Market Talk – May 27, 2021

Posted May 27, 2021 by Martin Armstrong |

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ASIA:

The US and China’s top trade negotiators have held “candid, pragmatic” talks, in their first meeting under the Biden presidency. US Trade Representative Katherine Tai and Chinese Vice Premier Liu He held a virtual meeting to discuss matters. In the virtual meeting, both sides said they discussed the importance of the trade relationship between the two countries. The world’s two biggest economies signed a so-called “phase 1” agreement in January last year. The Chinese Commerce Ministry representative, Ms. Tai has said she is now looking at whether the terms of the deal have been met by Beijing, as some experts have suggested that China has fallen up to 40% short on its agreement to buy American goods.

India’s government exceeded its legal powers by enacting rules that companies such as WhatsApp say will force them to break end-to-end message encryption, the messaging app owned by Facebook argued in a court filing, Reuters reported. WhatsApp has filed a lawsuit in a Delhi court against the government to quash a provision of a new regulation that mandates companies to divulge the “first originator of information,” arguing in favor of protecting privacy. In a statement on Wednesday, WhatsApp said it would engage with the Indian government to find “practical solutions,” and protect users. Still, its court filing shows it has taken a firmer stance against Prime Minister Narendra Modi’s administration.

Singapore’s economy grew at its fastest pace in more than a year in the first quarter of 2021, helped by a stronger-than-expected manufacturing sector, official data showed Tuesday. The Southeast Asian economy expanded by 1.3% in the quarter ended March compared with a year ago, the ministry of trade and industry said in an economic update. But the government warned of “heightened uncertainties” arising from the Covid-19 pandemic in the months ahead while maintaining its growth forecast for Singapore at 4% to 6% for 2021. The latest GDP print also exceeded the 0.9% year-on-year growth projected by analysts in a Reuters poll.

The major Asian stock markets had a mixed day today:

NIKKEI 225 decreased 93.18 points or -0.33% to 28,549.01
Shanghai increased 15.49 points or 0.43% to 3,608.85
Hang Seng decreased 52.81 points or -0.18% to 29,113.20
ASX 200 increased 2.40 points or 0.03% to 7,094.90
Kospi decreased 2.92 points or -0.09% to 3,165.51
SENSEX increased 97.70 points or 0.19% to 51,115.22
Nifty50 increased 36.40 points or 0.24% to 15,337.85

The major Asian currency markets had a mixed day today:

AUDUSD decreased 0.00050 or -0.06% to 0.77344
NZDUSD increased 0.00140 or 0.19% to 0.72893
USDJPY increased 0.69800 or 0.64% to 109.86
USDCNY decreased 0.00860 or -0.14% to 6.37663

Precious Metals:

Gold decreased 4.41 USD/t oz. or -0.23% to 1,892.03
Silver increased 0.073 USD/t. oz or 0.26% to 27.763

Some economic news from last night:

China:

Chinese Industrial profit (YoY) (Apr) decreased from 92.30% to 57.00%

Chinese Industrial profit YTD (Apr) decreased from 137.3% to 106.1%

Japan:

Foreign Bonds Buying decreased from 600.0B to -551.5B

Foreign Investments in Japanese Stocks decreased from 144.7B to -223.5B

South Korea:

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

Australia:

Building Capital Expenditure (MoM) (Q1) increased from 0.7% to 3.8%

Plant/Machinery Capital Expenditure (QoQ) (Q1) increased from 5.7% to 9.1%

Private New Capital Expenditure (QoQ) (Q1) increased from 4.2% to 6.3%

Some economic news from today:

Hong Kong:

Exports (MoM) (Apr) decreased from 26.4% to 24.4%

Imports (MoM) (Apr) increased from 21.7% to 25.2%

Trade Balance decreased from -27.0B to -31.8B

Indonesia:

M2 Money Supply (YoY) (Apr) increased from 6.90% to 11.50%

EUROPE/EMEA:

Marks & Spencer says Brexit and the Irish Sea border have added about £30m of costs to its island of Ireland business. Products moving from GB to Northern Ireland and Ireland have faced a new range of checks and controls since January. These include local sourcing and re-routing products through European hubs. Moving food products from Great Britain into the EU’s single market has become more expensive after Brexit, with official certification needed for all products of animal origin, such as meat and fish. M&S says this has added somewhere in the range of £42m to £47m to the cost of doing business.

The European Central Bank is ramping up efforts to push more management and capital out of the City and Canary Wharf into the EU. The central banking authority plans to scrutinize and crack down on so-called ‘desk mapping’ – or ‘back-to-back booking’ – to determine whether banks’ key staff, capital, and book trades used by EU-based clients are not based outside the bloc. The bank believes that currently, too many banks rely too heavily on their London units while serving clients across the EU, thereby escaping regulatory scrutiny and oversight, according to a Bloomberg report, citing anonymous sources to the ECB. For international banks wanting to do business in the EU post-Brexit, the use of blank typos would reportedly no longer be allowed.

The major Europe stock markets had a mixed day:

CAC 40 increased 44.11 points or 0.69% to 6,435.71
FTSE 100 decreased 7.26 points or -0.10% to 7,019.67
DAX 30 decreased 43.99 points or -0.28% to 15,406.73

The major Europe currency markets had a mixed day today:

EURUSD decreased 0.00011 or -0.01% to 1.21892
GBPUSD increased 0.00568 or 0.40% to 1.41743
USDCHF decreased 0.00018 or -0.02% to 0.89765

Some economic news from Europe today:

Swiss:

Trade Balance (Apr) decreased from 5.732B to 3.837B

Employment Level (Q1) decreased from 5.141M to 5.101M

Germany:

GfK German Consumer Climate (Jun) increased from -8.6 to -7.0

Italy:

Italian Business Confidence (May) increased from 106.0 to 110.2

Italian Consumer Confidence (May) increased from 102.3 to 110.6

Italian Trade Balance Non-EU (Apr) increased from 4.80B to 4.85B

US/AMERICAS:

The US workforce is at its strongest level since the pandemic began, according to the Labor Department’s weekly report. While analysts expected jobless claims to total 425,000 for the week ending on May 22, only 406,000 Americans filed claims, marking almost a 38,000 decline in filings. Continuing claims also posted a significant decline at 96,000 to 3.68 million, which brings the four-week moving average to 3.68 million. The news comes after 24 GOP-led states opted out of the unemployment relief program amid concerns that people were less inclined to rejoin the workforce.

Treasury Secretary Janet Yellen is urging the US government to continue spending on various new programs. “[W]e cannot continue to be good stewards of this recovery – and tackle the new bodies of work that Congress assigns to us in the years beyond – with a budget that was designed for 2010,” Yellen stated. Members of the Federal Reserve have previously warned the government not to use low rates as an excuse to increase spending. Washington posted a deficit in 2020 of $3.1 trillion and has already reached a deficit of $1.9 trillion during the fiscal year of 2021. President Biden is set to propose a new budget to the tune of $6 trillion that will be largely funded by tax payers.

US Market Closings:

Dow advanced 141.59 points or 0.41% to 34,464.64
S&P 500 advanced 4.85 points or 0.12% to 4,200.84
Nasdaq declined 1.72 points or -0.01% to 13,736.28
Russell 2000 advanced 23.8 points or 1.06% to 2,273.07

Canada Market Closings:

TSX Composite advanced 28.94 points or 0.15% to 19,774.41
TSX 60 advanced 0.71 of a point or 0.06% to 1,184.36

Brazil Market Closing:

Bovespa advanced 374.48 points or 0.3% to 124,363.65

ENERGY:

The oil markets had a mixed day today:

Crude Oil increased 0.37 USD/BBL or 0.56% to 66.5800
Brent increased 0.25 USD/BBL or 0.36% to 69.1200
Natural gas decreased 0.085 USD/MMBtu or -2.81% to 2.9420
Gasoline decreased 0.0014 USD/GAL or -0.07% to 2.1487
Heating oil increased 0.0038 USD/GAL or 0.19% to 2.0490

The above data was collected around 13:55 EST on Thursday

Top commodity gainers: Wheat (4.20%), Canola (3.21%), Copper (3.16%) and Corn (6.41%)
Top commodity losers: Bitumen (-5.15%), Platinum (-1.09%), Natural Gas (-2.81%), and Palm Oil (-0.99%)

The above data was collected around 14:00 EST on Thursday.

BONDS:

Japan 0.0770%(+0bp), US 2’s 0.15%(-0.0004%), US 10’s 1.6096%(+3.56bps); US 30’s 2.2882%(+0.03%), Bunds -0.1740% (+2.9bp), France 0.186% (+3bp), Italy 0.939% (+1.67bp), Turkey 17.55% (-4bp), Greece 0.8810% (+2bp), Portugal 0.498% (+4.1bp); Spain 0.483% (+2.89bp) and UK Gilts 0.817% (+6.3bp).