Market Talk – May 6, 2021

Posted May 6, 2021 by Martin Armstrong |

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ASIA:

China has “indefinitely” suspended key economic dialogue with Australia, the latest in a growing diplomatic rift between both countries. The relations between two countries have been on the decline since Australia called for a probe into the origins of the virus and banned Huawei from building its 5G network. In a statement on Thursday, a Chinese government commission accused Australia of having a “Cold War mindset”. Last year, China imposed sanctions on Australian goods like wine and beef.

Growth in India’s dominant services sector eased to a three-month low in April but remained unexpectedly resilient even as the COVID-19 crisis intensified and cost pressures rose at the fastest pace in over nine years, a private survey showed. The Nikkei/IHS Markit Services Purchasing Managers’ Index fell to 54.0 last month from 54.6 in March, its lowest since January but still well above the 50-mark separating growth from contraction. A Reuters poll expected the index to fall to 51.1.

The major Asian stock markets had a mixed day today:

NIKKEI 225 increased 518.74 points or 1.80% to 29,331.37
Shanghai decreased 5.57 points or -0.16% to 3,441.28
Hang Seng increased 219.48 points or 0.77% to 28,637.46
ASX 200 decreased 34.10 points or -0.48% to 7,061.70
Kospi increased 31.37 points or 1.00% to 3,178.74
SENSEX increased 272.21 points or 0.56% to 48,949.76
Nifty50 increased 106.95 points or 0.73% to 14,724.80

The major Asian currency markets had a mixed day today:

AUDUSD increased 0.00042 or 0.05% to 0.77535
NZDUSD decreased 0.00158 or -0.22% to 0.72012
USDJPY decreased 0.09 or -0.09% to 109.15
USDCNY decreased 0.01545 or -0.24% to 6.46985

Precious Metals:

Gold increased 26.84 USD/t oz. or 1.50% to 1,813.28
Silver increased 0.794 USD/t. oz or 3.00% to 27.294

Some economic news from last night:

South Korea:

FX Reserves – USD (Apr) increased from 446.13B to 452.31B

New Zealand:

Building Consents (MoM) (Mar) increased from -19.3% to 17.9%

ANZ Business Confidence increased from -2.0 to 7.0

Some economic news from today:

India:

M3 Money Supply decreased from 11.3% to 10.6%

EUROPE/EMEA:

The Bank of England has kept interest rates on hold as it forecast the fastest annual pace of growth for the British economy since early on in World War II, largely as a result of the rapid rollout of coronavirus vaccines, a major online daily reported. In a prepared statement Thursday, the nine-member Monetary Policy Committee said it will maintain the bank’s main interest rate at 0.1%. The unanimous and widely anticipated decision means that interest rates will remain at the lowest level in the bank’s 327-year history. If growth returns as quickly as the central bank expects, the British economy will make up all the ground lost during the pandemic by the end of this year. The bank also said economic growth will help reduce the anticipated peak in unemployment from 7.75% to 5.5%.

Turkey and Sweden on May 5 agreed to boost bilateral trade and investment. During the first Turkish-Sweden Joint Economic and Trade Committee (JETCO) meeting, held online, top officials from both countries spoke on bilateral commercial ties and relations with the EU, in particular updating the Turkey-EU Customs Union as well as the EU’s Green Deal. The two countries set a goal to boost the bilateral trade volume to $5 billion in a balanced way.

The major Europe stock markets had a green day:

CAC 40 increased 17.62 points or 0.28% to 6,357.09
FTSE 100 increased 36.87 points or 0.52% to 7,076.17
DAX 30 increased 25.96 points or 0.17% to 15,196.74

The major Europe currency markets had a mixed day today:

EURUSD increased 0.00608 or 0.51% to 1.20663
GBPUSD decreased 0.00098 or -0.07% to 1.38954
USDCHF decreased 0.00526 or -0.58% to 0.90803

Some economic news from Europe today:

Germany:

German Factory Orders (MoM) (Mar) increased from 1.4% to 3.0%

IHS Markit Construction PMI (Apr) decreased from 47.5% to 46.2

Norway:

Manufacturing Production (MoM) (Mar) increased from -0.4% lo 0.7%

Interest Rate Decision remain the same at 0.00%

France:

French Industrial Investments (Q2) remain the same at 10.0%

UK:

Composite PMI (Apr) increased from 56.4 to 60.7

Services PMI (Apr) increased from 56.3 to 61.0

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

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

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

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

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

Euro Zone:

Retail Sales (YoY) (Mar) increased from -1.5% to 12.0%

Retail Sales (MoM) (Mar) decreased from 4.2% to 2.7%

US/AMERICAS:

The Department of Labor released an optimistic weekly jobless report this Thursday, showing signs of a workforce recovery in the US. Initial unemployment claims dropped to 498,000, marking a 100,000 drop from the week prior. The Labor Department will release its nonfarm payroll data for April on Friday, which will provide a better picture of America’s overall labor recovery. As noted by CNBC, Virginia (-23,909), Florida (-9,662), and California (-7,5402) posted the most significant declines. Kentucky was the only state to report a marked increase with claims rising by 4,657.

The Biden administration plans to waive intellectual property protections for coronavirus vaccines. The White House noted that since America has largely secured their vaccination needs, they will “ramp up its efforts” to work with the private sector and “all possible partners — to expand manufacturing and distribution.” Pharmaceutical stocks dropped yesterday upon the news with Moderna shedding -6.1%, Pfizer closing flat, and J&J dropping a slight -0.4%.

Brazil registered 14.4 million jobless citizens between December and February 2021. This brings Brazil’s unemployment rate to 14.4%, up from 11.6% during the same time period last year, according to the Brazilian Institute of Geography and Statistics (IBGE). This marks the second consecutive increase after a four-month decline, which may allude trouble for Brazil’s workforce. “Discouraged” workers, who have stopped looking for work entirely, also reached an all-time high at six million (26.8% YoY).

US Market Closings:

Dow advanced 318.19 points or 0.93% to 34,548.53
S&P 500 advanced 34.03 points or 0.82% to 4,201.62
Nasdaq advanced 50.42 points or 0.37% to 13,632.84
Russell 2000 advanced 0.05 of a point or 0% to 2,241.42

Canada Market Closings:

TSX Composite declined 19.76 points or -0.1% to 19,290.98
TSX 60 declined 1.1 points or -0.1% to 1,150.91

Brazil Market Closing:

Bovespa advanced 356.17 points or 0.3% to 119,920.61

ENERGY:

The oil markets had a negative day today:

Crude Oil decreased 0.43 USD/BBL or -0.66% to 65.2000
Brent decreased 0.37 USD/BBL or -0.54% to 68.5900
Natural gas decreased 0.023 USD/MMBtu or -0.78% to 2.9150
Gasoline decreased 0.0195 USD/GAL or -0.91% to 2.1315
Heating oil decreased 0.0029 USD/GAL or -0.14% to 1.9996

Top commodity gainers: Palm Oil (4.10%), Orange Juice (7.95%), Rubber (10.23%) and Coffee (4.25%)
Top commodity losers: Gasoline (-0.91%), Palladium (-1.56%), Natural Gas (-0.78%), and Crude Oil (-0.66%)

The above data was collected around 12:10 EST on Thursday.

BONDS:

Japan 0.0930%(+0bp), US 2’s 0.16%(-0.0004%), US 10’s 1.5732%(-1.08bps); US 30’s 2.2509%(-0.01%), Bunds -0.2370% (-1bp), France 0.145% (+0.8bp), Italy 0.873% (+1.9bp), Turkey 17.41% (-9bp), Greece 0.972% (-0.3bp), Portugal 0.479% (+1.4bp); Spain 0.463% (+0.99bp) and UK Gilts 0.793% (-2.7bp).