Market Talk – May 19, 2021

Posted May 19, 2021 by Martin Armstrong |

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ASIA:

The price of Bitcoin fell below $34,000 (£24,030) for the first time in three months on Wednesday, after China imposed fresh curbs on cryptocurrencies. Beijing banned banks and payment firms from providing services related to cryptocurrency transactions. Despite this, a major US based bank, Wells Fargo, said on Wednesday it would introduce professionally managed funds for its wealthier clients. In a report, its investment institute said the risks associated with digital currencies meant it would favor “qualified investors”.

India is unlikely to resume major exports of COVID-19 vaccines until at least October as it diverts shots for domestic use, three government sources said, a longer-than-expected delay set to worsen supply shortages from the global COVAX initiative. The Serum Institute of India (SII), the world’s biggest vaccine maker producing the AstraZeneca vaccine, responded by saying that it hoped to restart deliveries to COVAX and other countries by the end of this year. The World Health Organization, which co-leads COVAX, on Monday called on vaccine makers outside India to advance supplies to the program given the shortfall from the South Asian country.

The major Asian stock markets had a negative day today:

NIKKEI 225 decreased 362.39 points or -1.28% to 28,044.45
Shanghai decreased 18.05 points or -0.51% to 3,510.96
Hang Seng closed
ASX 200 decreased 134.30 points or -1.90% to 6,931.70
Kospi closed
SENSEX decreased 290.69 points or -0.58% to 49,902.64
Nifty50 decreased 77.95 points or -0.52% to 15,030.15

The major Asian currency markets had a mixed day today:

AUDUSD decreased 0.00799 or -1.03% to 0.77144
NZDUSD decreased 0.00922 or -1.27% to 0.71525
USDJPY increased 0.41 or 0.38% to 109.27
USDCNY increased 0.01571 or 0.24% to 6.43846

Precious Metals:

Gold decreased 2.56 USD/t oz. or -0.14% to 1,865.66
Silver decreased 0.65 USD/t. oz or -2.30% to 27.556

Some economic news from last night:

Australia:

Westpac Consumer Sentiment (May) decreased from 6.2% to -4.8%

Wage Price Index (YoY) (Q1) increased from 1.4% to 1.5%

Wage Price Index (QoQ) (Q1) remain the same at 0.6%

New Zealand:

PPI Input (QoQ) (Q1) increased from 0.1% to 2.1%

PPI Output (QoQ) (Q1) increased from 0.5% to 1.2%

Some economic news from today:

Japan:

Capacity Utilization (MoM) (Mar) increased from -2.8% to 5.6%

Industrial Production (MoM) (Mar) decreased from 2.2% to 1.7%

EUROPE/EMEA:

British inflation more than doubled in April, the start of a likely climb in prices this year as rich economies recover from pandemic lockdowns, but one that the Bank of England hopes will prove temporary. Britain’s consumer price index rose by 1.5% in April. That was a sharp jump from the 0.7% rise seen in March and marked the highest CPI reading since March 2020, driven by higher power and fuel bills as global oil prices climb from their pandemic lows of 2020. April’s inflation reading was, however, only a touch above the 1.4% rise seen in a Reuters poll of economists and was still below the Bank of England’s 2% target.

House prices across the UK grew at the fastest pace in March since shortly before the financial crisis hit in 2007, according to official figures. With buyers rushing to take advantage of the government’s stamp duty holiday, extended to the end of June, the average UK house price climbed 10.2% in the year to March, up from 9.2% in February. This is the highest annual growth rate the UK has seen since August 2007, said the Office for National Statistics. The average UK property cost £256,000 in March, £24,000 more than in March 2020. Prices rose 2.1% between February and March. London remains the area with the lowest annual growth for the fourth month running, down to 3.7% from 4.4%, suggesting that the exodus from the capital has continued, as a shift to working from home prompted many office workers to reassess their housing and commuting needs. However, the average price in the capital remained the most expensive of any region at £500,000 in March.

The major Europe stock markets had a negative day:

CAC 40 decreased 91.12 points or -1.43% to 6,262.55
FTSE 100 decreased 84.04 points or -1.19% to 6,950.20
DAX 30 decreased 273.02 points or -1.77% to 15,113.56

The major Europe currency markets had a mixed day today:

EURUSD decreased 0.00495 or -0.40% to 1.21746
GBPUSD decreased 0.00791 or -0.56% to 1.41102
USDCHF increased 0.0064 or 0.71% to 0.90387

Some economic news from Europe today:

UK:

House Price Index (YoY) increased from 9.2% to 10.2%

Car Registration (YoY) (Apr) increased from 11.5% to 3,176.6%

Car Registration (MoM) (Apr) decreased from 453.4% to -50.1%

Core CPI MoM (MoM) (Apr) decreased from 0.4% to 0.3%

Core CPI (YoY) (Apr) increased from 1.1% to 1.3%

Core PPI Output (MoM) (Apr) decreased from 0.7% to 0.5%

Core PPI Output (YoY) (Apr) increased from 2.0% to 2.5%

Core RPI (MoM) (Apr) increased from 0.3% to 1.5%

Core RPI (YoY) (Apr) increased from 1.6% to 3.2%

CPI (YoY) (Apr) increased from 0.7% to 1.5%

CPI (MoM) (Apr) increased from 0.3% to 0.6%

CPI, n.s.a (Apr) increased from 109.40 to 110.10

PPI Input (YoY) (Apr) increased from 6.4% to 9.9%

PPI Input (MoM) (Apr) decreased from 1.9% to 1.2%

PPI Output (YoY) (Apr) increased from 2.3% to 3.9%

PPI Output (MoM) (Apr) decreased from 0.8% to 0.4%

RPI (YoY) (Apr) increased from 1.5% to 2.9%

RPI (MoM) (Apr) increased from 0.3% to 1.4%

Italy:

Italian Car Registration (MoM) (Apr) decreased from 18.7% to -14.5%

Italian Car Registration (YoY) (Apr) increased from 497.2% to 3,276.8%

Germany:

German Car Registration (MoM) (Apr) decreased from 50.4% to -21.4%

German Car Registration (YoY) (Apr) increased from 35.9% to 90.0%

France:

French Car Registration (MoM) (Apr) decreased from 37.8% to -23.2%

French Car Registration (YoY) (Apr) increased from 191.7% to 568.8%

Euro Zone:

Core CPI (YoY) (Apr) decreased from 0.9% to 0.7%

Core CPI (MoM) (Apr) decreased from 1.0% to 0.5%

CPI (MoM) (Apr) decreased from 0.9% to 0.6%

CPI (YoY) (Apr) increased from 1.3% to 1.6%

CPI ex Tobacco (MoM) (Apr) decreased from 0.9% to 0.6%

CPI ex Tobacco (YoY) (Apr) increased from 1.3% to 1.6%

HICP ex Energy & Food (YoY) (Apr) remain the same at 0.8%

HICP ex Energy and Food (MoM) (Apr)decreased from 0.8% to 0.5%

US/AMERICAS:

The White House has removed sanctions to allow the Nord Stream 2 pipeline deal to commence. Congress placed sanctions on companies involved in the pipeline under the National Defense Authorization Act. The new pipeline will transfer gas via the Baltic Sea from Russia to Germany. Numerous analysts believe the sanctions were lifted to maintain the US’ good standing with Germany, as Biden also also canceled former President Trump’s plan to withdraw troops from Germany. As for the Keystone XL pipeline, Biden issued an executive order cancelling the project on his first day of office. The news is likely to raise eyebrows from the US’ northern neighbor.

US House Speaker Nancy Pelosi is urging world leaders to boycott the Olympics in Beijing. “Let’s not honor the Chinese government by having heads of state go to China,” Pelosi stated in reference to the detained Uyghur Muslims. However, the prospect of boycotting the Olympics has become a bipartisan issue, with former CIA Director Mike Pompeo stating, “I don’t think we should have any American go and participate in the ‘Genocide Olympics.’” China has previously stated it would consider imposing sanctions against any nation that boycotted the games.

President Biden specifically mentioned China and Russia being a potential “threat” in the future while addressing the United States Coast Guard Academy. The president mentioned that it’s a “vital interest” to keep the seas safe to ensure trade is undisrupted. “When nations try to game the system or tip the rules in their favor, it throws everything off balance. That’s why we are so adamant that these areas of the world that are the arteries of trade and shipping remain peaceful, whether that’s the South China Sea, the Arabian Gulf, and, increasingly, the Arctic,” Biden stated.

US Market Closings:

Dow declined 164.62 points or -0.48% to 33,896.04
S&P 500 declined 12.15 points or -0.29% to 4,115.68
Nasdaq declined 3.9 points or -0.03% to 13,299.74
Russell 2000 declined 17.24 points or -0.78% to 2,193.64

Canada Market Closings:

TSX Composite declined 90.02 or -0.46% to 19,417.03
TSX 60 declined 5.39 points or -0.46% to 1,162.69

Brazil Market Closing:

Bovespa declined 343.66 points or -0.28% to 122,636.3

ENERGY:

The oil markets had a negative day today:

Crude Oil decreased 2.29 USD/BBL or -3.50% to 63.2000
Brent decreased 2.22 USD/BBL or -3.23% to 66.4900
Natural gas decreased 0.041 USD/MMBtu or -1.36% to 2.9710
Gasoline decreased 0.0681 USD/GAL or -3.15% to 2.0928
Heating oil decreased 0.0551 USD/GAL or -2.68% to 2.0013

Top commodity gainers: Lumber (4.98%), Coffee (2.62%), Corn (0.42%) and Lean Hogs (0.43%)
Top commodity losers: Copper (-3.54%), Brent (-3.23%), Gasoline (-3.15%), and Crude Oil (-3.50%)

The above data was collected around 15:05 EST on Wednesday.

BONDS:

Japan 0.0770%(-0bp), US 2’s 0.16%(+0.008%), US 10’s 1.6881%(+4.61bps); US 30’s 2.3933%(+0.03%), Bunds -0.106% (+0bp), France 0.291% (+0bp), Italy 1.1171% (+1.06bp), Turkey 17.42% (-3bp), Greece 1.082% (+1bp), Portugal 0.64% (+3.6bp); Spain 0.633% (+2.35bp) and UK Gilts 0.854% (-1bp).