Market Talk – October 15, 2020

Posted Oct 15, 2020 by Martin Armstrong |

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ASIA:

China’s consumer inflation slowed in September, driven by a moderation in food price gains. The consumer price index rose 1.7% last month from a year earlier, following a 2.4% gain in August, the National Bureau of Statistics said Thursday. The median forecast was for a 1.9% increase. The producer price index registered a 2.1% decline, after a 2% drop in August.

The US State Department has submitted a proposal for the Trump administration to add China’s Ant Group to a trade blacklist before the financial technology firm is slated to go public, Reuters reported. The move comes as China hardliners in the Trump administration are seeking to send a message to deter U.S. investors from taking part in the initial public offering for Ant. The dual listing in Shanghai and Hong Kong could be worth up to a record $35 billion. It was not immediately clear when the U.S. government agencies that decide whether to add a company to the so-called Entity List would review the matter. The entity list, which makes it more difficult for U.S. firms to sell high-tech items to blacklisted companies, has become the tool of choice for the Trump administration to punish Chinese companies, though its real-world impact is sometimes questionable.

The Indian cabinet on Wednesday allowed Abu Dhabi National Oil Co (ADNOC)to export oil from its Mangalore strategic petroleum reserve (SPR), a government official said, marking a policy shift that could enhance foreign participation as India seeks to expand its storage capacity. ADNOC had been seeking permission from the Indian government for the export of its oil from the cavern as it was finding it difficult to sell to Indian refiners, some of which have cut crude processing due to falling demand. Indian companies will have the first right of refusal in case of any re-exports by ADNOC, a government source said.

The major Asian stock markets had a mixed day today:

NIKKEI 225 decreased 119.50 points or -0.51% to 23,507.23
Shanghai decreased 8.60 points or -0.26% to 3,332.18
Hang Seng decreased 508.55 points or -2.06% to 24,158.54
ASX 200 increased 31.10 points or 0.50% to 6,210.30
Kospi decreased 19.27 points or -0.81% to 2,361.21
SENSEX decreased 1,066.33 points or -2.61% to 39,728.41
Nifty50 decreased 290.7 points or -2.43% to 11,680.35

The major Asian currency markets had a mixed day today:

AUDUSD decreased 0.00447 or -0.63% to 0.70923
NZDUSD decreased 0.00592 or -0.89% to 0.65960
USDJPY increased 0.2750 or 0.26% to 105.43
USDCNY decreased 0.00368 or -0.05% to 6.71253

Precious Metals:

Gold increased 6.49 USD/t oz. or 0.34% to 1,907.38

Silver decreased 0.03 USD/t. oz or -0.11%% to 24.253

Some economic news from last night:

China:

CPI (MoM) (Sep) decreased from 0.4% to 0.2%

CPI (YoY) (Sep) decreased from 2.4% to 1.7%

PPI (YoY) (Sep) decreased from -2.0% to -2.1%

Japan:

Foreign Bonds Buying increased from -337.8B to 1,946.5B

Foreign Investments in Japanese Stocks increased from 531.4B to 1,421.0B

South Korea:

Exports (YoY) (Sep) decreased from 7.7% to 7.6%

Imports (YoY) (Sep) increased from 1.1% to 1.6%

Trade Balance (Sep) decreased from 8.88B to 8.70B

M2 Money supply (Aug) decreased from 8.40% to 7.60%

Australia:

HIA New Home Sales (MoM) increased from 3.60% to 3.80%

MI Inflation Expectations increased from 3.1% to 3.4%

Employment Change (Sep) decreased from 111.0K to -29.5K

Full Employment Change (Sep) decreased from 36.2K to -20.1k

Participation Rate (Sep) remain the same at 64.8%

Unemployment Rate (Sep) increased from 6.8% to 6.9%

Some economic news from today:

Japan:

Tertiary Industry Activity Index (MoM) increased from -0.5% to 0.8%

India:

Exports (USD) (Sep) increased from 22.70B to 27.58B

Imports (USD) (Sep) increased from 29.47B to 30.31B

Trade Balance (Sep) increased from -6.77B to -2.72B

Indonesia:

Export Growth (YoY) (Sep) increased from -8.36% to -0.51%

Import Growth (YoY) (Sep) increased from -24.19% to -18.88%

Trade Balance (Sep) increased from 2.33B to 2.44B

EUROPE/EMEA:

The British government will impose stricter COVID-19 social restrictions on London, Health Secretary Matt Hancock announced in parliament on Thursday. The capital will be moved into the “tier 2” or “high risk” level in the government’s new three-tiered alert system, up from “tier 1” or “medium risk”. London and Manchester are in focus as the outbreak spreads.

European leaders have urged the UK government to make the “necessary moves” to clinch an EU-UK trade deal. Eu chief Brexit negotiator Michael Barnier said Brussels is determined to reach a fair-trade deal. Boris Johnson’s negotiator has accused the EU of taking an “unusual approach” to trade talks after the bloc’s leaders called on the UK to “make the necessary moves” for a post-Brexit deal.

France on Wednesday became the latest European country to toughen anti-coronavirus measures, imposing a curfew in Paris and eight other cities from Saturday, while Germany and Ireland also ramped up restrictions. With over one million coronavirus deaths and nearly 40 million cases worldwide, regions like Europe that suppressed the first outbreak are again facing

tough choices on how to control a new wave without the economic devastation wrought by nationwide lockdowns.

The major Europe stock markets had a negative day today:

CAC 40 decreased 104.24 points or -2.11% to 4,837.42
FTSE 100 decreased 102.54 points, or -1.73% to 5,832.52
DAX 30 decreased 324.31 points or -2.49% to 12,703.75

The major Europe currency markets had a mixed day today:

EURUSD decreased 0.00334 or -0.28% to 1.17088
GBPUSD decreased 0.01106 or -0.85% to 1.29001
USDCHF increased 0.00096 or 0.11% to 0.91431

Some economic news from Europe today:

Norway:

Trade Balance (Sep) decreased from -2.9B to -8.0B

Swiss:

PPI (MoM) (Sep) increased from -0.4% to 0.1%

PPI (YoY) (Sep) increased from -3.5% to -3.1%

France:

French CPI (YoY) decreased from 0.2% to 0,0%

French CPI (MoM) (Sep) decreased from -0.1% to -0.5%

French HICP (MoM) (Sep) decreased from -0.1% to -0.6%

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

France Thomson Reuters IPSOS PCSI (Oct) decreased from 40.97 to 39.26

Italy:

Italy Thomson Reuters IPSOS PCSI (Oct) decreased from 37.66 to 37.13

Italian Industrial New Orders (YoY) (Aug) increased from -7.6% to 6.1%

Italian Industrial New Orders (MoM) (Aug) increased from 3.4% to 15.1%

Italian Industrial Sales (YoY) (Aug) increased from -8.10% to -3.80%

Italian Industrial Sales (MoM) (Aug) decreased from 8.00% to 5.90%

Germany:

Germany Thomson Reuters IPSOS PCSI (Oct) increased from 51.06 to 52.57

UK:

Thomson Reuters IPSOS PCSI (Oct) decreased from 45.4 to 42.4

Euro Zone:

Reserve Assets Total (Sep) decreased from 914.98B to 909.58B

US/AMERICAS:

The number of unemployment filings rose to a two-month high last week in the US. According to the Labor Department, 898,000 Americans filed unemployment. The US workforce is 10.7 million positions short of recuperating from the 22 million job losses that occurred during the pandemic, according to the Associated Press. Furthermore, many analysts do not expect a sharp upturn in holiday hirings as online retail continues to dominate brick and mortar stores.

The average rate on 30-year home loans reached a historic low of 2.81%, down from 2.87% last week, according to a report by Freddie Mac. In contrast, 30-year loans averaged 3.69% at this time last year. The rate for 15-year fixed-rate mortgages also declined to 2.35% from 237% the week prior.

After four days of interrogations, the Senate will place their official vote on October 22 on whether Amy Coney Barrett will be appointed to the Supreme Court. Democratic Senator Richard Blumenthal called the appointment a “sham process,” as his party strongly believes the presidential election should take place prior to appointing a new member to the Supreme Court. Republicans hold a 53-47 lead over the Senate, and it is largely expected that Barrett will become a Justice prior to the election.

US Market Closings:

Dow declined 19.8 points or -0.07% to 28,494.2
S&P 500 declined 5.33 points or -0.15% to 3,483.32
Nasdaq declined 54.86 points or -0.47% to 11,713.87
Russell 2000 advanced 17.23 points or 1.06% to 1,638.88

Canada Market Closings:

TSX Composite advanced 45.63 points or 0.28% to 16,501.03
TSX 60 advanced 2.64 points or 0.27% to 986.63

Brazil Market Closing:

Bovespa declined 280.37 points or -0.28% to 99,054.06

ENERGY:

The oil markets had a mixed day today:

Crude Oil decreased 0.07 USD/BBL or -0.17% to 40.9700
Brent decreased 0.17 USD/BBL or -0.39% to 43.1500
Natural gas increased 0.141 USD/MMBtu or 5.35% to 2.7770
Gasoline decreased 0.0192 USD/GAL or -1.60% to 1.1820
Heating oil decreased 0.0088 USD/GAL or -0.74% to 1.1880
Top commodity gainers: Natural Gas (5.35%), Wheat (3.99%), Oat (2.63%), and Corn (1.96%)
Top commodity losers: Bitumen (-4.60%), Palm Oil (-2.54%), Lumber (-2.35%), and Lean Hogs (-10.91%)

The above data was collected around 16:45 EST on Thursday.

BONDS:

Japan 0.03%(-1bp), US 2’s 0.14% (+0bps), US 10’s 0.74%(+2bps);US 30’s 1.51%(+1bps), Bunds -0.58% (-1bp), France -0.33% (-3bp), Italy 0.70% (+4bp), Turkey 13.30% (+4bp), Greece 0.83% (+6bp), Portugal 0.17% (+3bp), Spain 0.15% (+7bp) and UK Gilts 0.19% (-4bp).