Market Talk – July 12, 2021

Posted Jul 12, 2021 by Martin Armstrong |

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ASIA:

China will cut the amount of cash that banks must hold as reserves, releasing around 1 trillion yuan ($154.19 billion) in long-term liquidity to underpin its post-COVID economic recovery that is starting to lose momentum. The People’s Bank of China (PBOC) said on its website it would cut the reserve requirement ratio (RRR) for all banks by 50 basis points (bps), effective from July 15. The PBOC said its prudent monetary policy remained unchanged. Part of the liquidity released will help financial institutions to repay maturing medium-term lending facility (MLF) loans, and will also help ease liquidity pressure caused by tax payments, it said. The central bank said the weighted average RRR for Chinese financial institutions would fall to 8.9% after the cut. Banks that are subject to an RRR of 5% will be exempted from the new cut.

The major Asian stock markets had a mixed day today:

NIKKEI 225 increased 628.60 points or 2.25% to 28,569.02
Shanghai increased 23.75 points or 0.67% to 3,547.84
Hang Seng increased 170.70 or 0.62% to 27,515.24
ASX 200 increased 60.20 points or 0.83% to 7,333.50
Kospi increased 28.52 points or 0.89% to 3,246.47
SENSEX decreased 13.50 points or -0.03% to 52,372.69
Nifty50 increased 2.80 points or 0.02% to 15,692.60

The major Asian currency markets had a mixed day today:

AUDUSD decreased 0.00049 or -0.07% to 0.74868
NZDUSD decreased 0.00199 or -0.28% to 0.69818
USDJPY increased 0.25 or 0.23% to 110.37
USDCNY decreased 0.00223 or -0.03% to 6.47674

Precious Metals:

Gold decreased 2.78 USD/t oz. or -0.15% to 1,805.20
Silver increased 0.066 USD/t. oz or 0.25% to 26.145

Some economic news from last night:

Japan:

Core Machinery Orders (YoY) (May) increased from 6.5% to 12.2%

Core Machinery Orders (MoM) (May) increased from 0.6% to 7.8%

PPI (MoM) (Jun) decreased from 0.8% to 0.6%

PPI (YoY) (Jun) decreased from 5.1% to 5.0%

New Zealand:

Electronic Card Retail Sales (MoM) (Jun) decreased from 1.7% to 0.9%

Electronic Card Retail Sales (YoY) (Jun) decreased from 18.1% to 4.0%

Some economic news from today:

Japan:

Machine Tool Orders (YoY) decreased from 141.9% to 96.6%

India:

CPI (YoY) (Jun) decreased from 6.30% to 6.26%

Cumulative Industrial Production (May) increased from -8.60% to 68.80%

Industrial Production (YoY) (May) increased from 24.1% to 29.3%

Manufacturing Output (MoM) (May) increased from 28.3% to 34.5%

EUROPE/EMEA:

Britain’s post-lockdown economic rebound slowed sharply in May despite a relaxation of social-distancing rules, according to official data. Gross domestic product expanded by a monthly 0.8%, much faster than its typical pre-pandemic pace but down from April’s 2.0% surge. It was also a lot weaker than the median forecast of 1.5% in a Reuters poll of economists. The Bank of England expects Britain’s economy to grow by 7.25% this year, the fastest since 1941. Last year output plunged by almost 10%, the biggest drop in more than 300 years. Britain’s dominant services sector grew by a weaker-than-expected 0.9% in May from April as a huge 37.1% monthly jump for accommodation and food services failed to offset slower increases elsewhere in the sector.

The major Europe stock markets had a green day:

CAC 40 increased 29.83 points or 0.46% to 6,559.25
FTSE 100 increased 3.54 points or 0.05% to 7,125.42
DAX 30 increased 102.58 points or 0.65% to 15,790.51

The major Europe currency markets had a mixed day today:

EURUSD decreased 0.00189 or -0.16% to 1.18581
GBPUSD decreased 0.00225 or -0.16% to 1.38803
USDCHF increased 0.00169 or 0.18% to 0.91544

Some economic news from Europe today:

Germany:

German WPI (YoY) (Jun) increased from 9.7% to 10.7%

German WPI (MoM) (Jun) decreased from 1.7% to 1.5%

US/AMERICAS:

The June Survey of Consumer Expectations projected median inflation to rise 4.8% over the next year, marking a 0.8 percentage point rise from May. The figure also represents the highest rate since 2013. The outlook for the next three years steadied at 3.6%. Despite being over the 2% target for the Federal Reserve, voting members have said they would let inflation run above target for a period of time.

Drugmaker Moderna announced plans to begin testing its coronavirus vaccine on pregnant women. The company aims to test 1,000 pregnant women, who have not been exposed to COVID-19, and monitor them over a 21-month trial period. Although the CDC has stated it is safe for pregnant women to receive the vaccine, this is the first clinical trial.

United Airlines CEO Scott Kirby believes travel will not fully recover until 2023. International travel is still diminished by around 60% due to restrictions and reluctancy. Kirby believes next summer will be Europe’s most lucrative travel year, while Asia will see a boost in 18-24 months. United also recently announced plans to add 150 daily flights to warm weather destinations over the winter in the anticipation of growing travel demand.

US Market Closings:

Dow advanced 126.02 points or 0.36% to 34,996.18
S&P 500 advanced 15.08 points or 0.35% to 4,384.63
Nasdaq advanced 31.32 points or 0.21% to 14,733.24
Russell 2000 advanced 1.82 points or 0.08% to 2,281.82

Canada Market Closings:

TSX Composite declined 24.87 points or -0.12% to 20,233.08
TSX 60 declined 0.5 of a point or -0.04% to 1,214.29

Brazil Market Closing:

Bovespa advanced 2,156.03 points or 1.72% to 127,583.8

ENERGY:

The oil markets had a mixed day today:

Crude Oil decreased 0.54 USD/BBL or -0.72% to 74.0200
Brent decreased 0.48 USD/BBL or -0.64% to 75.0700
Natural gas increased 0.044 USD/MMBtu or 1.20% to 3.7180
Gasoline decreased 0.0073 USD/GAL or -0.32% to 2.2847
Heating oil decreased 0.0115 USD/GAL or -0.53% to 2.1437

The above data was collected around 12:20 EST on Monday

Top commodity gainers: Methanol (2.39%), Wheat (2.47%), Coffee (2.84%) and Cocoa (12.21%)
Top commodity losers: Oat (-5.11%), Zinc (-1.47%), Sugar (-1.62%), and Lumber (-3.20%)

The above data was collected around 12:25 EST on Monday.

BONDS:

Japan 0.031%(+0bp), US 2’s 0.2366%(+0.02%), US 10’s 1.3729%(+1.17bps); US 30’s 1.9982%(+0.01%), Bunds -0.2970% (-0.5bp), France 0.0460% (-1bp), Italy 0.7410% (-2.64bp), Turkey 16.88% (-4bp), Greece 0.736% (-2bp), Portugal 0.313% (-3bp); Spain 0.345% (-1.48bp) and UK Gilts 0.649% (-0.8bp).