Market Talk – July 22, 2021

Posted Jul 22, 2021 by Martin Armstrong |

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ASIA:

China’s economy grew 7.9 percent from April to June, the National Bureau of Statistics (NBS) announced on Thursday. The growth rate was lower than the forecasted 8.1 percent by most market analysts. Chinese economists are aware that the economy is highly resilient after overcoming the coronavirus pandemic fallout. Increasingly, the giant economy is being boosted by rising domestic consumption, roaring external demand for Chinese goods, and the government’s laser-like focus on infrastructure investment, new and high technology investment, and non-stop improvement of 1.4 billion people’s welfare.

The major Asian stock markets had a green day today:

NIKKEI 225 closed
Shanghai increased 12.07 points or 0.34% to 3,574.73
Hang Seng increased 499.26 or 1.83% to 27,723.84
ASX 200 increased 77.70 points or 1.06% to 7,386.40
Kospi increased 34.30 points or 1.07% to 3,250.21
SENSEX increased 638.70 points or 1.22% to 52,837.21
Nifty50 increased 191.95 points or 1.23% to 15,824.05

The major Asian currency markets had a mixed day today:

AUDUSD increased 0.00089 or 0.12% to 0.73630
NZDUSD decreased 0.0007 or -0.10% to 0.69554
USDJPY decreased 0.18 or -0.17% to 110.09
USDCNY increased 0.0117 or 0.18% to 6.47596

Precious Metals:

Gold increased 2.86 USD/t oz. or 0.16% to 1,806.17
Silver increased 0.104 USD/t. oz or 0.41% to 25.332

Some economic news from last night:

Australia:

NAB Quarterly Business Confidence decreased from 19 to 17

Some economic news from today:

Hong Kong:

CPI (YoY) (Jun) decreased from 1.00% to 0.70%

Indonesia:

Deposit Facility Rate (Jul) remain the same at 2.75%

Lending Facility Rate (Jul) remain the same at 4.25%

Loans (YoY) (Jun) increased from -1.28% to 0.59%

Interest Rate Decision remain the same at 3.50%

EUROPE/EMEA:

UK government borrowing fell in June as the reopening of the economy from lockdown fuelled a rise in tax receipts despite a record jump in debt interest payments to £8.7bn amid rising inflation. The Office for National Statistics (ONS) said the government’s budget deficit – the shortfall between spending and income – reached £22.8bn in June, a fall of £5.5bn from the same month a year earlier. However, the latest snapshot revealed the impact on the public purse from rising inflation as interest payments on government debt increased by more than 200% to £8.7bn, the highest monthly level on records dating back to 1997. The rise in debt interest payments is likely to become a focus of Rishi Sunak after the surge in government borrowing during the Covid-19 pandemic pushed debt to levels unseen since the 1960s.

Britain’s unemployment rate is falling as the economy grinds back into gear, but job vacancies are soaring as reopening businesses struggle to recruit sufficient staff, official data showed Thursday. The unemployment rate dipped to 4.8 percent in the three months to the end of May. That was down from 5.0 percent in the three months to February, the Office for National Statistics (ONS) said in a statement, but it remains 0.9 percentage points higher than its pre-pandemic level. The number of employees on payrolls meanwhile soared by a record 356,000 in June, hitting 28.9 million people.

The major Europe stock markets had a mixed day:

CAC 40 increased 17.11 points or 0.27% to 6,481.59
FTSE 100 decreased 29.98 points or -0.43% to 6,968.30
DAX 30 increased 92.04 points or 0.60% to 15,514.54

The major Europe currency markets had a mixed day today:

EURUSD decreased 0.00298 or -0.25% to 1.17641
GBPUSD increased 0.00307 or 0.22% to 1.37459
USDCHF increased 0.00234 or 0.26% to 0.91989

Some economic news from Europe today:

Norway:

Industrial Confidence (Q2) increased from 8.6 to 11.3

France:

French Business Survey (Jul) increased from 108 to 110

UK:

CBI Industrial Trends Orders (Jul) decreased from 19 to 17

Euro Zone:

Deposit Facility Rate (Jul) remain the same at -0.50%

ECB Marginal Lending Facility remain the same at 0.25%

ECB Interest Rate Decision (Jul) remain the same at 0.00%

Consumer Confidence (Jul) decreased from -3.3 to -4.4

US/AMERICAS:

Weekly unemployment filings unexpectedly rose last week, according to the Labor Department. Initial filings reached 419,000 for the week ending on July 17, although analysts had expected a reading of 350,000. The week prior was revised upward to reflect 368,000 filings. Continuing claims declined by 126,000 to 3.24 million, marking another pandemic low.

Lyft and Uber drivers across the nation went on strike this Wednesday to urge Senators to pass the Protecting the Right to Organize Act (PRO Act). The bill, which passed in the House in March, would permit gig workers to unionize and seek benefits not grants to gig economy workers. The popularity of unions in the US has drastically decreased over the decades. In 1979, 27% of the workforce were involved with a union compared to only 10.3% in 2019. A representative for Uber claimed that top drivers in high-demand areas are earning $32.33 per hour. However, boycotting ride-hailing drivers interviewed outside of the LAX Airport yesterday claimed to be making significantly less. It is now up to the Senate to decide if they will go forward with the PRO Act.

A group of states’ Attorneys General are proposing a $26 billion settlement for the opioid crisis that they claim was caused by Cardinal Health, Amerisource Bergen Drug, McKesson, and manufacturer Johnson & Johnson. There are currently over 4,000 lawsuits against the four companies noted for allegedly promoting the use of addictive and deadly opiate narcotics. Johnson & Johnson, a company that faces constant lawsuits, will be forced to pay up to $5 billion over the course of nine years, with $3.7 billion paid during the first three years. Furthermore, Johnson & Johnson would be barred from selling opiates under the proposal and will not be allowed to provide grants, funding, or lobbying for any third party that is involved with opiates. The other three drug distributors will pay up to $21 billion collectively over the next 18 years.

US Market Closings:

Dow advanced 23.35 points or 0.07% to 34,823.35
S&P 500 advanced 8.79 points or 0.2% to 4,367.48
Nasdaq advanced 52.64 points or 0.36% to 14,684.6
Russell 2000 declined 34.57 points or -1.55% to 2,199.48

Canada Market Closings:

TSX Composite declined 12.53 points or -0.06% to 20,097.52
TSX 60 advanced 0.06 of a point or 0% to 1,207.95

Brazil Market Closing:

Bovespa advanced 217.41 points or 0.1% to 126,146.66

ENERGY:

The oil markets had a mixed day today:

Crude Oil increased 0.83 USD/BBL or 1.18% to 71.1300
Brent increased 0.81 USD/BBL or 1.12% to 73.0400
Natural gas decreased 0.014 USD/MMBtu or -0.35% to 3.9450
Gasoline increased 0.0358 USD/GAL or 1.62 % to 2.2525
Heating oil increased 0.0256 USD/GAL or 1.23% to 2.1126

The above data was collected around 12:15 EST on Thursday

Top commodity gainers: Coffee (10.31%), Cocoa (2.21%), Lumber (10.79%) and Bitumen (2.01%)
Top commodity losers: Oat (-3.52%), Corn (-1.97%), Soybeans (-2.55%), and Wheat (-3.45%)

The above data was collected around 12:22 EST on Thursday.

BONDS:

Japan 0.02%(+1bp), US 2’s 0.1998%(-0.01%), US 10’s 1.2432%(-4.85bps); US 30’s 1.8874%(-0.05%), Bunds -0.4270% (-3.1bp), France -0.0860% (-4.2bp), Italy 0.6428% (-4.65bp), Turkey 16.74% (-7bp), Greece 0.6700% (-1bp), Portugal 0.233% (-2bp); Spain 0.302% (+1.44bp) and UK Gilts 0.5670% (-3.8bp).