Market Talk – December 8, 2020

Posted Dec 8, 2020 by Martin Armstrong |

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ASIA:

Asian economies – including India, China, Singapore and Indonesia – are set to brush aside the COVID-19 pandemic’s impact and would enter the ‘Goldilocks’ phase in 2021, as per a Morgan Stanley research. Goldilocks economy — not too much deflation, not too much inflation — sustains moderate economic growth. In other words, that is the economy is in equilibrium: with economic stability, good employment figures and higher than global average growth. The report by Morgan Stanley economists (Deyi Tan, Zac Su, Jin Choi and Jonathan Cheung) suggests that economies, including India, have seen some action from the government which is set to impact the economy.

Credit rating agency Fitch Ratings has raised India’s GDP forecast and now expects it to contract 9.4 per cent in the current fiscal year to March 2021. The rating agency had earlier predicted India’s annual GDP to contract 10.5 per cent. The revised forecast comes on the back of a sharper rebound in the second quarter. In its Global Economic Outlook, Fitch said the coronavirus-induced recession has inflicted severe economic damage and added that India needs to repair balance sheets and dedicate plans focused on long-term recovery.

The major Asian stock markets had a mixed day today:

NIKKEI 225 decreased 80.36 points or -0.30% to 26,467.08
Shanghai decreased 6.43 points or -0.19% to 3,410.18
Hang Seng decreased 202.29 points or -0.76% to 26,304.56
ASX 200 increased 12.70 points or 0.19% to 6,687.70
Kospi decreased 44.51 points or -1.62% to 2,700.93
SENSEX increased 181.54 points or 0.40% to 45,608.51
Nifty50 increased 37.20 points or 0.28% to 13,392.95

The major Asian currency markets had a mixed day today:

AUDUSD decreased 0.00066 or -0.09% to 0.74111
NZDUSD increased 0.00051 or 0.07% to 0.70440
USDJPY increased 0.15 or 0.15% to 104.16
USDCNY decreased 0.00005 or 0.00% to 6.51939

Precious Metals:

Gold increased 8.91 USD/t oz. or 0.48% to 1,872.60
Silver increased 0.13 USD/t. oz or 0.51% to 24.631

Some economic news from last night:

Japan:

Reuters Tankan Index (Dec) increased from -13 to -9

Average Cash Earnings (YoY) increased from -0.9% to -0.8%

Household Spending (YoY) (Oct) increased from -10.2% to 1.9%

Household Spending (MoM) (Oct) decreased from 3.8% to 2.1%

Overall wage income of employees (Oct) increased from -1.3% to -0.8%

Overtime Pay (YoY) (Oct) increased from -12.30% to -11.70%

Adjusted Current Account increased from 1.35T to 1.98T

Bank Lending (YoY) (Nov) increased from 6.2% to 6.3%

Current Account n.s.a. (Oct) increased from 1.660T to 2.145T

GDP (QoQ) (Q3) increased from -7.9% to 5.3%

GDP (YoY) (Q3) increased from -28.1% to 22.9%

GDP Capital Expenditure (QoQ) (Q3) increased from -4.7% to -2.4%

GDP External Demand (QoQ) (Q3) increased from -3.0% to 2.7%

GDP Private Consumption (QoQ) (Q3) increased from -7.9% to 5.1%

Australia:

House Price Index (QoQ) (Q3) increased from -1.8% to 0.8%

NAB Business Confidence (Nov) increased from 5 to 12

NAB Business Survey (Nov) increased from 1 to 9

Some economic news from today:

Japan:

Economy Watchers Current Index (Nov) decreased from 54.5 to 45.6

Indonesia:

Consumer Confidence (Nov) increased from 79.0 to 92.0

EUROPE/EMEA:

The UK and EU have reached agreement on how rules in the Brexit divorce deal will be implemented, particularly in relation to Northern Ireland. The government says an “agreement in principle” has been found for issues including border control posts and the supply of medicines. Separate negotiations to reach a post-Brexit trade deal are still ongoing.

France has fired a warning to Angela Merkel that a bad Brexit deal will hammer Germany’s economy as tensions build between Paris and Berlin. Europe Minister Clément Beaune warned other leaders not to weaken as the final deadline loomed. Mr Beaune said of Chancellor Merkel: “She knows the European market well enough to guess how the German economy would suffer from a bad deal.”

The major Europe stock markets had a mixed day:

CAC 40 decreased 12.71 points or -0.23% to 5,560.67
FTSE 100 increased 3.43 points or 0.05% to 6,558.82
DAX 30 increased 7.49 points or 0.06% to 13,278.49

The major Europe currency markets had a mixed day today:

EURUSD decreased 0.00001 or 0.00% to 1.21122
GBPUSD increased 0.00086 or 0.06% to 1.33641
USDCHF decreased 0.00216 or -0.24% to 0.88865

Some economic news from Europe today:

Germany:

German ZEW Current Conditions (Dec) decreased from -64.3 to -66.5

German ZEW Economic Sentiment (Dec) increased from 39.0 to 55.0

Norway:

Norges Bank regional network Survey decreased from 0.19 to 0.10

France:

French Non-Farm Payrolls (QoQ) (Q3) decreased from 1.8% to 1.6%

French Current Account (Oct) increased from -5.60B to -3.70B

French Exports (Oct) increased from 37.6B to 38.9B

French Imports (Oct) increased from 43.2B to 43.7B

French Trade Balance (Oct) increased from -5.6B to -4.9B

Swiss：

Unemployment Rate n.s.a. (Nov) increased from 3.2% to 3.3%

Unemployment Rate s.a. (Nov) remain the same at 3.4%

Euro Zone:

Employment Change (YoY) (Q3) increased from -3.1% to -2.3%

Employment Change (QoQ) (Q3) increased from -2.9% to 1.0%

Employment Overall (Q3) increased from 157,346.0K to 157,386.5K

GDP (QoQ) (Q3) increased from -11.8% to 12.5%

GDP (YoY) (Q3) increased from -14.7% to -4.3%

ZEW Economic Sentiment (Dec) increased from 32.8 to 54.4

US/AMERICAS:

The Food and Drug Administration (FDA) announced this Tuesday that the Pfizer coronavirus vaccine is safe for public usage in people over the age of 16. A group of experts will deliberate this Thursday to determine who will receive the vaccination. The FDA’s report “showed similar efficacy point estimates across age groups, genders, racial and ethnic groups, and participants with medical comorbidities associated with high risk of severe COVID-19.” However, the FDA could not comment on whether the vaccine is safe for pregnant women, kids under 16, and people with compromised immune systems.

Boeing announced that they lost an additional 88 orders for 737 MAX jet flights. After a 20-month ban following deadly crashes that claimed the lives of 346, the FAA has approved the aircraft for flight. However, numerous airlines are still hesitant to employ the 737. American Airlines announced that it will resume usage on December 29, making it the first airliner in the US to resume 737 MAX jet usage. As of November, Boeing’s backlog stood at 4,240 plans, down from 4,275 in October.

American Airlines also announced this Tuesday that they are requiring mandatory coronavirus preflight testing for all US destinations with travel restrictions. The test will cost travelers $129 and will be mandatory for those traveling after December 12.

US Market Closings:

Dow advanced 104.09 points or 0.35% to 30,173.88
S&P 500 advanced 10.29 points or 0.28% to 3,702.25
Nasdaq advanced 62.83 points or 0.5% to 12,582.77
Russell 2000 advanced 26.53 points or 1.4% to 1,917.78

Canada Market Closings:

TSX Composite advanced 56.65 points or 0.32% to 17,639
TSX 60 advanced 4.25 points or 0.41% to 1,050.99

Brazil Market Closing:

Bovespa advanced 203.29 points or 0.18% to 113,793.06

ENERGY:

The oil markets had a mixed day today:

Crude Oil decreased 0.07 USD/BBL or -0.15% to 45.6900
Brent increased 0.1 USD/BBL or 0.20% to 48.8900
Natural gas increased 0.015 USD/MMBtu or 0.62% to 2.4210
Gasoline increased 0.0027 USD/GAL or 0.22% to 1.2585
Heating oil increased 0.0092 USD/GAL or 0.66% to 1.4084

The above data was collected around 12:53 EST on Tuesday

Top commodity gainers: Orange Juice (3.61%), Cheese (0.75%), Lumber (2.25%), and Heating Oil (0.66%)
Top commodity losers: Oat (-1.54%), Cocoa (-4.80%), Bitumen (-1.94%), and Wheat (-1.49%)

The above data was collected around 12:59 EST on Tuesday.

BONDS:

Japan 0.02%(-1bp), US 2’s 0.15%(+0.006%), US 10’s 0.91%(-2bps); US 30’s 1.66%(-0.026%), Bunds -0.61% (-3bp), France -0.37% (-3bp), Italy 0.56% (-1bp), Turkey 12.91% (+30bp), Greece 0.65% (+1bp), Portugal 0.01% (-1bp); Spain 0.04% (-1bp) and UK Gilts 0.26% (-3bp).