Market Talk – July 7, 2021

Posted Jul 7, 2021 by Martin Armstrong |

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ASIA:

Japan’s government expects the country’s economy to rebound to pre-COVID-19 levels by the end of March 2022, with a government official touting a strong domestic vaccine rollout and robust growth as the main upward drivers. Revised estimates show that Japan’s economy shrank less over 2021 than initially predicted, with uprated figures showing a gross domestic product (GDP) decline of 3.9% rather than the initial 5.1% predicted.

The major Asian stock markets had a mixed day today:

NIKKEI 225 decreased 276.26 points or -0.96% to 28,366.95
Shanghai increased 23.46 points or 0.66% to 3,553.72
Hang Seng decreased 112.24 or -0.40% to 27,960.62
ASX 200 increased 65.10 points or 0.90% to 7,326.90
Kospi decreased 19.87 points or -0.60% to 3,285.34
SENSEX increased 193.58 points or 0.37% to 53,054.76
Nifty50 increased 61.40 points or 0.39% to 15,879.65

The major Asian currency markets had a negative day today:

AUDUSD decreased 0.00128 or -0.17% to 0.74836
NZDUSD decreased 0.00098 or -0.14% to 0.70132
USDJPY decreased 0 or -0.00% to 110.59
USDCNY decreased 0.00512 or -0.08% to 6.47336

Precious Metals:

Gold increased 7.56 USD/t oz. or 0.42% to 1,804.25
Silver increased 0.029 USD/t. oz or 0.11% to 26.163

Some economic news from last night:

Japan:

Foreign Reserves (USD) (Jun) decreased from 1,387.5B to 1,376.5B

South Korea:

Current Account (May) increased from 1.91B to 10.76B

Australia:

AIG Services Index (Jun) decreased from 61.2 to 57.8

New Zealand:

GlobalDairyTrade Price Index decreased from -1.3% to -3.6%

Indonesia:

FX Reserves (USD) (Jun) increased from 136.40B to 137.10B

Some economic news from today:

China:

FX Reserves (USD) (Jun) decreased from 3.222T to 3.214T

Japan:

Coincident Indicator (MoM) (May) decreased from 2.4% to -2.6%

Leading Index (MoM) (May) decreased from 1.4% to -1.2%

Hong Kong:

Foreign Reserves (USD) (Jun) decreased from 494.50B to 491.60B

Singapore:

Foreign Reserves USD (MoM) (Jun) increased from 398.1B to 398.4B

EUROPE:

Consumers visited and spent less in UK shops, bars and restaurants in June, according to new data, suggesting the economic recovery lost momentum following a rise in Covid-19 infections. The lifting of restrictions, the dropping of mask wearing and social distancing, and the increased awareness of low levels of hospitalization “should give the economic rebound new impetus over the summer”, said Martin Beck, lead UK Economist, at the consultancy Oxford Economics.

The major Europe stock markets had a green day:

CAC 40 increased 20.24 points or 0.31% to 6,527.72
FTSE 100 increased 50.14 points or 0.71% to 7,151.02
DAX 30 increased 181.33 points or 1.17% to 15,692.71

The major Europe currency markets had a mixed day today:

EURUSD decreased 0.00192 or -0.16% to 1.18053
GBPUSD increased 0.0001 or 0.01% to 1.38048
USDCHF increased 0.00027 or 0.03% to 0.92493

Some economic news from Europe today:

Germany:

German Industrial Production (MoM) (May) remain the same at -0.3%

UK:

Halifax House Price Index (YoY) decreased from 9.5% to 8.8%

Halifax House Price Index (MoM) (Jun) decreased from 1.2% to -0.5%

Labour Productivity (Q1) increased from -0.7% to 0.9%

Norway:

Manufacturing Production (MoM) (May) increased from -1.9% to -0.1%

France:

French Current Account (May) decreased from -2.00B to -2.30B

French Exports (May) decreased from 40.6B to 39.4B

French Imports (May) decreased from 46.9B to 46.2B

French Reserve Assets Total (Jun) decreased from 191,234.0M to 186,242.0M

French Trade Balance (May) decreased from -6.3B to -6.8B

Italy:

Italian Retail Sales (MoM) (May) increased from -0.1% to 0.2%

Italian Retail Sales (YoY) (May) decreased from 30.4% to 13.3%

US/AMERICAS:

Mortgage applications declined 1.8% last week, representing the lowest level since early 2020, according to data provided by the Mortgage Bankers Association. Refinances declined 2% as well compared to 8% YoY as many homeowners have already taken advantage of artificially low rates. A representative for MBA stated the decline is due to a combination of low inventory and expensive housing that has caused the average buyer to take out higher loan amounts. The average contract rate for 30-year fixed-rate mortgages fell 5 basis points.

The Federal Reserve reiterated their desire to take a steady pace after releasing their monthly minutes report. The majority of members on the Federal Open Market Committee agreed that the economy had not met the “substantial further progress” benchmark, and therefore policy did not warrant a change. However, a few members believe the US economy is recovering at a faster than anticipated rate and were concerned about rising inflation. “In coming meetings, participants agreed to continue assessing the economy’s progress toward the Committee’s goals and to begin to discuss their plans for adjusting the path and composition of asset purchases,” the minutes report noted without giving a clear date for when purchases will decrease. The report did note that they would provide notice before changing their buying program. The FOMC agreed they “should be patient in assessing progress toward its goals and in announcing changes to its plans for asset purchases.”

Haiti’s President Jovenel Moïse was assassinated in his home this Wednesday. First Lady Martine Moïse survived the attack and was taken to the hospital with a gunshot wound. Opposition leaders had called for Moïse to step down after ruling by decree for two years. Haiti has long been in economic despair. According to CNBC, 60% of the population earns under $2 per day. World leaders spoke out against the heinous act today and President Biden stated that the US is willing to assist if needed.

US Market Closings:

Dow advanced 104.42 points or 0.3% to 34,681.79
S&P 500 advanced 14.59 points or 0.34% to 4,358.13
Nasdaq advanced 1.42 points or 0.01% to 14,665.06
Russell 2000 declined 21.66 points or -0.95% to 2,252.85

Canada Market Closings:

TSX Composite declined 9.43 points or -0.05% to 20,290.6
TSX 60 advanced 0.87 of a point or 0.07% to 1,218.67

Brazil Market Closing:

Bovespa advanced 1,923.83 points or 1.54% to 127,018.71

ENERGY:

The oil markets had a negative day today:

Crude Oil decreased 1.34 USD/BBL or -1.83% to 72.0300
Brent decreased 1.29 USD/BBL or -1.73% to 73.2400
Natural gas decreased 0.044 USD/MMBtu or -1.21% to 3.5930
Gasoline decreased 0.0279 USD/GAL or -1.25% to 2.2003
Heating oil decreased 0.0203 USD/GAL or -0.96% to 2.0846

The above data was collected around 15:52 EST on Wednesday

Top commodity gainers: Orange Juice (8.94%), Rice (3.00%), Canola (2.35%) and Palladium (2.14%)
Top commodity losers: Steel (-2.06%), Bitumen (-4.57%), Ethanol (-5.24%), and Methanol (-2.51%)

The above data was collected around 15:55 EST on Wednesday.

BONDS:

Japan 0.034%(-1bp), US 2’s 0.22%(-0.002%), US 10’s 1.3196%(-3.19bps); US 30’s 1.9378%(-0.04%), Bunds -0.2980% (-3bp), France 0.0350% (-3bp), Italy 0.7398% (-1bp), Turkey 16.98% (-1bp), Greece 0.7300% (-4bp), Portugal 0.301% (-2bp); Spain 0.338% (-1bp) and UK Gilts 0.604% (-3bp).