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Market Talk – July 25, 2022


ASIA:

China’s new household deposits grew more than a third year on year to a record USD 1.5tn in the first half of 2022, while individual bank borrowings plunged more than half over the same period, official data showed. The inversion in savings rates followed an increase in bank deposits as Chinese savers raced to find safe options for their assets, and an economic downturn weighed on personal spending. China’s economy narrowly escaped a contraction in the second quarter, expanding 0.4 percent year on year in the three months to the end of June. Long-term real estate development loans fell by a quarter in the first half of 2022 from a year ago after many property companies, mainly Evergrande, defaulted on debt payments. Infrastructure buildout, another significant source of long-term credit, is also lagging as debt-laden local governments, the main backer of roads and bridges, struggle to raise capital.

India’s central bank governor Shaktikanta Das said that India’s central bank has zero tolerance for volatile and bumpy movements of rupee against US dollar and ensured to engage with foreign exchange markets to stop the downfall of rupee and to find its appropriate level. The rupee touched its record low in history to cross the psychological 80 per dollar mark last week, which caused India’s central bank, the Reserve Bank of India (RBI), for heavy dollar selling. Das said the rupee’s movements have been relatively smooth and orderly due to the RBI’s actions in the foreign exchange market. On Friday, the rupee was last trading at 79.90/91 to a dollar, compared to its Thursday’s close of 79.9450.

 

The major Asian stock markets had a mixed day today:

 

  • NIKKEI 225 decreased 215.41 points or -0.77% to 27,699.25

 

  • Shanghai decreased 19.59 points or -0.60% to 3,250.39

 

  • Hang Seng decreased 46.20 points or -0.22% to 20,562.94

 

  • ASX 200 decreased 1.60 points or -0.02% to 6,789.90

 

  • Kospi increased 10.55 points or 0.44% to 2,403.69

 

  • SENSEX decreased 306.01 points or -0.55% to 55,766.22

 

  • Nifty50 decreased 88.45 points or -0.53% to 16,631.00

 

The major Asian currency markets had a mixed day today:

 

  • AUDUSD increased 0.00376 or 0.54% to 0.69613

 

  • NZDUSD increased 0.00165 or 0.26% to 0.62685

 

  • USDJPY increased 0.626 or 0.46% to 136.696

 

  • USDCNY decreased 0.00341 or -0.05% to 6.75369

 

Precious Metals:

 

l Gold decreased 5.45 USD/t oz. or -0.32% to 1,723.61

 

l Silver decreased 0.130 USD/t. oz or -0.70% to 18.492

 

No economic news from last night:

 

Some economic news from today:

 

Hong Kong:

 

Exports (MoM) (Jun) decreased from -1.4% to -6.4%

 

Imports (MoM) (Jun) decreased from 1.3% to 0.5%

 

Trade Balance decreased from -36.7B to -68.5B

 

Singapore:

 

CPI (YoY) (Jun) increased from 5.6% to 6.7%

 

EUROPE/EMEA:

The UK’s Industrial output grew at the slowest pace in over a year in three months to July. A survey conducted by the Confederation of British Industry found that there are tentative signs that some challenges around inflation and investment are easing, which may help in economic growth of the region. The Bank of England’s Monetary Policy Committee (MPC) scheduled to meet next must decide to increase the interest rates by 50 basis points to tackle the highest inflation of 40 years. Quarterly inflation expectations – a key concern for the BoE as it judges how long high inflation will last – dropped sharply to +48 from April’s record high of +71. Monday’s CBI Industrial Trends Survey output balance dropped to +6 for July from +19 in April, its lowest since the three months to April 2021 but still above its long-run average of +2. The monthly CBI industrial orders balance dropped to +8 from +18, its lowest since October but above its long-run average of -13.

A survey conducted by the German IFO institute think tank, published on Monday showed morale among German businesses has fallen as rising prices for goods and fuel dampen growth prospects. The IFO business climate index fell almost four points from 92.2 in June to 88.6 in July. The index measures businesses’ confidence in the current climate in comparison to a reference point set in 2015. The survey was conducted of around 9000 managers from across the German business community. The fall in confidence represents a new downward trend following over a year of recovery since the lows seen in early 2020 when the coronavirus pandemic broke out. July’s confidence index number represents the lowest point since June 2020.

 

The major Europe stock markets had a mixed day:

 

  • CAC 40 increased 20.73 points or 0.33% to 6,237.55

 

  • FTSE 100 increased 29.93 points or 0.41% to 7,306.30

 

  • DAX 30 decreased 43.36 points or -0.33% to 13,210.32

 

The major Europe currency markets had a green day today:

 

  • EURUSD increased 0.00018 or 0.02% to 1.02163

 

  • GBPUSD increased 0.0043 or 0.36% to 1.20474

 

  • USDCHF increased 0.00369 or 0.38% to 0.96499

 

Some economic news from Europe today:

 

UK:

 

CBI Industrial Trends Orders (Jul) decreased from 18 to 8

 

Germany:

 

German Business Expectations (Jul) decreased from 85.5 to 80.3

 

German Current Assessment (Jul) decreased from 99.4 to 97.7

 

German Ifo Business Climate Index (Jul) decreased from 92.2 to 88.6

US/AMERICAS:

The markets are preparing for an important week with numerous earnings reports being released, GDP data, and the next Federal Reserve meeting. The GDP report is set to be released on Thursday. The White House has changed the definition of “recession,” and will no longer call two consecutive quarters of decline one – a potential indicator of what to expect. Yet, the markets may be pricing that in differently. The markets are also pricing in a 75 bps rate hike from the Federal Reserve, but June’s 9.1% inflation report may cause them to act more aggressively. The Federal Reserve will announce its next move on Wednesday.

Prospects for Boeing were looking up after Delta placed a large order last week. Now, 2,500 workers have announced that they will go on strike on August 1. Union workers claim that the company has failed to meet their demands. Boeing said they increased their 401K contributions to 10%, implemented additional workers’ pay over the next two years, and matched student loan payments for the children of their employees. The union is seeking a 7.2% wage increase as well as a $1,000 cash bonus. If the strike does occur, the company may not be able to fulfill its new orders on time, causing trouble for the aerospace company and potentially the Dow at large.

US Market Closings:

  • Dow advanced 90.75 points or 0.28% to 31,990.04
  • S&P 500 advanced 5.21 points or 0.13% to 3,966.84
  • Nasdaq declined 51.45 points or -0.43% to 11,782.67
  • Russell 2000 advanced 10.89 points or 0.6% to 1,817.77

 

Canada Market Closings:

  • TSX Composite advanced 121.56 points or 0.64% to 19,104.48
  • TSX 60 advanced 6.87 points or 0.6% to 1,156.35

 

Brazil Market Closing:

  • Bovespa advanced 1,345.03 points or 1.36% to 100,269.85

 

ENERGY:

 

The oil markets had a green day today:

 

  • Crude Oil increased 1.83 USD/BBL or 1.93% to 96.616

 

  • Brent increased 1.38 USD/BBL or 1.34% to 104.713

 

  • Natural gas increased 0.378 USD/MMBtu or 4.55% to 8.6570

 

  • Gasoline increased 0.1515 USD/GAL or 4.70% to 3.3726

 

  • Heating oil increased 0.079 USD/GAL or 2.29% to 3.5292

 

The above data was collected around 13:57 EST on Monday

 

  • Top commodity gainers: Natural Gas (4.55%), Bitumen(3.06%), Gasoline (4.70%) and Cocoa (3.27%)

 

  • Top commodity losers: Oat (-1.66%), Aluminum (-2.19%), Lumber (-4.05%) and Sugar (-2.35%)

 

The above data was collected around 14:09 EST on Monday.

 

BONDS:

 

Japan 0.201%(-1.8bp), US 2’s 3.03% (+0.042%), US 10’s 2.8197% (+3.87bps); US 30’s 3.05% (+0.051%), Bunds 1.0220% (-0.1bp), France 1.6150% (-0.5bp), Italy 3.384% (-3.6bp), Turkey 16.71% (-11bp), Greece 3.045% (-23.7bp), Portugal 2.184% (-0.7bp); Spain 2.275% (+1.5bp) and UK Gilts 1.9380% (-0.3bp).

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