Market Talk – August 19, 2021

Posted Aug 19, 2021 by Martin Armstrong |

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ASIA:

Singapore will reopen their borders to some travelers from Germany, Hong Kong, Macao, and Brunei as soon as August 26. Transport Minister S. Iswaran stressed that Singapore’s “connectivity with the rest of the world is essential, if not existential.” The nation has already opened borders to travelers from China, New Zealand, and Taiwan, but recently closed their borders to Australia and Vietnam after a resurgence of COVID cases. “The longer our borders remain closed, the greater the risk of lasting damage to our economy, our livelihoods and our status as an aviation hub,” Iswaran stated. Travel from Germany and Brunei is expected to open on September 1 with stipulations. Travelers must be fully vaccinated to skip quarantine rules and travel on non-stop flights for the vaccinated travel lane (VTL). Additionally, they must have spent 21 consecutive days in Germany or Brunei before flying. Travelers will also be required to download a contact tracing app. Those traveling from Macao and Hong Kong will have an easier time entering Singapore as vaccinations are not mandatory, but the other stipulations will apply.

Thailand’s GDP advanced 7.5% during Q2 after posting a -2.6% decline in Q1, however, the Bank of Thailand reduced its 2021 forecast from 1.8% to 0.7%, while predicting a 3.7% growth in 2022. The central bank cited declining growth since April due to a resurgence of COVID outbreaks. The overall global economic recovery is significantly helping the Thai economy as exports surged 30.7%. Manufacturing advanced 16.8%, compared to a -14.7% decline a year prior. Food services rose 13.2% and transportation advanced 11.6%. As travel restrictions begin to ease, analysts expect the Thai economy to see a notable increase.

The major Asian stock markets had a negative day today:

NIKKEI 225 decreased 304.74 points or -1.10% to 27,281.17
Shanghai decreased 19.73 points or -0.57% to 3,465.55
Hang Seng decreased 550.68 or -2.13% to 25,316.33
ASX 200 decreased 37.50 points or -0.50% to 7,464.60
Kospi decreased 61.10 points or -1.93% to 3,097.83
SENSEX closed
Nifty50 closed

The major Asian currency markets had a mixed day today:

AUDUSD decreased 0.00793 or -1.10% to 0.71553
NZDUSD decreased 0.00477 or -0.69% to 0.68340
USDJPY increased 0.01 or 0.01% to 109.82
USDCNY increased 0.01252 or 0.19% to 6.49850

Precious Metals:

Gold decreased 8.59 USD/t oz. or -0.48% to 1,779.00
Silver decreased 0.31 USD/t. oz or -1.30% to 23.175

Some economic news from last night:

Japan:

Reuters Tankan Index (Aug) increased from 25 to 33

Foreign Bonds Buying increased from -1,103.6B to 661.8B

Foreign Investments in Japanese Stocks increased from 105.0B to 198.8B

Australia:

Employment Change (Jul) decreased from 29.1K to 2.2K

Full Employment Change (Jul) decreased from 51.6K to -4.2K

Participation Rate (Jul) decreased from 66.2% to 66.0%

Unemployment Rate (Jul) decreased from 4.9% to 4.6%

Some economic news from today:

Indonesia:

Motorbike Sales (YoY) (Jun) decreased from 155.10% to 28.90%

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

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

Loans (YoY) (Jul) decreased from 0.59% to 0.50%

Interest Rate Decision remain the same at 3.50%

Hong Kong:

CPI (YoY) (Jul) increased from 0.70% to 3.70%

EUROPE/EMEA:

The success of Germany-based BioNTech could advance the nation’s economy by up to 0.5 percentage points. Analysts expect the German economy to grow by 4% in 2021 after plummeting -4.6% in 2020. Based on the success of BioNTech’s coronavirus vaccination partnership with Pfizer, the amount of money incurred could account for roughly an eighth of Germany’s GDP in 2021, according to thinktank Macroeconomic Policy Institute (IMK). “Sometimes, however, there are rare cases in which individual companies have macroeconomic relevance. BioNTech is such a rare example,” Sebastian Dullien of the IMK stated.

Despite being one of the poorest countries in the world, Afghanistan may be sitting on top of $1 trillion USD worth of untapped minerals. In 2010, US geologists discovered that the country held large supplies of iron, copper, and gold. Additionally, they hold rare earth minerals such as lithium, which is essential for much of today’s modern technology. However, if no one was willing to invest in Afghanistan before, the prospects for international capital flows to the country look dim aside from China and Russia warming up to the idea of working with the new regime. According to the US Congressional Research Service, 90% of Afghans live below the poverty level of $2 USD per day.

The major Europe stock markets had a negative day:

CAC 40 decreased 164.22 points or -2.43% to 6,605.89
FTSE 100 decreased 110.46 points or -1.54% to 7,058.86
DAX 30 decreased 200.16 points or -1.25% to 15,765.81

The major Europe currency markets had a mixed day today:

EURUSD decreased 0.00351 or -0.30% to 1.16758
GBPUSD decreased 0.01064 or -0.77% to 1.36442
USDCHF increased 0.00141 or 0.15% to 0.91850

Some economic news from Europe today:

Swiss:

Trade Balance (Jul) decreased from 5.474B to 5.246B

Norway:

Consumer Confidence (Q3) increased from 4.70 to 10.90

Interest Rate Decision remain the same at 0.00%

Spain:

Spanish Trade Balance decreased from 0.14B to -0.98B

Euro Zone:

Current Account (Jun) increased from 11.7B to 21.8B

Current Account n.s.a. (Jun) increased from 4.3B to 24.0B

US/AMERICAS:

Jobless claims in the US reached a post-pandemic low for the week ending on August 14, according to the weekly Labor Department report. Initial claims totaled 348,000, marking a 29,000 decline from the week prior, and surpassing analysts’ expectations of 365,000. Unemployment levels have not been this low since the week of March 14, 2020, when the coronavirus began to take over the global economy. Continuing claims also saw a notable decline of 79,000 filings after falling to 2.82 million.

The US Labor and Treasury Departments announced that states can extend unemployment benefit pay past the September 6 expiration date. Over 11 million jobless citizens were set to lose their supplemental $300 a week allowance once the American Rescue Plan ceased. Numerous lawmakers have cited concerns over the plan, citing that it was providing an incentive for Americans not to return to work.

Although the national unemployment average fell to 5.4%, twelve states currently have over 5.9% of their population unemployed, according to the Bureau of Labor Statistics. According to Secretary Janet Yellen, the Labor Department will likely offer an additional $43 million in grants to help the unemployed.

Chairman of the Securities and Exchange (SEC) Commission Gary Gensler warned that cryptocurrencies must abide by SEC laws if they wish they continue trading within the US. “[The] field is not going to reach any of its potential if It tries to stay outside of our laws,” Gensler warned. Although Gensler said the SEC is currently “neutral” on cryptocurrencies, which he called “innovative technologies,” he reiterated that the agency is concerned about protecting investors. The SEC allegedly fears the crypto market will become the “wild west,” and Gensler is asking Congress to provide the SEC with more authority to regulate trading.

US Market Closings:

Dow declined 66.57 points or -0.19% to 34,894.12
S&P 500 advanced 5.55 points or 0.13% to 4,405.82
Nasdaq advanced 15.87 points or 0.11% to 14,541.79
Russell 2000 declined 26.36 points or -1.22% to 2,132.42

Canada Market Closings:

TSX Composite declined 86.75 points or -0.43% to 20,215.36
TSX 60 declined 4.16 points or -0.34% to 1,217.52

Brazil Market Closing:

Bovespa advanced 522.07 points or 0.45% to 117,164.69

ENERGY:

The oil markets had a negative day today:

Crude Oil decreased 1.78 USD/BBL or -2.72% to 63.6800
Brent decreased 1.79 USD/BBL or -2.62% to 66.4400
Natural gas decreased 0.021 USD/MMBtu or -0.55% to 3.8300
Gasoline decreased 0.0665 USD/GAL or -3.10% to 2.0812
Heating oil decreased 0.0523 USD/GAL or -2.59% to 1.9689

The above data was collected around 14:30 EST on Thursday

Top commodity gainers: Orange Juice (1.62%) and Soda Ash (1.71%)
Top commodity losers: Steel (-3.92%), Tin (-7.25%), Palladium (-4.81%), and Rubber (-3.24%)

The above data was collected around 14:35 EST on Thursday.

BONDS:

Japan 0.013%(-0bp), US 2’s 0.2176%(+0.00%), US 10’s 1.2433%(-1.67bps); US 30’s 1.8810%(-0.02%),Bunds -0.4860% (-0.4bp), France -0.1400% (-0.8bp), Italy 0.5523% (-0bp), Turkey 16.92% (+13bp), Greece 0.5580% (+1bp), Portugal 0.118% (+1bp); Spain 0.235% (+8.26bp) and UK Gilts 0.5400% (-3bp).