Market Talk – April 7, 2021

Posted Apr 7, 2021 by Martin Armstrong |

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ASIA:

The International Monetary Fund (IMF) raised its FY22 growth forecast for India to 12.5% from 11.5% estimated earlier in January, even as a resurgent Covid spread threatens to undermine the country’s economic recovery. The Washington-based global financial institution, in its annual World Economic Outlook ahead of the annual Spring meeting with the World Bank, said the Indian economy is expected to grow by 6.9% in 2022. China, the only major economy to have a positive growth rate in 2020 of 2.3%, is expected to grow by 8.6% in 2021 and 5.6% in 2022.

The major Asian stock markets had a mixed day today:

NIKKEI 225 increased 34.16 points or 0.12% to 29,730.79
Shanghai decreased 3.34 points or -0.10% to 3,479.63
Hang Seng decreased 263.94 points or -0.91% to 28,674.80
ASX 200 increased 42.10 points or 0.61% to 6,928.00
Kospi increased 10.33 points or 0.33% to 3,137.41
SENSEX increased 460.37 points or 0.94% to 49,661.76
Nifty50 increased 135.55 points or 0.92% to 14,819.05

The major Asian currency markets had a negative day today:

AUDUSD decreased 0.00248 or -0.32% to 0.76385
NZDUSD decreased 0.00253 or -0.36% to 0.70338
USDJPY decreased 0.11 or -0.10% to 109.65
USDCNY decreased 0.00003 or -0.00% to 6.54254

Precious Metals:

Gold decreased 2.81 USD/t oz. or -0.16% to 1,740.76
Silver increased 0.013 USD/t. oz or 0.05% to 25.183

Some economic news from last night:

Japan:

Foreign Reserves (USD) (Mar) decreased from 1,379.4B to 1,368.5B

South Korea:

Current Account (Feb) increased from 7.06B to 8.03B

Australia:

AIG Construction Index (Mar) increased from 57.4 to 61.8

Services PMI increased from 53.4 to 55.5

New Zealand:

ANZ Commodity Price Index (MoM) increased from 3.3% to 6.1%

Indonesia:

FX Reserves (USD) (Mar) decreased from 138.80B to 137.10B

Some economic news from today:

China:

FX Reserves (USD) (Mar) decreased from 3.205T to 3.170T

Japan:

Coincident Indicator (MoM) (Feb) decreased from 2.9% to -1.3%

Leading Index increased from 98.5 to 99.7

Leading Index (MoM) (Feb) increased from 0.8% to 1.2%

India:

Cash Reserve Ratio remain the same at 3.00%

Interest Rate Decision remain the same at 4.00%

Reverse REPO Rate remain the same at 3.35%

Nikkei Services PMI (Mar) decreased from 55.3 to 54.6

M3 Money Supply decreased from 12.6% to 11.8%

Singapore:

Foreign Reserves USD (MoM) (Mar) decreased from 382.6B to 382.0B

EUROPE/EMEA:

The International Monetary Fund raised its forecast for British economic growth, which is set to outpace the eurozone this year after its slump in 2020 but is unlikely to regain its pre-pandemic size until sometime in 2022. The IMF said Britain’s economy would grow by 5.3% in 2021, up from a previous forecast of 4.5% it made in January. However, the IMF forecasts do not take into account new lockdown measures announced by France and other countries in continental Europe in recent weeks

The major Europe stock markets had a mixed day:

CAC 40 decreased 0.68 points or -0.01% to 6,130.66
FTSE 100 increased 61.77 points or 0.91% to 6,885.32
DAX 30 decreased 36.32 points or -0.24% to 15,176.36

The major Europe currency markets had a mixed day today:

EURUSD increased 0.00226 or 0.19% to 1.18957
GBPUSD decreased 0.00394 or -0.28% to 1.37884
USDCHF decreased 0.00285 or -0.31% to 0.92794

Some economic news from Europe today:

Spain:

Spanish Services PMI (Mar) increased from 43.1 to 48.1

Italy:

Italian Composite PMI (Mar) increased from 51.4 to 51.9

Italian Services PMI (Mar) decreased from 48.8 to 48.6

France:

French Markit Composite PMI (Mar) increased from 47.0 to 50.0

French Services PMI (Mar) increased from 45.6 to 48.2

Germany:

German Composite PMI (Mar) increased from 51.1 to 57.3

German Services PMI (Mar) increased from 45.7 to 51.5

Euro Zone:

Markit Composite PMI (Mar) increased from 48.8 to 53.2

Services PMI (Mar) increased from 45.7 to 49.6

UK:

Composite PMI (Mar) increased from 49.6 to 56.4

Services PMI (Mar) increased from 49.5 to 56.3

US/AMERICAS:

The Federal Open Market Committee released their Minutes report from their mid-March meeting this Wednesday. As expected, the Fed is maintaining near-zero rates and plans to continue purchasing a minimum of $120 billion in bonds monthly. Their GDP outlook for 2021 optimistically rose to 6.5% from the initial forecast of 4.2% provided in December. The outlook on unemployment drastically improved, with the group noting a possible decline to 4.5% before the end of the year. Inflation is expected to run around 2.2%, slightly above the Fed’s target of 2%. However, Chicago Fed President Charles Evans said it would take numerous months of higher inflation before it could be determined whether it was sustainable. The decision-making branch of the Fed repeated that new policies would be based on “outcome-based guidance” rather than projections.

The US trade deficit soared to a record high in February after spiking to 4.8% to $71.1 billion, according to data released by the Commerce Department. Analysts at Reuters anticipated a $70.5 billion deficit, and forecast a continuing ride due to new stimulus and infrastructure packages. Exports declined 2.6% to $187.3 billion, while exports of goods fell 3.5% to $131.1 billion attributed to the southern cold front and a $2.5 billion decrease in shipments of capital goods. Imports experienced a 0.7% decrease to $258.3 billion, while imports of goods dropped 0.9% to $219.1 billion. Adjusted for inflation, the deficit in trade goods rose to a record high of $99.1 billion this February compared to $96.1 billion the month prior.

Dallas Federal Reserve Bank President Robert Kaplan stated this Wednesday that the US economy will experience “very robust” growth once it emerges from the coronavirus pandemic. The recovery is largely dependent on vaccine distribution and controlling new strains of the virus, he believes. According to Kaplan, the US economy could expand by 6.5% this year and anticipates unemployment dropping to 4% by the end of the year.

US Market Closings:

Dow advanced 16.02 points or 0.05% to 33,446.26
S&P 500 advanced 6.01 points or 0.15% to 4,079.95
Nasdaq declined 9.54 points or -0.07% to 13,688.84
Russell 2000 declined 36.1 points or -1.6% to 2,223.05

Canada Market Closings:

TSX Composite advanced 24.93 points or 0.13% to 19,129.07
TSX 60 advanced 3.25 points or 0.29% to 1,141.5

Brazil Market Closing:

Bovespa advanced 124.71 points or 0.11% to 117,623.58

ENERGY:

The oil markets had a mixed day today:

Crude Oil decreased 0.3 USD/BBL or -0.51% to 59.0200
Brent decreased 0.28 USD/BBL or -0.45% to 62.4600
Natural gas increased 0.066 USD/MMBtu or 2.69% to 2.5220
Gasoline decreased 0.0185 USD/GAL or -0.94% to 1.9475
Heating oil decreased 0.013 USD/GAL or -0.72% to 1.7811

Top commodity gainers: Natural Gas (2.69%), Palm Oil (1.03%), Lumber (2.46%) and Iron Ore 62% fe (1.35%)
Top commodity losers: Palladium (-2.28%), Copper (-1.15%), Coal (-0.96%), and Gasoline (-0.94%)

The above data was collected around 11:18 EST on Wednesday.

BONDS:

Japan 0.10%(-1bp), US 2’s 0.15%(-0.010%), US 10’s 1.65%(-1bps); US 30’s 2.32%(+0.004%), Bunds -0.32% (-1bp), France -0.07% (-1bp), Italy 0.70% (-0bp), Turkey 17.47% (+3bp), Greece 0.86% (+1bp), Portugal 0.25% (-0bp); Spain 0.35% (+0bp) and UK Gilts 0.79% (-1bp).