Market Talk – February 22, 2021

Posted Feb 22, 2021 by Martin Armstrong |

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ASIA:

Senior Chinese diplomat Wang Yi said on Monday the United States and China could work together on issues like climate change and the coronavirus pandemic if they repaired their damaged bilateral relationship. Wang said China is willing to reopen constructive dialogue with Washington after relations between the two countries sank to their lowest in decades under former president Donald Trump. Wang urged Washington to respect China’s core interests, stop “smearing” the ruling Communist Party, stop interfering in Beijing’s internal affairs, and stop “conniving” with separatist forces for Taiwan’s independence.

China will push forward rural land reforms in a cautious manner as it tries to balance bolstering food security, particularly during the coronavirus pandemic, with economic growth. China’s plan to rejuvenate its backward countryside is part of broader efforts to spur growth. It aims to reduce the urban-rural divide and propel the economy toward greater self-reliance, said Bloomberg Economics, adding that policies to modernize agricultural production and boost rural infrastructure may be an important new driver of the economy in coming years.

India is set to clear 45 investment proposals from China, which are likely to include those from Great Wall Motor and SAIC Motor Corp., Reuters reported, as military tensions between the two countries ease at the disputed border. About 150 investment proposals from China worth more than $2 billion were stuck in the pipeline. Companies from Japan and the US routing investment through Hong Kong were also caught in the cross-fire as an inter-ministerial panel led by the interior ministry increased scrutiny of such proposals. Great Wall, which plans to invest $1 billion in India over the next few years, said earlier that establishing operations in the country is a key part of its global strategy. It had planned to start selling cars in India from this year, and was also mulling bringing in electric vehicles.

The major Asian stock markets had a mixed day today:

NIKKEI 225 increased 138.11 points or 0.46% to 30,156.03
Shanghai decreased 53.72 points or -1.45% to 3,642.44
Hang Seng decreased 324.90 points or -1.06% to 30,319.83
ASX 200 decreased 12.90 points or -0.19% to 6,780.90
Kospi decreased 27.87 points or -0.90% to 3,079.75
SENSEX decreased 1,145.44 points or -2.25% to 49,744.32
Nifty50 decreased 306.05 points or -2.04% to 14,675.70

The major Asian currency markets had a mixed day today:

AUDUSD increased 0.00504 or 0.64% to 0.79183
NZDUSD increased 0.00381 or 0.52% to 0.73335
USDJPY decreased 0.39 or -0.37% to 105.03
USDCNY increased 0.00822 or 0.13% to 6.46784

Precious Metals:

Gold increased 27.18 USD/t oz. or 1.52% to 1,809.49
Silver increased 0.73 USD/t. oz or 2.69% to 27.945

Some economic news from last night:

Japan:

Corporate Services Price Index (CSPI) (YoY) decreased from -0.3% to -0.5%

Some economic news from today:

Hong Kong:

CPI (YoY) (Jan) increased from -0.70% to 1.90%

EUROPE/EMEA:

UK Prime Minister Boris Johnson declared the end of the pandemic is “in sight” for England, as he set out his aim to ease lockdown rules in a series of stages over the next four months. Johnson detailed a four-step plan that will reopen schools from March 8, outdoor hospitality from mid-April and sports stadiums by mid-May. From June 21, all remaining businesses, such as nightclubs, will resume operations, and rules on social contact will be scrapped. Chancellor of the Exchequer Rishi Sunak will announce more support for pandemic-hit businesses in his budget next week.

Sweden’s central bank Governor Stefan Ingves made clear he’s more worried about withdrawing monetary support too soon rather than too late, given the severity of the current crisis. Sweden’s economy emerged less battered than most from 2020, after it responded to the pandemic with limited restrictions and historic government support. Last year’s GDP contraction was just 2.8%, versus a decline of almost 7% in the Eurozone. That performance, combined with recent positive data, has most economists betting the Riksbank won’t return to the negative rates it abandoned more than a year ago.

The major Europe stock markets had a negative day:

CAC 40 decreased 6.11 points or -0.11% to 5,767.44
FTSE 100 decreased 11.78 points or -0.18% to 6,612.24
DAX 30 decreased 43.19 points or -0.31% to 13,950.04

The major Europe currency markets had a mixed day today:

EURUSD increased 0.00466 or 0.38% to 1.21640
GBPUSD increased 0.00791 or 0.56% to 1.40804
USDCHF decreased 0.00059 or -0.07% to 0.89586

Some economic news from Europe today:

Germany:

German Business Expectations (Feb) increased from 91.5 to 94.2

German Current Assessment (Feb) increased from 89.2 to 90.6

German Ifo Business Climate Index (Feb) increased from 90.3 to 92.4

US/AMERICAS:

Dallas Federal Reserve Bank President Robert Kaplan stated today that he foresees the US economy growing by 5% this year. Specifically, Kaplan expected the recovery to strengthen in Q3 and Q4 once the vaccination program has rolled out and COVID restrictions ease. “If we are wrong, the risks are to the upside – we may grow faster,” Kaplan added. Unemployment, now at 6.3%, will “meaningfully” decline, and inflation will firm,” he stated this Monday.

Boeing has been hit with another dilemma just as it began to rebound from the 737 MAX crisis. A United Airlines 777 in Denver and a Longtail Aviation 747 freighter in the Netherlands both experienced engine failures over the weekend. The Colorado incident resulted in debris from the plane landing in a Dallas suburb. Boeing is now planning to suspend the 777s with PW4000 turbine jets. The Federal Aviation Administration (FAA) plans to issue an emergency airworthiness decree. Boeing’s share price fell -2.11% on Monday.

The Canadian government has increased its travel measures in a drastic way. The government has extended its ban on travel across the US-Canada border until March 21, 2021. Additionally, non-essential and non-US travel has been restricted until April 21, 2021. Beginning today, all travelers, whether by land or air, will be required to take a coronavirus (PCR) test prior to entering the country. Those flying by air will need to stay at a government-approved facility for 72 hours, on their dime, while awaiting the results of their test. Numerous travelers have stated they’d travel by land to avoid the restriction. However, Prime Minister Trudeau announced, “If you’re returning to Canada through our land border, you’ll now have to show a negative PCR test result taken within the 72 hours before your arrival. You’ll then have to immediately quarantine for 14 days. This is not a suggestion – it’s mandatory, and it will be enforced.”

The Canada Recovery Benefit (CRB) will be extended for another 12 weeks to help those affected by the pandemic. Additionally, Canada Recovery Sickness Benefit (CRSB) has been extended an additional two weeks, as lawmakers urge anyone who is feeling sick to stay at home. Employment Insurance (EI) benefits will also be available for up to 50 weeks for any claims made between September 27, 2020, and September 25, 2021.

US Market Closings:

Dow advanced 27.37 points or 0.09% to 31,521.69
S&P 500 declined 30.21 points or -0.77% to 3,876.5
Nasdaq declined 341.42 points or -2.46% to 13,533.05
Russell 2000 declined 15.62 points or -0.69% to 2,251.07

Canada Market Closings:

TSX Composite advanced 32.47 points or 0.18% to 18,416.74
TSX 60 advanced 1.37 points or 0.13% to 1,094.24

Brazil Market Closing:

Bovespa declined 5,762.83 points or -4.87% to 112,667.7

ENERGY:

The oil markets had a mixed day today:

Crude Oil increased 1.87 USD/BBL or 3.16% to 61.1100
Brent increased 1.84 USD/BBL or 2.92% to 64.7500
Natural gas decreased 0.135 USD/MMBtu or -4.40% to 2.9340
Gasoline increased 0.0191 USD/GAL or 1.06% to 1.8260
Heating oil increased 0.0257 USD/GAL or 1.41% to 1.8486
Top commodity gainers: Rubber (5.42%), Coffee (4.59%), Crude Oil (3.16%) and Sugar (5.17%)
Top commodity losers: Natural Gas (-4.40%), Orange Juice (-0.59%), Feeder Cattle (-0.45%), and Coal (-0.65%)

The above data was collected around 13:40 EST on Monday.

BONDS:

Japan 0.12%(+2bp), US 2’s 0.00%(+0.00%), US 10’s 1.36%(+2bps); US 30’s 2.00%(+0.03%), Bunds -0.29% (+6bp), France -0.03% (+3bp), Italy 0.61% (-1bp), Turkey 12.63% (+0bp), Greece 0.88% (-1bp), Portugal 0.22% (-3bp); Spain 0.33% (+4bp) and UK Gilts 0.69% (-0bp).