Market Talk – June 8, 2021

Posted Jun 8, 2021 by Martin Armstrong |

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ASIA:

China on Tuesday warned the United States against pursuing a trade deal with Taiwan after the US said it would start negotiations with the self-ruled island. Beijing sees democratic Taiwan as part of its territory. On Tuesday, China’s foreign ministry spokesman Zhao Lijian urged Washington to “stop any form of official exchanges with Taiwan, handle the Taiwan issue cautiously, and refrain from sending any wrong signals to Taiwan independence forces.” Chinese social media erupted with fury at the weekend over a visit by US senators to Taipei where they announced that Washington would donate 750,000 COVID-19 vaccine doses to the island. US Secretary of State Antony Blinken told a congressional hearing in Washington that discussions would begin on a trade deal.

India’s market regulator on Monday barred Franklin Templeton Mutual Fund from launching any new debt schemes for two years, after a probe into its sudden closure of six credit funds last year found “serious lapses and violations.” The decision by the Securities and Exchange Board of India (SEBI) is a major setback for Franklin Templeton, one of India’s most prominent fund houses in fixed income with assets under management of over 825 billion rupees as of the end of March. SEBI ordered the fund house to refund investment and advisory fees along with interest of more than 5 billion rupees, and fined the global giant another 50 million rupees

The major Asian stock markets had a mixed day today:

NIKKEI 225 decreased 55.68 points or -0.19% to 28,963.56
Shanghai decreased 19.43 points or -0.54% to 3,580.11
Hang Seng decreased 5.90 points or -0.02% to 28,781.38
ASX 200 increased 10.70 points or 0.15% to 7,292.60
Kospi decreased 4.29 points or -0.13% to 3,247.83
SENSEX decreased 52.94 points or -0.10% to 52,275.57
Nifty50 decreased 11.55 points or -0.07% to 15,740.10

The major Asian currency markets had a mixed day today:

AUDUSD decreased 0.00161 or -0.21% to 0.77396
NZDUSD decreased 0.00276 or -0.38% to 0.71966
USDJPY increased 0.18 or 0.17% to 109.46
USDCNY increased 0.01188 or 0.19% to 6.39942

Precious Metals:

Gold decreased 5.56 USD/t oz. or -0.29% to 1,893.44
Silver decreased 0.248 USD/t. oz or -0.89% to 27.627

Some economic news from last night:

Japan:

Average Cash Earnings (YoY) increased from 0.2% to 1.6%

Overall wage income of employees (Apr) increased from 0.6% to 1.6%

Overtime Pay (YoY) (Apr) increased from -5.00% to 6.40%

Adjusted Current Account decreased from 1.70T to 1.55T

Bank Lending (YoY) (May) decreased from 4.8% to 2.9%

Current Account n.s.a. (Apr) decreased from 2.650T to 1.322T

GDP (QoQ) (Q1) decreased from 2.8% to -1.0%

GDP (YoY) (Q1) decreased from 11.7% to -3.9%

GDP Capital Expenditure (QoQ) (Q1) decreased from 4.3% to -1.2%

GDP External Demand (QoQ) (Q1) decreased from 1.1% to -0.2%

GDP Private Consumption (QoQ) (Q1) decreased from 2.2% to -1.5%

South Korea:

Current Account (Apr) decreased from 7.82B to 1.91B

Australia:

NAB Business Confidence (May) decreased from 23 to 20

NAB Business Survey (May) increased from 32 to 37

Indonesia:

FX Reserves (USD) (May) decreased from 138.80B to 136.40B

Some economic news from today:

Japan:

Economy Watchers Current Index (May) decreased from 39.1 to 38.1

EUROPE/EMEA:

British Foreign Secretary Dominic Raab told Al Arabiya that the UK stands with its “ally” Saudi Arabia against Iran-back terror attacks on the Kingdom, and reiterated Britain’s commitment to securing a stronger nuclear deal with Iran for the safety of the region. Raab had met with Saudi Arabia’s Crown Prince Mohammed bin Salman on Monday to set out the UK’s ambition for a closer partnership with Saudi Arabia based on a commitment to trade and regional security, the Saudi Press Agency (SPA) reported earlier.

Nvidia Corp has submitted an application to Chinese competition regulators to review a $40 billion takeover of UK chip designer Arm, the Financial Times reported on Tuesday. Nvidia said last month it expects to close the Arm acquisition by March 2022, after having struck a deal with Japan’s SoftBank Group in September 2020. In February, Bloomberg News reported that the US Federal Trade Commission had opened an in-depth probe into Nvidia’s agreement to buy Arm.

The major Europe stock markets had a mixed day:

CAC 40 increased 7.45 points or 0.11% to 6,551.01
FTSE 100 increased 17.87 points or 0.25% to 7,095.09
DAX 30 decreased 36.55 points or -0.23% to 15,640.60

The major Europe currency markets had a negative day today:

EURUSD decreased 0.00177 or -0.15% to 1.21737
GBPUSD decreased 0.00237 or -0.17% to 1.41542
USDCHF decreased 0.00085 or -0.09% to 0.89675

Some economic news from Europe today:

UK:

BRC Retail Sales Monitor (YoY) (May) decreased from 39.6% to 18.5%

Germany:

German Industrial Production (MoM) (Apr) decreased from 2.2% to -1.0%

German ZEW Current Conditions (Jun) increased from -40.1 to -9.1

German ZEW Economic Sentiment (Jun) decreased from 84.4 to 79.8

France:

French Current Account (Apr) increased from -2.70B to -1.40B

French Exports (Apr) increased from 40.0B to 40.6B

French Imports (Apr) increased from 46.1B to 46.9B

French Trade Balance (Apr) decreased from -6.1B to -6.2B

Italy:

Italian Retail Sales (MoM) (Apr) decreased from -0.1% to -0.4%

Italian Retail Sales (YoY) (Apr) increased from 23.5% to 30.4%

Norway:

Norges Bank regional network Survey increased from 0.92 to 1.88

Euro Zone:

Employment Change (YoY) (Q1) increased from -1.9% to -1.8%

Employment Change (QoQ) (Q1) decreased from 0.3% to -0.3%

Employment Overall (Q1) increased from 157,440.7K to 157,618.6K

GDP (QoQ) (Q1) increased from -0.6% to -0.3%

GDP (YoY) (Q1) increased from -1.8% to -1.3%

ZEW Economic Sentiment (Jun) decreased from 84.0 to 81.3

US/AMERICAS:

Job openings in the US reached a record high this April after 9.286 million positions became available, according to the Labor Department’s Job Openings and Labor Turnover Survey (JOLTS). March’s figure was revised upward to 8.288 million as well. Naturally, due to restrictions easing, the food service industry saw the largest gain (349,000), followed by other services (115,000), and manufacturing (78,800). Despite the number of openings, the number of new hires during April totaled 6.1 million. The number of separations (e.g., layoffs, discharges, and quits) rose by 324,000 to 5.8 million.

Vice President Harris, tasked with calming the immigration crisis, met with Mexican President Andres Manuel Lopez Obrador and stated that the two were embarking on a “new era.” President Lopez Obrador has had difficulties with his northern neighbor. First, former President Trump demanded Mexico finance a wall separating the two countries and pushed Mexico to do more to fight illegal immigration. Then during the beginning of Biden’s presidency, Biden informed immigrants that they were welcome in America. Biden’s promise led to the worst US-Mexico border crisis in two decades and dampened relations with Mexico. Today, VP Harris firmly told anyone wishing to enter the country illegally not to come.

US Market Closings:

Dow declined 30.42 points or -0.09% to 34,599.82
S&P 500 advanced 0.72 of a point or 0.02% to 4,227.24
Nasdaq advanced 43.19 points or 0.31% to 13,924.91
Russell 2000 advanced 24.58 points or 1.06% to 2,343.76

Canada Market Closings:

TSX Composite advanced 30.62 points or 0.15% to 20,065.92
TSX 60 advanced 0.79 of a point or 0.07% to 1,200.12

Brazil Market Closing:

Bovespa declined 993.97 points or -0.76% to 129,782.3

ENERGY:

The US Energy Information Administration lifted its forecasts for this year’s US and global benchmark oil prices, according to a monthly report released Tuesday. The EIA forecast this year’s West Texas Intermediate crude prices at an average $61.85 a barrel, up 5% from the May forecast. Brent crude is expected to average $65.19 this year, up 4.7% from the previous forecasts. The EIA, however, lowered its oil forecasts for 2022 by 0.4% to $56.74 for WTI and to $60.49 for Brent. US oil production is expected to average 11.08 million barrels per day this year, up 0.5% from May’s forecast.

The oil markets had a green day today:

Crude Oil increased 0.99 USD/BBL or 1.43% to 70.2200
Brent increased 0.88 USD/BBL or 1.23% to 72.3700
Natural gas increased 0.061 USD/MMBtu or 1.99% to 3.1310
Gasoline increased 0.0327 USD/GAL or 1.49% to 2.2258
Heating oil increased 0.0223 USD/GAL or 1.05% to 2.1379

The above data was collected around 16:18 EST on Tuesday

Top commodity gainers: Natural Gas (1.99%), Sugar (2.07%), Gasoline (1.49%) and Tin (1.59%)
Top commodity losers: Bitumen (-1.79%), Canola (-1.97%), Palm Oil (-2.13%), and Lumber (-4.44%)

The above data was collected around 16:26 EST on Tuesday.

BONDS:

Japan 0.0750%(-0bp), US 2’s 0.1547%(-0.00%), US 10’s 1.5347%(-3.53bps); US 30’s 2.2165%(-0.04%), Bunds -0.2230% (-3bp), France 0.146% (-3bp), Italy 0.8644% (-6bp), Turkey 18.10% (+3bp), Greece 0.8750% (+5bp), Portugal 0.434% (-4bp); Spain 0.442% (-4bp) and UK Gilts 0.773% (-4bp).