Market Talk – February 2, 2021

Posted Feb 2, 2021 by Martin Armstrong |

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ASIA:

China’s growth is likely to moderate in the coming months as the country faces risks on two fronts, according to the chief Asia economist of Goldman Sachs. Goldman Sachs economist Andrew Tilton said the policy makers are quite comfortable with the recovery so far and are starting to pull back on policy stimulus to some degree. The world’s second-largest economy showed robust GDP growth in the fourth quarter of 2020, expanding at 6.5% compared to a year ago. It beat market expectations and made China one of the few major economies in the world to record positive growth for a year mired by the coronavirus pandemic.

In their annual budget, Indian government announced a plan that would allow foreign direct investment of up to 74% in insurance entities, up from 49% currently, clearing the way for “foreign ownership and control with safeguards”. The change could attract investments from international insurers, industry sources said, many of which have existing joint-venture operations in India, including from American International Group and Britain’s Prudential Plc. The country’s investment promotion agency, Invest India, expects the insurance market to be worth around $250 billion by 2025.

Singapore is working to grow its strong manufacturing base and seeks to attract the top players to anchor their operations here, said Trade and Industry Minister Chan Chun Sing on Monday. The manufacturing industry remains a key pillar of Singapore’s economy and the Republic wants to build on its existing manufacturing strengths, expanding its capacity and capabilities in emerging areas of growth such as biomedical science, agri-tech, urban mobility and sustainability. Mr Chan also outlined on Monday Singapore’s three key strategies to position itself as an advanced manufacturing hub – investing in infrastructure, building a strong research ecosystem, and supporting firms in Industry 4.0 transformation projects.

The major Asian stock markets had a green day today:

NIKKEI 225 increased 271.12 points or 0.97% to 28,362.17
Shanghai increased 28.40 points or 0.81% to 3,533.68
Hang Seng increased 355.84 points or 1.23% to 29,248.70
ASX 200 increased 99.60 points or 1.49% to 6,762.60
Kospi increased 40.28 points or 1.32% to 3,096.81
SENSEX increased 1,197.11 points or 2.46% to 49,797.72
Nifty50 increased 366.65 points or 2.57% to 14,647.85

The major Asian currency markets had a mixed day today:

AUDUSD decreased 0.00555 or -0.73% to 0.75822
NZDUSD decreased 0.00186 or -0.26% to 0.71469
USDJPY increased 0.22 or 0.21% to 105.12
USDCNY decreased 0.00952 or -0.15% to 6.46268

Precious Metals:

Gold decreased 23.71 USD/t oz. or -1.27% to 1,836.45
Silver decreased 2.4 USD/t. oz or -8.28% to 26.570

Some economic news from last night:

Japan：

Monetary Base (YoY) increased from 18.3% to 18.9%

South Korea:

CPI (YoY) (Jan) increased from 0.5% to 0.6%

CPI (MoM) (Jan) increased from 0.2% to 0.8%

Australia:

RBA Interest Rate Decision (Jan) remain the same at 0.10%

Some economic news from today:

India:

Exports (USD) increased from 27.15B to 27.24B

Imports (USD) decreased from 42.59B to 41.99B

Trade Balance increased from -15.44B to -14.75B

Hong Kong:

Retail Sales (YoY) (Dec) decreased from -4.0% to -13.2%

Singapore:

Manufacturing PMI (Jan) increased from 50.5 to 50.7

New Zealand:

GlobalDairyTrade Price Index decreased from 4.8% to 1.8%

EUROPE/EMEA:

5G technology will contribute an additional £43 billion to UK GDP by 2030, according to analysis from consultancy firm PwC. The technology will allow for productivity and efficiency gains across various sectors, such as health and social care, finance, manufacturing, utilities, and more. According to the report, the healthcare sector stands to gain the most from the 5G rollout, which will facilitate improvements in medical devices and patient beds. Retail and media companies will also utilize 5G technology to boost shopping, streaming and gaming experiences for consumers. In financial services, meanwhile, 5G will facilitate advances in security, minimizing fraud losses.

Britain’s economy is suffering the most damage since the first wave of Covid-19 as persistently high infection rates and renewed lockdown measures delay the economic recovery from the pandemic, according to a Guardian analysis. Pressure is mounting on the chancellor, Rishi Sunak, to provide further financial support before the 3 March budget as the economic damage intensifies during the prolonged lockdown at the start of 2021. In a new intervention, the president of the World Bank, David Malpass, warned governments across the globe that urgent action was necessary to prevent years of development gains being wiped out in poorer nations.

Chancellor Angela Merkel has reassured residents in Germany that they will be offered a Covid-19 vaccine by the end of summer despite delivery delays. Merkel met with the country’s 16 state leaders and pharmaceutical representatives on Monday to discuss how to improve the country’s sluggish vaccination program will be developed by the Health Ministry with the federal states by the next planned government Covid-19 strategy meeting scheduled for February 10.

The major Europe stock markets had a green day:

CAC 40 increased 101.43 points or 1.86% to 5,563.11
FTSE 100 increased 50.23 points or 0.78% to 6,516.65
DAX 30 increased 213.14 points or 1.56% to 13,835.16

The major Europe currency markets had a mixed day today:

EURUSD decreased 0.00524 or -0.43% to 1.20150
GBPUSD decreased 0.00365 or -0.27% to 1.36432
USDCHF increased 0.00265 or 0.30% to 0.89923

Some economic news from Europe today:

UK:

Nationwide HPI (MoM) (Jan) decreased from 0.9% to -0.3%

Nationwide HPI (YoY) (Jan) decreased from 7.3% to 6.4%

France:

French CPI (MoM) remain the same at 0.2%

French CPI (YoY) increased from 0.0% to 0.6%

French HICP (YoY) increased from 0.0% to 0.8%

French HICP (MoM) increased from 0.2% to 0.3%

Spain:

Spanish Unemployment Change increased from 36.8K to 76.2K

Italy:

Italian GDP (QoQ) (Q4) decreased from 16.0% to -2.0%

Italian GDP (YoY) (Q4) decreased from -5.1% to -6.6%

Euro Zone:

GDP (QoQ) (Q4) decreased from 12.4% to -0.7%

GDP (YoY) (Q4) decreased from -4.3% to -5.1%

US/AMERICAS:

The GOP has proposed a $618 billion coronavirus plan in response to President Biden’s $1.9 trillion proposal. Under the Republican’s plan, those who qualify for a direct stimulus check will receive a one-time $1,000 payment. However, instead of the previous $75,000 salary cap, Republicans propose that the checks should only go to those earning under $50,000 annually. President Biden is expected to meet with Republican lawmakers later in the day to discuss relief packages.

Pfizer anticipates to gross $15 billion from its coronavirus vaccine in 2021, the company announced this Tuesday. The company has already provided 65 million vaccinations worldwide, with 29 million going to the US as of January 31. The company plans to deliver an additional 200 million doses to America by May, which would require a weekly average of 10 million doses per week. The company anticipates the coronavirus vaccine will account for 25% of their revenue this year.

The National Finance Center payroll agency may have been hacked by Chinese operatives in 2020, a Reuters report stated. Those familiar with the matter believe the hackers exploited data from up to 18,000 customers through a flaw in SolarWinds Corp software through the company’s Orion network. China’s foreign ministry said it “resolutely opposes and combats any form of cyberattacks and cyber theft.” The investigation remains ongoing.

US Market Closings:

Dow advanced 475.57 points or 1.57% to 30,687.48
S&P 500 advanced 52.45 points or 1.39% to 3,826.31
Nasdaq advanced 209.38 points or 1.56% to 13,612.78
Russell 2000 advanced 25.28 points or 1.19% to 2,151.44

Canada Market Closings:

TSX Composite advanced 182.04 points or 1.03% to 17,874.49
TSX 60 advanced 14.57 points or 1.39% to 1,059.25

Brazil Market Closing:

Bovespa advanced 716.24 points or 0.61% to 118,233.81

ENERGY:

The oil markets had a green day today:

Crude Oil increased 1.28 USD/BBL or 2.39% to 54.8300
Brent increased 1.22 USD/BBL or 2.17% to 57.5700
Natural gas increased 0.036 USD/MMBtu or 1.26% to 2.8860
Gasoline increased 0.0294 USD/GAL or 1.85% to 1.6195
Heating oil increased 0.0236 USD/GAL or 1.43% to 1.6705
Top commodity gainers: Crude Oil (2.39%), Brent (2.17%), Gasoline (1.85%) and Lean Hogs (2.48%)
Top commodity losers: Platinum (-3.75%), Coal (-3.58%), Coffee (-2.07%), and Silver (-8.28%)

The above data was collected around 13:37 EST on Tuesday.

BONDS:

Japan 0.05%(-1bp), US 2’s 0.00%(+0.00%), US 10’s 1.10%(+2bps); US 30’s 2.00%(+0.03%), Bunds -0.51% (+4bp), France -0.25% (-0bp), Italy 0.67% (+5bp), Turkey 12.54% (+1bp), Greece 0.68% (-0bp), Portugal 0.06% (+2bp); Spain 0.12% (+2bp) and UK Gilts 0.35% (+3bp).