Market Talk – March 24, 2021

Posted Mar 24, 2021 by Martin Armstrong |

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ASIA:

Chinese internet giant Tencent on Wednesday reported a 28 percent year-on-year growth in revenue for 2020, raking in around 482 billion yuan (about $73.9 billion). The company’s net profit, calculated on a non-IFRS basis in order to reflect its core earnings by excluding certain one-time or non-cash items, rose 30 percent year on year to reach about 123 billion yuan during the period, according to its financial statement.

India’s Supreme Court on Tuesday rejected an attempt to extend a six-month moratorium on loan repayments to banks, but ruled that no borrowers can be charged any extra interest incurred on loans during that period, which ended in August last year. India’s top court rejected pleas to extend the moratorium, and said the government and central bank rather than the judiciary decide on economic policy based on expert opinion. India’s Nifty PSU bank index, which tracks state-run banks, rose as much as 3.93%, while the Nifty Bank index rose as much as 2.07% following the verdict.

Bank of America (Bofa) Securities in a report said India is set to overtake Japan as the world’s third-largest economy behind the U.S. and China by 2031. The investment banking division of Bank of America previously predicted it would happen in 2028 but said Monday the economic shock from Covid-19 will push back the timeline by three years. The researchers noted India should reach Japan’s nominal GDP in dollar terms in 2031 if it grows at 9% annually — assuming real GDP growth of around 6%, an average inflation rate of 5% and 2% depreciation. If growth touches 10%, then India can potentially top Japan by 2030, the report said.

The major Asian stock markets had a mixed day today:

NIKKEI 225 decreased 590.40 points or -2.04% to 28,405.52
Shanghai decreased 44.45 points or -1.30% to 3,367.06
Hang Seng decreased 579.24 points or -2.03% to 27,918.14
ASX 200 increased 33.40 points or 0.50% to 6,778.80
Kospi decreased 8.39 points or -0.28% to 2,996.35
SENSEX decreased 871.13 points or -1.74% to 49,180.31
Nifty50 decreased 265.35 points or -1.79% to 14,549.40

The major Asian currency markets had a mixed day today:

AUDUSD decreased 0.00078 or -0.10% to 0.76017
NZDUSD decreased 0.00149 or -0.21% to 0.69768
USDJPY increased 0.22 or 0.20% to 108.73
USDCNY increased 0.00604 or 0.09% to 6.52666

Precious Metals:

Gold increased 7.07 USD/t oz. or 0.41% to 1,734.18
Silver increased 0.037 USD/t. oz or 0.15% to 25.117

Some economic news from last night:

Japan:

Corporate Services Price Index (CSPI) (YoY) increased from -0.4% to -0.1%

Manufacturing PMI (Mar) increased from 51.4 to 52.0

Services PMI (Mar) increased from 45.8 to 46.5

South Korea:

PPI (MoM) (Feb) decreased from 1.1% to 0.8%

PPI (YoY) (Feb) increased from 0.9% to 2.0%

Australia:

Manufacturing PMI increased from 56.9 to 57.0

Services PMI increased from 53.4 to 56.2

New Zealand:

Exports (Feb) increased from 4.20B to 4.47B

Imports (Feb) decreased from 4.85B to 4.29B

Trade Balance (MoM) (Feb) increased from -647M to 181M

Trade Balance (YoY) (Feb) decreased from 2,730M to 2,360M

EUROPE/EMEA:

The Eurozone economy returned to growth for the first time in six months in March, a closely watched survey said Wednesday, as coronavirus lockdowns had little effect on manufacturing, especially in Germany. IHS Markit’s survey showed that a major pickup in activity in Germany, the Eurozone’s biggest economy, had lifted manufacturing output in the single currency bloc to 63 points, its highest reading since 1997. The acceleration in manufacturing also affected hiring as manufacturers saw headcounts rise at a rate not seen since August 2018. The services sector, however, still lingered in recessionary territory under the effects of the pandemic, but the rate of decline was weakening, IHS Markit said.

An Abu Dhabi investment fund has agreed to pay £800m into UK life sciences, in what could be the first of billions of pounds of investment in the UK. Mubadala, one of the UAE’s most active funds, will invest the money over five years. Abu Dhabi is set to invest heavily in British health, tech, green energy, and infrastructure, according to the Financial Times. The exact size of the total investment is not yet clear, the FT said, but it could be worth up to £5bn.

The major Europe stock markets had a mixed day:

CAC 40 increased 1.99 points or 0.03% to 5,947.29
FTSE 100 increased 13.70 points or 0.20% to 6,712.89
DAX 30 decreased 51.63 points or -0.35% to 14,610.39

The major Europe currency markets had a mixed day today:

EURUSD decreased 0.00215 or -0.18% to 1.18226
GBPUSD decreased 0.004 or -0.29% to 1.36935
USDCHF increased 0.00101 or 0.11% to 0.93538

Some economic news from Europe today:

UK:

Composite PMI (Mar) increased from 49.6 to 56.6

Manufacturing PMI (Mar) increased from 55.1 to 57.9

Services PMI (Mar) increased from 49.5 to 56.8

Core CPI (YoY) (Feb) decreased from 1.4% to 0.9%

Core CPI MoM (MoM) (Feb) increased from -0.5% to 0.0%

Core PPI Output (MoM) (Feb) decreased from 0.5% to 0.1%

Core PPI Output (YoY) (Feb) decreased from 1.5% to 1.4%

Core RPI (MoM) (Feb) increased from -0.3% to 0.5%

Core RPI (YoY) (Feb) remain the same at 1.6%

CPI (YoY) (Feb) decreased from 0.7% to 0.4%

CPI (MoM) (Feb) increased from -0.2% to 0.1%

CPI, n.s.a (Feb) increased from 109.00 to 109.10

PPI Input (YoY) (Feb) increased from 1.6% to 2.6%

PPI Input (MoM) (Feb) decreased from 1.0% to 0.6%

PPI Output (YoY) (Feb) increased from 0.1% to 0.9%

PPI Output (MoM) (Feb) decreased from 0.8% to 0.6%

RPI (MoM) (Feb) increased from -0.3% to 0.5%

RPI (YoY) (Feb) remain the same at 1.4%

France:

French Manufacturing PMI (Mar) increased from 56.1 to 58.8

French Markit Composite PMI (Mar) increased from 47.0 to 49.5

French Services PMI (Mar) increased from 45.6 to 47.8

Germany:

German Composite PMI (Mar) increased from 51.1 to 56.8

German Manufacturing PMI (Mar) increased from 60.7 to 66.6

German Services PMI (Mar) increased from 45.7 to 50.8

Euro Zone:

Manufacturing PMI (Mar) increased from 57.9 to 62.4

Markit Composite PMI (Mar) increased from 48.8 to 52.5

Services PMI (Mar) increased from 45.7 to 48.8

Consumer Confidence (Mar) increased from -14.8 to -10.8

US/AMERICAS:

Nearly 200 companies have reached out to the US Congress with the hope of passing a paid family leave program. The US is currently the only developed nation that does not provide any relief for new parents, according to the Organization for Economic Cooperation and Development. Prior attempts have been made to enact legislation, but, unsurprisingly, both parties were unable to agree on a final bill. In a joint letter to Congress, the letter is asking lawmakers to provide American workers “time to welcome a newly arrived child, time to care for a seriously ill family member, and time to care for one’s own serious illness.” Furthermore, the letter states that enacting such measures could prevent women from leaving the workplace after childbirth, or an unexpected pandemic, as over 2 million women were forced to quit their jobs to tend to children.

After suspending flights last fall at the beginning of the coronavirus pandemic, WestJet has announced that it will resume flights from six airports in Eastern Canada at the end of June. Flights to Quebec City and Atlantic Canada will be adjusted based on demand, and West Jet’s Chief Commercial Officer John Weatherill said he expects demand to be very high this summer. “Our focus remains on the safe restart of air travel. We ask that federal and provincial governments work with us to provide clarity and certainty to Canadians, including travel policies that support economic recovery and restore jobs,” said WestJet CEO Ed Sims.

US Market Closings:

Dow declined -3.09 points or -0.01% to 32,420.06
S&P 500 declined 21.38 points or -0.55% to 3,889.14
Nasdaq declined 265.81 points or -2.01% to 12,961.89
Russell 2000 declined 51.42 points or -2.35% to 2,134.27

Canada Market Closings:

TSX Composite declined 41.51 points or -0.22% to 18,628.29
TSX 60 declined -1.09 points or -0.1% to 1,114.68

Brazil Market Closing:

Bovespa declined 1,197.61 points or -1.06% to 112,064.19

ENERGY:

The oil markets had a green day today:

Crude Oil increased 3.17 USD/BBL or 5.49% to 60.9300
Brent increased 3.4 USD/BBL or 5.59% to 64.1900
Natural gas increased 0.019 USD/MMBtu or 0.76% to 2.5270
Gasoline increased 0.089 USD/GAL or 4.69% to 1.9854
Heating oil increased 0.0704 USD/GAL or 4.03% to 1.8193

Top commodity gainers: Crude Oil (5.49%), Brent (5.59%), Gasoline (4.69%) and Heating Oil (4.03%)
Top commodity losers: Wheat (-1.58%), Rubber (-1.89%), Cotton (-1.46%), and Copper (-1.24%)

The above data was collected around 14:55 EST on Wednesday.

BONDS:

Japan 0.07%(-1bp), US 2’s 0.14%(-0.004%), US 10’s 1.62%(-2bps); US 30’s 2.32%(-0.027%), Bunds -0.36% (+2bp), France -0.11% (-1bp), Italy 0.59% (-1bp), Turkey 17.05% (-122bp), Greece 0.86% (-1bp), Portugal 0.16% (-2bp); Spain 0.28% (-3bp) and UK Gilts 0.75% (-1bp).