Market Talk – May 4, 2021

Posted May 4, 2021 by Martin Armstrong |

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ASIA:

China urged the Philippines on Tuesday to observe “basic etiquette,” and eschew megaphone diplomacy after the southeast Asian nation’s foreign minister used an expletive-laced Twitter message to demand that China’s vessels leave disputed waters. In a statement, China’s foreign ministry urged the Philippines to respect the nation’s sovereignty and jurisdiction and stop taking actions that complicate the situation. The Chinese ministry cited Philippine President Rodrigo Duterte that differences between the countries on individual issues should not affect friendship and cooperation.

India and UK announced 1 billion pounds ($1.39 billion) of private-sector investment and committed to seek a free trade deal. Prime Minister Modi and Prime Minister Boris held a virtual meeting to discuss the bilateral talks of two nations. The British government set out 533 million pounds of Indian investment into Britain, including 240 million by the Serum Institute for its vaccines and sales business, and 446 million pounds of export deals for British businesses. The investment announcement came alongside an “Enhanced Trade Partnership” agreement, and both sides committed to begin full trade talks in the autumn with the ambition to double existing bilateral trade by 2030. The two countries also announced agreements on climate change, technology and pharmaceuticals.

The major Asian stock markets had a mixed day today:

NIKKEI 225 closed
Shanghai closed
Hang Seng increased 199.60 points or 0.70% to 28,557.14
ASX 200 increased 39.10 points or 0.56% to 7,067.90
Kospi increased 20.17 points or 0.64% to 3,147.37
SENSEX decreased 465.01 points or -0.95% to 48,253.51
Nifty50 decreased 137.65 points or -0.94% to 14,496.50

The major Asian currency markets had a mixed day today:

AUDUSD decreased 0.00642 or -0.83% to 0.76943
NZDUSD decreased 0.0063 or -0.88% to 0.71334
USDJPY increased 0.23 or 0.21% to 109.33
USDCNY increased 0.01584 or 0.24% to 6.48653

Precious Metals:

Gold decreased 7.78 USD/t oz. or -0.43% to 1,784.58
Silver decreased 0.36 USD/t. oz or -1.34% to 26.510

Some economic news from last night:

South Korea:

CPI (MoM) (Apr) increased from 0.1% to 0.2%

CPI (YoY) (Apr) increased from 1.5% to 2.3%

Australia:

Exports (MoM) (Mar) decreased from -1% to -2%

Home Loans (MoM) increased from -1.8% to 3.3%

Imports (MoM) (Mar) decreased from 5% to 4%

Trade Balance (Mar) decreased from 7.595B to 5.574B

Some economic news from today:

Hong Kong:

Retail Sales (YoY) (Mar) decreased from 30.0% to 20.1%

Australia:

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

EUROPE/EMEA:

Britain’s private sector is on course to a summertime boom, with growth anticipated to be at its highest level in six years, as the economy reopens. The Confederation of British Industry (CBI) expects private sector activity to grow 32% in the next three months — marking the strongest predictions for growth since June 2015. Private sector activity rose 24% last month, according to CBI’s figures. Growth in business & professional services firms is expected to grow by 48% and manufacturers by 36%, the strongest growth since April 2014 and March 2017, respectively.

The major Europe stock markets had a negative day:

CAC 40 decreased 56.15 points or -0.89% to 6,251.75
FTSE 100 decreased 46.64 points or -0.67% to 6,923.17
DAX 30 decreased 379.99 points or -2.49% to 14,856.48

The major Europe currency markets had a mixed day today:

EURUSD decreased 0.00381 or -0.32% to 1.20196
GBPUSD decreased 0.00311 or -0.22% to 1.38724
USDCHF increased 0.00154 or 0.17% to 0.91308

Some economic news from Europe today:

Swiss:

SECO Consumer Climate (Q2) increased from -30 to -18

France:

French Government Budget Balance (Mar) decreased from -47.5B to -60.1B

UK:

BoE Consumer Credit (Mar) increased from -1,168B to -0.535B

Manufacturing PMI (Apr) increased from 58.9 to 60.9

Mortgage Approvals (Mar) decreased from 87.39K to 82.74K

Mortgage Lending (Mar) increased from 6.43B to 11.83B

Net Lending to Individuals increased from 5.3B to 11.3B

US/AMERICAS:

Treasury Secretary Janet Yellen believes there may be a case to raise interest rates so that “our economy doesn’t overheat.” The US government has spent more than $5.3 trillion in coronavirus stimulus spending since the pandemic began in March 2020, adding to the large deficit. However, Yellen believes the spending was necessary to gain a competitive advantage over other world economies and shorten the effects of the coronavirus on the economy. “Even though the additional spending is relatively small relative to the size of the economy, it could cause some very modest increases in interest rates,” she stated this Tuesday. Federal Reserve Chairman Jerome Powell previously stated that the Fed will reserve the tool of raising rates to control inflation if deemed necessary.

Next Monday, New York Stock Exchange (NYSE) traders may return to the floor if they have been fully vaccinated. Traders who do return to Wall Street will be subject to random testing and must maintain social distancing of six feet or more. It is unclear if traders will be required to sign waivers or agree not to sue the exchange if they do become infected.

A Reuters report today cited that people in the US are beginning to return to the cities slowly. New York City added 1,9000 residents in the first two months of the year, although nearly 110,000 residents left during 2020. Zillow noted that suburban homes did sell at a faster pace during the end of 2020 compared to suburban homes. Average monthly departures from urban cities rose 3.7% (266,000 to 276,000) during March-September 2020. However, some analysts believe that young people who may have been forced to move back home during the pandemic will choose to relocate to urban areas.

US Market Closings:

Dow advanced 19.8 points or 0.06% to 34,133.03
S&P 500 declined 28 points or -0.67% to 4,164.66
Nasdaq declined 261.61 points or -1.88% to 13,633.5
Russell 2000 declined 29.17 points or -1.28% to 2,248.29

Canada Market Closings:

TSX Composite declined 25.13 points or -0.13% to 19,188.03
TSX 60 advanced 0.74 of a point or 0.06% to 1,144.00

Brazil Market Closing:

Bovespa declined 1,497.48 points or -1.26% to 117,712.00

ENERGY:

Top oil exporter Saudi Arabia is expected to cut its official selling prices (OSPs) for Asia in June, tracking weakness in Middle East benchmark Dubai and demand uncertainty amid a new wave of regional COVID-19 outbreaks, a Reuters survey showed. Sources at five Asian refiners expected the June OSP for flagship Arab Light crude to decrease by an average of 28 cents a barrel, which would become the producer’s first price reduction since December last year. Meanwhile, the June Saudi OSPs will have to compete with the prices released by Abu Dhabi National Oil Co (ADNOC) on Sunday. For the first time, ADNOC set the OSP for its flagship Murban crude based on the monthly average of the newly launched Murban futures contract on the ICE Futures Abu Dhabi (IFAD) oil exchange and released its June OSPs ahead of Saudi Aramco.

The oil markets had a mixed day today:

Crude Oil increased 1.15 USD/BBL or 1.78% to 65.6400
Brent increased 1.25 USD/BBL or 1.85% to 68.8100
Natural gas decreased 0.023 USD/MMBtu or -0.78% to 2.9430
Gasoline increased 0.0401 USD/GAL or 1.91% to 2.1416
Heating oil increased 0.0417 USD/GAL or 2.14% to 1.9936

Top commodity gainers: Heating Oil (2.14%), Sugar (2.75%), Corn (2.94%) and Lumber (2.15%)
Top commodity losers: Live Cattle (-1.50%), Silver (-1.34%), Coffee (-0.96%), and Natural Gas (-0.78%)

The above data was collected around 11:50 EST on Tuesday.

BONDS:

Japan 0.0890%(-1bp), US 2’s 0.16%(+0.001%), US 10’s 1.5906%(-1.54bps); US 30’s 2.2668%(-0.02%), Bunds -0.2030% (+0bp), France 0.125% (-2.6bp), Italy 0.8220% (-1.2bp), Turkey 17.64% (+8bp), Greece 1.007% (+2.1bp), Portugal 0.45% (-2.4bp); Spain 0.438% (-2.65bp) and UK Gilts 0.797% (-4.6bp).