program as well, which could be an issue for the economic recovery in the region. In the meantime, one of the current risks for the eurozone is a potential increase in borrowing costs as inflation expectations rise.

The major Europe stock markets had a mixed day:

CAC 40 increased 9.62 points or 0.15% to 6,296.69
FTSE 100 decreased 19.45 points or -0.28% to 7,000.08
DAX 30 decreased 91.36 points or -0.59% to 15,368.39

The major Europe currency markets had a mixed day today:

EURUSD increased 0.0053 or 0.44% to 1.20351
GBPUSD increased 0.0146 or 1.05% to 1.39846
USDCHF decreased 0.0045 or -0.49% to 0.91527

Some economic news from Europe today:

UK:

Rightmove House Price Index (MoM) increased from 0.8% to 2.1%

Euro Zone:

Current Account (Feb) decreased from 30.5B to 25.9B

Current Account n.s.a. (Feb) increased from 5.8B to 13.3B

Construction Output (MoM) (Feb) decreased from 0.84% to -2.12%

US/AMERICAS:

President Biden announced this Monday that all Americans over the age of 16 are now eligible for the coronavirus vaccine. The president said that the supply is vast enough to cover all eligible Americans and those living in Puerto Rico, and the US government is picking up the tab. “Everybody is eligible, as of today to get the vaccine. We have enough of it; you need to be protected, and you need, in turn, to protect your neighbors and your family. So please get the vaccine,” the president urged. Over half of US adults have already received at least one dose of the vaccination, according to the Centers for Disease Control and Prevention (CDC). However, there has been no comments concerning ending state lockdowns, masks, remote learning, or social distancing.

Over 1,200 complaints have been filed with the Canada Revenue Agency (CRA) concerning businesses misusing COVID federal support funds, however, the CRA has not penalized a single company. The federal finance minister repeatedly stated that any misuse of funds would result in harsh penalties and even imprisonment. The Canada Emergency Wage Subsidy (CEWS) has large loopholes that has allowed companies with seemingly positive cash flows to receive government aid. CBC News reported on six large publicly traded companies who received CEWS while also raising their dividends and overall forecasts.

New housing starts in Canada peaked to a record high last month, according to the Canadian Mortgage and Housing Corporation. In March, the seasonally adjusted annualized rate of new housing advanced to 335,200 homes, a 21.6% monthly increase. Urban starts grew 33.8% or 222,358 units, while single-family detached urban starts advanced 3.6% or 78,615 units. Housing prices also rocketed to all-time highs after increasing 31.6% YoY, the Canadian Real Association reported earlier in the month.

US Market Closings:

Dow declined 123.04 points or -0.36% to 34,077.63
S&P 500 declined 22.21 points or -0.53% to 4,163.26
Nasdaq declined 137.58 points or -0.98% to 13,914.76
Russell 2000 declined 30.67 points or -1.36% to 2,232

Canada Market Closings:

TSX Composite declined 146.9 points or -0.76% to 19,204.42
TSX 60 declined 8.4 points or -0.73% to 1,145.18

Brazil Market Closing:

Bovespa declined 180.15 points or -0.15% to 120,933.78

ENERGY:

The oil markets had a mixed day today:

Crude Oil increased 0.05 USD/BBL or 0.08% to 63.1800
Brent increased 0.08 USD/BBL or 0.12% to 66.8500
Natural gas increased 0.05 USD/MMBtu or 2.01% to 2.7340
Gasoline decreased 0.00 USD/GAL or -0.07% to 2.0385
Heating oil decreased 0.01 USD/GAL or -0.32% to 1.8897

Top commodity gainers: Ethanol (6.47%), Lumber (2.47%), Cocoa (2.49%) and Lean Hogs (2.98%)
Top commodity losers: Bitumen (-1.34%), Sugar (-2.51%), Feeder Cattle (-1.50%), and Rubber (-2.75%)

The above data was collected around 13:18 EST on Monday.

BONDS:

Japan 0.087%(-0bp), US 2’s 0.1632%(+0.00%), US 10’s 1.5905%(+2bps); US 30’s 2.2948%(+0.03%), Bunds -0.274% (-1bp), France -0.0212% (-1bp), Italy 0.80% (+5bp), Turkey 17.29% (+0bp), Greece 0.908% (+1bp), Portugal 0.437% (+4bp); Spain 0.424% (+3bp) and UK Gilts 0.756% (-1bp).