Market Talk – July 26, 2021

Posted Jul 26, 2021 by Martin Armstrong |

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ASIA:

The disparities in provincial growth across China widened further during the past six months, with the economies in coastal regions surging ahead on the back of increased exports while northern and inland provinces continued lagging behind due to their dependency on slowing government investments, according to data analyzed of new half-year provincial economic data. Those exports helped power economic growth in six coastal provinces – Guangdong, Fujian, Zhejiang, Shanghai, Jiangsu and Shandong – from January to June. Guangdong’s economic growth continued to lead the way among China’s 31 provincial-level jurisdictions, expanding 13 per cent from a year earlier to 5.72 trillion yuan (US$884 billion) in the first half, buoyed by a 26.9 per cent rise in exports. However, its economic pace was temporarily slowed by a coronavirus outbreak in May that resulted in a partial lockdown.

India’s top companies are deleveraging by cutting debt, with Reliance Industries leading the pack. The company made a debt cut of approx. 12.75 billion USD in fiscal 2021. Opting for lower-cost loans, aggressive asset sales and avoiding new projects were methods Corporate India had adopted to check debt. Statistics collated by an Indian online business daily shows that state-owned SAIL was the topper in debt reduction in percentage terms at 30.5 per cent. Jindal Steel, which reduced its debt by 29.7 per cent, was next.

The major Asian stock markets had a mixed day today:

NIKKEI 225 increased 285.29 points or 1.04% to 27,833.29
Shanghai decreased 82.96 points or -2.34% to 3,467.44
Hang Seng decreased 1,129.66 or -4.13% to 26,192.32
ASX 200 decreased 0.10 points or 0.00% to 7,394.30
Kospi decreased 29.47 points or -0.91% to 3,224.95
SENSEX decreased 123.53 points or -0.23% to 52,852.27
Nifty50 increased 31.60 points or -0.20% to 15,824.45

The major Asian currency markets had a mixed day today:

AUDUSD increased 0.00153 or 0.21% to 0.73781
NZDUSD increased 0.00122 or 0.17% to 0.69952
USDJPY decreased 0.16 or -0.15% to 110.38
USDCNY increased 0.01144 or 0.18% to 6.48638

Precious Metals:

Gold decreased 4.63 USD/t oz. or -0.26% to 1,796.71
Silver increased 0.03 USD/t. oz or 0.12% to 25.189

Some economic news from last night:

Japan:

Manufacturing PMI (Jul) decreased from 52.4 to 52.2

Services PMI decreased from 47.2 to 46.4

New Zealand:

Exports (Jun) increased from 5.89B to 5.95B

Imports (Jun) increased from 5.40B to 5.69B

Trade Balance (YoY) (Jun) decreased from -40M to -250M

Trade Balance (MoM) (Jun) decreased from 489M to 261M

Some economic news from today:

Singapore:

Industrial Production (YoY) (Jun) increased from 27.0% to 27.5%

Industrial Production (MoM) (Jun) decreased from 4.4% to -3.0%

Japan:

BoJ Core CPI (YoY) increased from 0.0% to 0.1%

Hong Kong:

Exports (MoM) (Jun) increased from 24.0% to 33.0%

Imports (MoM) (Jun) increased from 26.5% to 31.9%

Trade Balance decreased from -25.5B to -40.4B

EUROPE/EMEA:

On July 21 Lord Frost and Northern Ireland Secretary Brandon Lewis outlined their plans to rewrite the Northern Ireland Protocol. They claimed the UK and the EU “cannot go on as we are” on the implementation of the Brexit mechanism and demanded “significant changes”. The Protocol was agreed as part of the 2019 withdrawal agreement and effectively keeps Northern Ireland in the single market. Among the proposals were asking Brussels to show greater flexibility in the implementation of customs checks, and also renegotiate the governance of overseeing the Protocol.

Unionists have been left frustrated that checks have been required on goods travelling to Northern Ireland supermarkets which they say are unlikely to cross into the Republic of Ireland and therefore into the EU. Lord Frost is intending to hold conversations with EU officials in the coming weeks over the Protocol. He has also warned the UK will trigger Article 16 which allows him to legally suspend parts of the deal if an agreement is not found by the end of September.

The major Europe stock markets had a mixed day:

CAC 40 increased 9.78 points or 0.15% to 6,578.60
FTSE 100 decreased 2.15 points or -0.03% to 7,025.43
DAX 30 decreased 50.31 points or -0.32% to 15,618.98

The major Europe currency markets had a mixed day today:

EURUSD increased 0.00322 or 0.27% to 1.18029
GBPUSD increased 0.00777 or 0.57% to 1.38157
USDCHF decreased 0.00388 or -0.42% to 0.91575

Some economic news from Europe today:

Germany:

German Business Expectations (Jul) decreased from 103.7 to 101.2

German Current Assessment (Jul) increased from 99.7 to 100.4

German Ifo Business Climate Index (Jul) decreased from 101.7 to 100.8

US/AMERICAS:

Treasury Secretary Janet Yellen is warning that the US will default on debt unless “extraordinary measures” are taken before August 2. “The period of time that extraordinary measures may last is subject to considerable uncertainty due to a variety of factors, including the challenges of forecasting the payments and receipts of the US government months into the future, exacerbated by the heightened uncertainty in payments and receipts related to the economic impact of the pandemic,” Yellen stated in a letter to House Speaker Nancy Pelosi. Yellen is now urging lawmakers to extend or raise the debt ceiling.

Alberta’s food services industry suffered the consequences of prolonged lockdowns, according to Statistics Canada. Dining at full-service restaurants declined -3.2% in May, while overall sales dropped -5.5% or C$32,717,000 from April 2021 to May 2021. Nationwide, the sector declined -0.6% this May, which still marks a 37.1% increase YoY. Food and dining prices rose in 2.6% in May YoY as well, with alcoholic beverage sales decreasing -1.5% YoY.

Single-family home sales unexpectedly declined in June, according to the US Census Bureau. Sales fell -6.6% to a seasonally-adjusted rate of 676,000, which is -19.4$ beneath analysts’ expectations. May’s reading was revised 45,000 lower to 724,000. The median home price in June dropped to $361,800 compared to May’s record high of $380,700. Despite the drop in sales, inventory is on the rise after advancing to 353,000.

US Market Closings:

Dow advanced 82.76 points or 0.24% to 35,144.31
S&P 500 advanced 10.51 points or 0.24% to 4,422.3
Nasdaq advanced 3.72 points or 0.03% to 14,840.71
Russell 2000 advanced 7.27 points or 0.33% to 2,216.92

Canada Market Closings:

TSX Composite declined 23.47 points or -0.12% to 20,164.96
TSX 60 declined 3.1 points or -0.26% to 1,211.01

Brazil Market Closing:

Bovespa advanced 951.08 points or 0.76% to 126,003.86

ENERGY:

The oil markets had a green day today:

Crude Oil increased 0.09 USD/BBL or 0.12% to 72.1600
Brent increased 0.62 USD/BBL or 0.84% to 74.7200
Natural gas increased 0.036 USD/MMBtu or 0.89% to 4.0960
Gasoline increased 0.0225 USD/GAL or 0.98 % to 2.3138
Heating oil increased 0.0224 USD/GAL or 1.05% to 2.1563

The above data was collected around 15:02 EST on Monday

Top commodity gainers: Palm Oil (2.65%), Coffee (10.03%), Cocoa (2.59%) and Copper (4.22%)
Top commodity losers: Methanol (-1.98%), Bitumen (-1.78%), Oat (-1.14%), and Wheat (-1.10%)

The above data was collected around 15:10 EST on Monday.

BONDS:

Japan 0.013%(+0bp), US 2’s 0.20%(-0.002%), US 10’s 1.2779%(-0.34bps); US 30’s 1.9242%(+0.00%), Bunds -0.4150% (-0.2bp), France -0.0730% (+0.5bp), Italy 0.6391% (+1bp), Turkey 16.86% (+12bp), Greece 0.6390% (-2bp), Portugal 0.216% (+2bp); Spain 0.308% (+9.21bp) and UK Gilts 0.5780% (-1bp).