Market Talk – August 30, 2021

Posted Aug 30, 2021 by Martin Armstrong |

Spread the love

ASIA:

China is maintaining “normal communication” with the United States on trade, the Chinese government said on Thursday. Washington and Beijing signed a so-called Phase 1 trade deal in January 2020, before the widespread outbreak of COVID-19. The pact calls for China to increase its purchases of U.S. exports by $200 billion over two years. While trade ties between the two countries have calmed since the signing of the pact, bilateral relations have been tense due to disagreement over issues ranging from the origins of the coronavirus to China’s maritime claims in the South China Sea.

India attracted foreign direct investment (FDI) inflows of $22.53 billion during the first three months of the fiscal year starting on April 1, 90% higher than the April-June period last year, the government said on Saturday. India’s automobile industry accounted for 27% of the total FDI equity inflow, emerging as the brightest sector in Asia’s third-largest economy, followed by computer software and hardware and the services sectors, which accounted for 17% and 11% of the inflows respectively, the Trade Ministry said in a statement.

The major Asian stock markets had a green day today:

NIKKEI 225 increased 148.15 points or 0.54% to 27,789.29
Shanghai increased 5.99 points or 0.17% to 3,528.15
Hang Seng increased 131.65 or 0.52% to 25,539.54
ASX 200 increased 16.20 points or 0.22% to 7,504.50
Kospi increased 10.29 points or 0.33% to 3,144.19
SENSEX increased 765.04 points or 1.36% to 56,889.76
Nifty50 increased 225.85 points or 1.35% to 16,931.05

The major Asian currency markets had a mixed day today:

AUDUSD decreased 0.00225 or -0.31% to 0.72911
NZDUSD decreased 0.00122 or -0.17% to 0.70009
USDJPY increased 0.1 or 0.09% to 109.92
USDCNY increased 0.00236 or 0.04% to 6.46482

Precious Metals:

Gold decreased 6.19 USD/t oz. or -0.34% to 1,810.48
Silver decreased 0.051 USD/t. oz or -0.21% to 23.944

Some economic news from last night:

Japan:

Retail Sales (YoY) (Jul) increased from 0.1% to 2.4%

Australia:

Business inventories (MoM) (Q2) decreased from 2.4% to 0.2%

Company Gross Operating Profits (QoQ) (Q2) increased from -0.6% to 7.1%

Company Profits Pre-Tax (QoQ) (Q2) increased from -6.0% to 17.4%

EUROPE/EMEA:

The Bank of England has removed from display a series of artworks depicting former leaders of the institution who had connections to the slave trade. In total, 10 oil paintings and seven busts were taken down at the bank’s headquarters and adjacent museum in London. The move was the result of a year-long review commenced last summer, in the wake of the Black Lives Matter protests that erupted across Europe and North America. The bank has also appointed a new researcher at the museum who will study its “historic links with the transatlantic slave trade in detail,” a spokesperson for the bank told Reuters.

The major Europe stock markets had a green day:

CAC 40 increased 5.38 points or 0.08% to 6,687.30
FTSE 100 closed
DAX 30 increased 35.56 points or 0.22% to 15,887.31

The major Europe currency markets had a mixed day today:

EURUSD decreased 0.00006 or -0.01% to 1.17953
GBPUSD decreased 0.00054 or -0.04% to 1.37558
USDCHF increased 0.00554 or 0.61% to 0.91683

Some economic news from Europe today:

Swiss:

KOF Leading Indicators (Aug) decreased from 130.9 to 113.5

Spain:

Spanish Business Confidence decreased from 1.4 to 0.1

Spanish CPI (MoM) increased from -0.8% to 0.4%

Spanish CPI (YoY) increased from 2.9% to 3.3%

Spanish HICP (MoM) increased from -1.2% to 0.4%

Spanish HICP (YoY) (Aug) increased from 2.9% to 3.3%

Spanish Retail Sales (YoY) (Jul) decreased from 1.2% to 0.1%

Germany:

German CPI (MoM) (Aug) decreased from 0.9% to 0.0%

German CPI (YoY) (Aug) increased from 3.8% to 3.9%

German HICP (YoY) (Aug) increased from 3.1% to 3.4%

German HICP (MoM) (Aug) decreased from 0.5% to 0.1%

Euro Zone:

Business and Consumer Survey (Aug) decreased from 119.0 to 117.5

Business Climate (Aug) decreased from 1.88 to 1.75

Consumer Confidence (Aug) decreased from -4.4 to -5.3

Consumer Inflation Expectation (Aug) increased from 30.0 to 31.1

Selling Price Expectations (Aug) increased from 35.5 to 37.3

Services Sentiment (Aug) decreased from 18.9 to 16.8

Industrial Sentiment (Aug) decreased from 14.5 to 13.7

US/AMERICAS:

St. Louis Federal Reserve President James Bullard is concerned about rising inflation in the US. Although Federal Reserve Chairman Jerome Powell stated that high inflation is temporary, other members of the Fed do not necessarily agree. Bullard believes that inflation should stabilize by Q1 of next year, and if it’s still running high, the Fed will need to use “aggressive” tactics. Bullard also noted that the markets are already factoring in a forthcoming tapering program for the Fed’s $120 billion monthly buying program. “At this point, I’m not sure these purchases are really doing anything helpful at this stage of the recovery, because we do have this incipient housing bubble here and we don’t want to be feeding into that,” Bullard told reporters.

Brazil’s Supreme Court upheld a ruling that the central bank will remain autonomous from the government. President Jair Bolsonaro recently stated that he regrets signing a bill into law that permitted the central bank to act independently, as he would like to make changes to the bank’s monetary policy. Chief of Staff Ciro Nogueira said that the administration will comply with current regulations. “I give my testimony that the relationship of the government with the central bank is excellent, that autonomy of the monetary authority is an historic and irreversible advance,” Nogueira wrote.

Analysts’ expect Brazil’s inflation to decline to 3.9% in 2022. Still, inflation is currently rising at its fastest pace in over five years with a 12-month average of 9%. Rising prices and unemployment are wreaking havoc on Brazilian families. The National Confederation of Retail, Services and Tourism (CNC) announced an alarming 72.9% of Brazilian households were in debt. representing a 5.5% increase YoY, and 7.8% higher than before the pandemic began. There are currently over 15 million citizens in search of jobs, adding to the mounting debt. “Weakness of the formal labour market and advances from the informal sector with a high level of unemployment and high inflation are contributing to a greater indebtedness of families,” the CNC said in a press release.

US Market Closings:

Dow declined 55.96 points or -0.16% to 35,399.84
S&P 500 advanced 19.42 points or 0.43% to 4,528.79
Nasdaq advanced 136.39 points or 0.9% to 15,265.89
Russell 2000 declined 11.16% or -0.49% to 2,265.99

Canada Market Closings:

TSX Composite declined 49.67 points or -0.24% to 20,594.97
TSX 60 declined 3.32 points or -0.27% to 1,233.55

Brazil Market Closing:

Bovespa declined 937.64 points or -0.78% to 119,739.96

ENERGY:

The oil markets had a mixed day today:

Crude Oil increased 0.37 USD/BBL or 0.54% to 69.1100
Brent increased 0.5 USD/BBL or 0.69% to 73.2000
Natural gas decreased 0.119 USD/MMBtu or -2.71% to 4.2680
Gasoline increased 0.0488 USD/GAL or 2.15% to 2.3230
Heating oil increased 0.0283 USD/GAL or 1.34% to 2.1375

The above data was collected around 12:22 EST on Monday

Top commodity gainers: Gasoline (2.15%) and Lumber (1.40%), Coffee (3.03%) and Palladium (2.13%)
Top commodity losers: Corn (-3.05%), Orange Juice (-2.78%), Soybeans (-3.15%), and Natural Gas (-2.71%)

The above data was collected around 12:39 EST on Monday.

BONDS:

Japan 0.020%(-1bp), US 2’s 0.2100%(-0.012%), US 10’s 1.2902%(-2.02bps); US 30’s 1.9052%(-0.02%),Bunds -0.4380% (-1.9bp), France -0.0860% (-2.5bp), Italy 0.6120% (-2.55bp), Turkey 16.65% (+0bp), Greece 0.7070% (+1bp), Portugal 0.161% (-3bp); Spain 0.281% (+5.05bp) and UK Gilts 0.5810% (+0bp).