Market Talk – January 15, 2021

Posted Jan 15, 2021 by Martin Armstrong |

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ASIA:

Shares in China’s Xiaomi sank after the US government added the smartphone group to an investment blacklist in a move that is likely to thin its ranks of American shareholders. The Beijing-based company’s stock dropped 10.3 percent in Hong Kong trading on Friday, hours after the Pentagon added it to a list of companies with suspected ties to the Chinese military. That, in conjunction with a separate executive order, will block US investors from buying its shares 60 days from now and will require Americans to sell their holdings eventually. The move marks a significant blow for Xiaomi, which had been a big beneficiary of Washington’s campaign of sanctions against Chinese competitor Huawei. That had helped Xiaomi’s sales to surpass Apple’s, making it the world’s number three phone maker by units sold in the third quarter.

India’s wholesale price-based inflation eased to 1.22% in December from a year earlier, helped mainly by a lower increase in food prices, data released by the Ministry of Commerce and Industry showed on Thursday. Analysts in a Reuters poll had forecast the annual wholesale price index to rise 1.30%

The major Asian stock markets had a mixed day today:

NIKKEI 225 decreased 179.08 points or -0.62% to 28,519.18
Shanghai increased 0.47 points or 0.01% to 3,566.38
Hang Seng increased 77.00 points or 0.27% to 28,573.86
ASX 200 increased 0.10 points or 0.00% to 6,715.40
Kospi decreased 64.03 points or -2.03% to 3,085.90
SENSEX decreased 549.49 points or -1.11% to 49,034.67
Nifty50 decreased 161.90 points or -1.11% to 14,433.70

The major Asian currency markets had a mixed day today:

AUDUSD decreased 0.00551 or -0.71% to 0.77193
NZDUSD decreased 0.00684 or -0.95% to 0.71496
USDJPY decreased 0 or 0.00% to 103.84
USDCNY increased 0.01688 or 0.26% to 6.48327

Precious Metals:

Gold decreased 16.17 USD/t oz. or -0.88% to 1,830.20
Silver decreased 0.78 USD/t. oz or -3.05% to 24.752

Some economic news from last night:

China:

House Prices (YoY) (Dec) decreased from 4.0% to 3.8%

China Thomson Reuters IPSOS PCSI (Jan) increased from 71.23 to 77.74

Japan:

Foreign Bonds Buying increased from -291.6B to 730.7B

Foreign Investments in Japanese Stocks increased from -85.5B to 580.8B

Thomson Reuters IPSOS PCSI (Jan) decreased from 38.29 to 34.84

Tertiary Industry Activity Index (MoM) decreased from 1.6% to -0.7%

South Korea:

Exports (YoY) (Dec) remain the same at 12.6%

Imports (YoY) (Dec) increased from 1.8% to 2.2%

Trade Balance (Dec) decreased from 6.94B to 6.77B

Interest Rate Decision (Jan) remain the same at 0.50%

Australia:

Home Loans (MoM) increased from 0.8% to 5.5%

Invest Housing Finance (MoM) increased from 0.3% to 6.0%

New Zealand:

FPI (MoM) (Dec) increased from -0.9% to 0.1%

Some economic news from today:

India:

Bank Loan Growth increased from 6.1% to 6.7%

Deposit Growth increased from 11.3% to 11.5%

Exports (USD) (Dec) increased from 26.89B to 27.15B

FX Reserves, USD increased from 585.32B to 586.08B

Imports (USD) (Dec) decreased from 42.60B to 42.59B

Trade Balance (Dec) increased from -15.71B to -15.44B

Indonesia:

Loans (YoY) (Nov) decreased from -1.39% to -2.41%

Export Growth (YoY) (Dec) increased from -3.81% to 14.63%

Import Growth (YoY) (Dec) increased from -26.92% to -0.47%

Trade Balance (Dec) decreased from 3.58B to 2.10B

EUROPE/EMEA:

The UK economy has edged towards a double-dip recession after official figures confirmed a renewed slump in November fuelled by the second national coronavirus lockdown in England. The Office for National Statistics said gross domestic product (GDP) had fallen by 2.6% month-on-month in November when the government forced closures of non-essential shops and the hospitality sector in England to combat rapid growth in COVID-19 infections. Tougher controls in Scotland, Wales, and Northern Ireland weighed on growth as well. Reflecting the renewed controls amid the second wave of the pandemic, the latest official figures end six consecutive months of growth over the summer, when the UK economy was recovering from the first wave of the crisis. The impact of renewed restrictions took GDP in November down to 8.5% below its pre-pandemic level, in a setback for Britain’s economic recovery from the first wave of the crisis.

In an effort to stop unidentified new strains of the virus from entering the country, the UK government today announced that all travel corridors would be removed temporarily from Monday (January 18) until at least February 15. All incoming travelers must now provide a negative test result from within the past 72 hours and quarantine for ten days (or five days if they take another test at their own expense and it comes back negative).

Germany’s economy held up better in the pandemic than it did during the global financial crisis, despite a second wave of lockdowns in the fourth quarter and the reversal of more than a decade’s growth in employment and trade. On Thursday, the country’s Federal Statistics Office forecast a 5% contraction in the economy in 2020 compared to the previous year based on provisional GDP estimates. By comparison, Europe’s biggest economy shrank 5.7% in 2009 during the recession that followed the financial crisis, it said in a statement. Nearly all major sectors with the exception of construction suffered a decline last year. Spending by households tumbled and business investment shrank the most since the financial crisis. Exports and imports of goods and services decreased for the first time since 2009, shrinking 9.9% and 8.6%, respectively.

The major European stock markets had a negative day:

CAC 40 decreased 69.45 points or -1.22% to 5,611.69
FTSE 100 decreased 66.25 points or -0.97% to 6,735.71
DAX 30 decreased 200.97 points or -1.44% to 13,787.73

The major European currency markets had a mixed day today:

EURUSD decreased 0.00607 or -0.50% to 1.20909
GBPUSD decreased 0.0087 or -0.64% to 1.35968
USDCHF increased 0.00194 or 0.22% to 0.89017

Some economic news from Europe today:

France:

French CPI (YoY) decreased from 0.2% to 0.0%

French CPI (MoM) (Dec) remain the same at 0.2%

French Government Budget Balance (Nov) decreased from -159.9B to -176.9B

French HICP (MoM) (Dec) remain the same at 0.2%

French HICP (YoY) (Dec) decreased from 0.2% to 0.0%

UK:

U.K. Construction Output (YoY) (Nov) increased from -2.2% to -1.4%

Construction Output (MoM) (Nov) increased from 1.5% to 1.9%

GDP (MoM) decreased from 0.4% to -2.6%

Index of Services decreased from 9.7% to 3.7%

Industrial Production (YoY) (Nov) increased from -5.8% to -4.7%

Industrial Production (MoM) (Nov) decreased from 1.1% to -0.1%

Manufacturing Production (YoY) (Nov) increased from -6.1% to -3.8%

Manufacturing Production (MoM) (Nov) decreased from 1.6% to 0.7%

Monthly GDP 3M/3M Change decreased from 10.2% to 4.1%

Trade Balance (Nov) decreased from -13.29B to -16.01B

Trade Balance Non-EU (Nov) decreased from -5.82B to -8.01B

Norway:

Trade Balance (Dec) increased from 0.2B to 12.1B

Spain:

Spanish CPI (MoM) (Dec) remain the same at 0.2%

Spanish CPI (YoY) (Dec) increased from -0.8% to -0.5%

Spanish HICP (MoM) (Dec) increased from 0.1% to 0.2%

Spanish HICP (YoY) (Dec) increased from -0.8% to -0.6%

Euro Zone:

Trade Balance (Nov) decreased from 29.6B to 25.8B

Reserve Assets Total (Dec) increased from 859.43B to 878.92B

US/AMERICAS:

The average price for a new car in the US surpassed the $40,000 level, according to CNet. An analysis by Edmunds showed that the average person borrowed $35,373 to purchase a new car during Q4 of 2020 and made an average down payment of $4,734. New car owners are now paying a monthly average of $581 with a 4.6% APR. Edmunds’ executive director of insights, Jessica Caldwell, noted that although the high price seemed odd during the midst of an economic crisis, new car buyers are “clearly on the other side of the economic divide.” “They’re likely qualifying for the lowest promotional rates and feeling secure enough to put down more money to get the bigger vehicles and features that they want,” Caldwell stated.

President-elect Joe Biden is proposing a new $1.9 trillion stimulus package to combat the effects of the coronavirus and corresponding lockdowns. The American Rescue Plan would include a $1,400 stimulus check for those who qualify, which would raise the latest amount to $2,000 as originally proposed by Democrats and certain Republicans including President Trump. The bill would allocate $350 for government aid, $170 billion for education, $50 billion for COVID-19 testing, and $20 billion for a national vaccine program. Additionally, Biden would like to increase weekly unemployment benefits to $400 and extend it until the end of September. Lastly, Biden is seeking to raise the federal minimum wage to $15 per hour, stating “No one working 40 hours a week should live below the poverty line.”

New real estate records were set in both Vancouver and the Greater Toronto areas after home sales soared 7.2% from November to December. This marks a 47,2% rise YoY, according to the Canadian Real Estate Association (CREA), accounting for over 550,000 home sales. The new year is starting off with “record-high demand and record-low supply,” according to the CREA. The group anticipates real estate continuing to rise in the new year.

The US Congress has accused China of committing genocide against Uighurs and other Muslims in the Xinjiang region and will conduct a detailed investigation. It has been known that China set up camps to detain these minority groups, which they maintain are “vocational training centers.” This is one of the rare bipartisan issues in the US where Democratic and Republican leaders have condemned China’s actions. While the ongoing investigation is certain to strain ties with China, America’s top trading partner, it seems to be one issue that both US political parties can agree on.

US Market Closings:

Dow declined 177.26 points or -0.57% to 30,814.26
S&P 500 declined 27.29 points or -0.72% to 3,768.25
Nasdaq declined 114.14 points or -0.87% to 12,998.5
Russell 2000 declined 32.15 points or -1.49% to 2,123.2

Canada Market Closings:

TSX Composite declined 49.06 points or -0.27% to 17,909.03
TSX 60 declined -0.88 of a point or -0.08% to 1,066.74

Brazil Market Closing:

Bovespa declined 3,131.72 points or -2.54% to 120,348.8

ENERGY:

The oil markets had a mixed day today:

Crude Oil decreased 1.3 USD/BBL or -2.43% to 52.2700
Brent decreased 1.35 USD/BBL or -2.39% to 55.0700
Natural gas increased 0.065 USD/MMBtu or 2.44% to 2.7310
Gasoline decreased 0.03 USD/GAL or -1.93% to 1.5239
Heating oil decreased 0.0313 USD/GAL or -1.93% to 1.5881
Top commodity gainers: Natural Gas (2.44%), Rubber (3.95%), Rice (2.52%) and Bitumen (2.36%)
Top commodity losers: Platinum (-3.28%), Brent (-2.39%), Crude Oil (-2.43%), and Silver (-3.05%)

The above data was collected around 12:58 EST on Friday.

BONDS:

Japan 0.04%(+1bp), US 2’s 0.14%(-0.012%), US 10’s 1.09%(-4bps); US 30’s 1.84%(-0.035%), Bunds -0.55% (+3bp), France -0.33% (+0bp), Italy 0.60% (-1bp), Turkey 12.89% (+2bp), Greece 0.67% (-2bp), Portugal 0.02% (+1bp); Spain 0.06% (+0bp) and UK Gilts 0.29% (-1bp).