Market Talk – May 18, 2021

Posted May 18, 2021 by Martin Armstrong |

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ASIA:

China has banned financial institutions and payment companies from providing services related to cryptocurrency transactions, and warned investors against speculative crypto trading. Under the ban, such institutions, including banks and online payments channels, must not offer clients any service involving cryptocurrencies, such as registration, trading, clearing and settlement, three industry bodies said in a joint statement on Tuesday. China has banned crypto exchanges and initial coin offerings but has not barred individuals from holding cryptocurrencies.

Domestic sales of gasoline and diesel by Indian state refiners plunged by a fifth in the first half of May from a month earlier as lockdowns to curb coronavirus infections hit industrial activities and consumption, preliminary data showed on Monday. Indian fuel demand had recovered to near pre-COVID levels in March but has been declining since April given restrictions amid a staggering spike in infections to record highs.

Singapore’s non-oil domestic exports (Nodx) expanded at a slower pace in April, with growth supported by non-electronics such as petrochemicals and specialized machinery. Shipments grew 6 percent year on year last month, continuing the positive growth trend since December, according to data released by Enterprise Singapore (ESG) on Monday (May 17). But April’s export growth was lower than the revised 11.9 percent expansion recorded in March and below the 11.5 percent growth forecast by analysts polled by Bloomberg. On a month-on-month seasonally adjusted basis, exports declined 8.8 percent from March.

The major Asian stock markets had a green day today:

NIKKEI 225 increased 582.01 points or 2.09% to 28,406.84
Shanghai increased 11.40 points or 0.32% to 3,529.01
Hang Seng increased 399.72 points or 1.42% to 28,593.81
ASX 200 increased 42.40 points or 0.60% to 7,066.00
Kospi increased 38.53 points or 1.23% to 3,173.05
SENSEX increased 612.60 points or 1.24% to 50,193.33
Nifty50 increased 184.95 points or 1.24% to 15,108.10

The major Asian currency markets had a mixed day today:

AUDUSD increased 0.00241 or 0.31% to 0.77964
NZDUSD increased 0.00297 or 0.41% to 0.72479
USDJPY decreased 0.2280 or -0.21% to 108.94
USDCNY decreased 0.01794 or -0.28% to 6.42304

Precious Metals:

Gold increased 1.85 USD/t oz. or 0.10% to 1,867.98
Silver increased 0.07 USD/t. oz or 0.24% to 28.239

Some economic news from last night:

Japan:

GDP (YoY) (Q1) decreased from 11.6% to -5.1%

GDP (QoQ) (Q1) decreased from 2.8% to -1.3%

GDP Capital Expenditure (QoQ) (Q1) decreased from 4.3% to -1.4%

GDP External Demand (QoQ) (Q1) decreased from 1.0% to -0.2%

GDP Price Index (YoY) decreased from 0.3% to -0.2%

GDP Private Consumption (QoQ) (Q1) decreased from 2.2% to -1.4%

New Zealand:

RBNZ Offshore Holdings (Apr)decreased from 47.00% to 44.90%

Some economic news from today:

Japan:

Tertiary Industry Activity Index (MoM) increased from 0.3% to 1.1%

EUROPE/EMEA:

The Resolution Foundation said the UK may face a decade of major public policy challenges that could reduce economic performance to nearer that of struggling Italy. A joint project by the Resolution Foundation think tank and the London School of Economics said the UK was neither used to nor prepared for the challenges posed by the aftermath of Covid-19, Brexit, the net-zero transition, automation, and a changing population. The launch report noted that Italy had suffered two decades of flatlining living standards, and in the absence of a comprehensive strategy for economic renewal, there was a risk the UK could face a similar relative decline.

The German Constitutional Court on Tuesday cleared the way for continued Bundesbank participation in one of the European Central Bank’s key asset purchase programs, following years of legal wrangling. Germany’s highest court dismissed the claim that the ECB had failed to provide adequate justification for the so-called PSPP, introduced to support the eurozone’s battered economy in 2015.

African leaders gathered in Paris on Tuesday for a summit dedicated to supporting the continent’s financial recovery from the damage wrought by Covid-19. French President Emmanuel Macron wants to discuss helping African countries deal with debt and find solutions to the economic crisis. Kristalina Georgieva, managing director of the International Monetary Fund, said the summit sought to reverse the “dangerous divergence” between advanced economies and the developing world. Ms Georgieva said Africa’s economy was expected to grow only 3.2 percent in 2021 compared to an average of six percent for the rest of the world.

The major Europe stock markets had a mixed day:

CAC 40 decreased 13.68 points or -0.22% to 6,353.67
FTSE 100 increased 1.39 points or 0.02% to 7,034.24
DAX 30 decreased 10.04 points or -0.07% to 15,386.58

The major Europe currency markets had a mixed day today:

EURUSD increased 0.00595 or 0.49% to 1.22163
GBPUSD increased 0.00451 or 0.32% to 1.41896
USDCHF decreased 0.00557 or -0.62% to 0.89756

Some economic news from Europe today:

UK:

Average Earnings ex Bonus (Mar) increased from 4.4% to 4.6%

Average Earnings Index +Bonus (Mar) decreased from 4.5% to 4.0%

Claimant Count Change (Apr) increased from -19.4K to -15.1K

Employment Change 3M/3M (MoM) (Mar) increased from -73K to 84K

Unemployment Rate (Mar) decreased from 4.9% to 4.8%

Norway:

Trade Balance (Apr) decreased from 25.4B to 17.0B

Italy:

Italian Trade Balance (Mar) increased from 4.750B to 5.190B

Italian Trade Balance EU (Mar) decreased from 0.60B to 0.38B

Euro Zone:

Employment Change (QoQ) decreased from 0.4% to -0.3%

Employment Overall (Q1) decreased from 157,972.0K to 157,440.7K

GDP (YoY) (Q1) remain the same at -1.8%

GDP (QoQ) (Q1) remain the same at -0.6%

Trade Balance (Mar) decreased from 23.0B to 15.8B

US/AMERICAS:

Fidelity Investments has a new target demographic – teenagers. Fidelity Youth Accounts will be available to teenagers aged 13 to 17 who have a parent with a Fidelity account. The no-fee platform will allow youth to purchase ETFs, stocks, and mutual funds. A spokeswoman for Fidelity said their goal is to “encourage young Americans to learn through action and foster meaningful family conversations around financial topics.” However, allowing teenagers to risk money is raising some obvious concerns. This is the first platform that will allow minors to trade actively.

Treasury Secretary Janet Yellen told the U.S. Chamber of Commerce this Tuesday that corporations need to pay higher taxes that would be in line with “historical norms.” “With corporate taxes at a historical low of one percent of GDP, we believe the corporate sector can contribute to this effort by bearing its fair share: we propose simply to return the corporate tax toward historical norms,” Yellen commented. She also voiced support for stronger labor unions, stating that they have higher bargaining power as a group. “Workers, particularly lower-wage earners, have seen wage growth stagnate over several decades, despite overall rising productivity and national income,” the secretary said.

New home construction has reached its lowest level in nearly a year, according to the US Census. Single-family housing starts fell 13.4% in April compared to the month prior. High commodity prices are partly to blame after items like lumber, steel, and copper surged. Almost half of builders are adding “escalation clauses” to their sale prices due to the rising costs of materials, which leads to customers paying an initially unknown amount. Around 15% of builder said that put down the initial concrete foundation for homes, but have held off on actually building the rest of the house, which is still statistically counted as a “start.”

US Market Closings:

Dow declined 267.13 points or -0.78% to 34,060.66
S&P 500 declined 35.46 points or -0.85% to 4,127.83
Nasdaq declined 75.41 points or -0.56% to 13,303.64
Russell 2000 declined 16.24 points or -0.73% to 2,210.88

Canada Market Closings:

TSX Composite advanced 32.4 points or 0.17% to 19,507.05
TSX 60 advanced 1.58 points or 0.14% to 1,168.08

Brazil Market Closing:

Bovespa advanced 42.09 points or 0.03% to 122,979.96

ENERGY:

The oil markets had a negative day today:

Crude Oil decreased 0.96 USD/BBL or -1.45% to 65.3100
Brent decreased 0.91 USD/BBL or -1.31% to 68.5500
Natural gas decreased 0.089 USD/MMBtu or -2.86% to 3.0200
Gasoline decreased 0.0091 USD/GAL or -0.42% to 2.1492
Heating oil decreased 0.0104 USD/GAL or -0.50% to 2.0500

Top commodity gainers: Palm Oil (5.02%), Cotton (1.91%), Canola (1.49%) and Zinc (1.64%)
Top commodity losers: Lumber (-4.75%), Platinum (-1.57%), Natural Gas (-2.86%), and Crude Oil (-1.45%)

The above data was collected around 13:50 EST on Tuesday.

BONDS:

Japan 0.0830%(+0bp), US 2’s 0.15%(+0.0001%), US 10’s 1.6471%(+0.71bps); US 30’s 2.3684%(+0.01%), Bunds -0.104% (+1.2bp), France 0.296% (+1bp), Italy 1.1070% (-0bp), Turkey 17.45% (+0bp), Greece 1.077% (-3bp), Portugal 0.607% (-2bp); Spain 0.605% (-2bp) and UK Gilts 0.867% (+0bp).