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Market Talk – July 28, 2022


ASIA:

An iPhone manufacturing plant in the southern Chinese city of Shenzhen is being forced into a seven-day “closed-loop” lockdown by Chinese authorities, along with 100 other companies, to limit COVID-19 infections, Bloomberg reported. The “closed loop” system will mean that only employees who live on site will be able to work, blocking outside access and largely banning anyone from leaving the factory. The timing of the lock-down is also concerning, as Foxconn is expected to begin mass production of the upcoming iPhone 14 series in a few weeks, ahead of the September launch. In 2020, amid widespread lockdowns and uncertainty, Apple had to push back the launch of its iPhone 12 to October, a one-month delay due to supply chain issues.

The International Monetary Fund (IMF) on Tuesday cut India’s growth forecast for 2022-23 (FY23) by 80 basis points to 7.4 percent, citing less favorable external conditions and rapid policy tightening by the central bank. In its April World Economic Outlook update, the IMF said that although a global recession was ruled out in 2022 with growth forecast at 3.2 percent, the balance of risks was straight to the downside, driven by a wide range of factors that could adversely affect the performance of the world economy. The IMF’s downward revision to India’s growth forecast came days after the Asian Development Bank cut its growth projection for India to 7.2 percent for FY23 from 7.5 percent due to higher-than-expected inflation since April and subsequent tightening of monetary policy by Reserve Bank of India (RBI).

 

The major Asian stock markets had a mixed day today:

 

  • NIKKEI 225 increased 99.73 points or 0.36% to 27,815.48

 

  • Shanghai increased 6.82 points or 0.21% to 3,282.58

 

  • Hang Seng decreased 47.36 points or -0.23% to 20,622.68

 

  • ASX 200 increased 66.50 points or 0.97% to 6,889.70

 

  • Kospi increased 19.74 points or 0.82% to 2,435.27

 

  • SENSEX increased 1,041.47 points or 1.87% to 56,857.79

 

  • Nifty50 increased 287.80 points or 1.73% to 16,929.60

 

The major Asian currency markets had a mixed day today:

 

  • AUDUSD decreased 0.00356 or -0.51% to 0.69646

 

  • NZDUSD increased 0.00107 or 0.17% to 0.62717

 

  • USDJPY decreased 1.705 or -1.25% to 134.450

 

  • USDCNY increased 0.00592 or 0.09% to 6.74832

 

Precious Metals:

 

l Gold increased 20.09 USD/t oz. or 1.16% to 1,752.63

 

l Silver increased 0.776 USD/t. oz or 4.06% to 19.870

 

Some economic news from last night:

 

Japan:

 

Foreign Bonds Buying increased from -910.2B to 107.9B

 

Foreign Investments in Japanese Stocks decreased from 475.0B to 298.1B

 

South Korea:

 

Manufacturing BSI Index (Aug) decreased from 82 to 80

 

Australia:

 

Export Price Index (QoQ) (Q2) decreased from 14.6% to 10.1%

 

Import Price Index (QoQ) (Q2) decreased from 5.1% to 4.3%

 

Retail Sales (MoM) (Jun) decreased from 0.9% to 0.2%

 

New Zealand:

 

ANZ Business Confidence (Jul) increased from -62.6 to -56.7

 

NBNZ Own Activity (Jul) increased from -9.1% to -8.7%

 

Some economic news from today:

 

India:

 

M3 Money Supply decreased from 8.9% to 7.9%

 

EUROPE/EMEA:

The Federal Reserve raised interest rates by 0.75 percentage point for the second month in a row in the most aggressive tightening since the 1980s, putting pressure on the Bank of England to clamp down sharply on rising prices. The Fed’s moves will inflame the Bank of England as it faces growing pressure from Tory MPs to tackle inflation as elections begin for the party’s next leader. The bank is considering a 0.5 percentage point hike ahead of next week’s meeting, which would be the biggest rate hike in nearly three decades. The two likely contenders for the office of British prime minister also shared views on raising rates ahead of the election. Liz Truss called for a review of the bank’s mandate, while Rishi Sunak warned that his Tory leadership rival’s tax cuts could worsen inflation and push rates even higher.

The European Central Bank will consider the economic situation before deciding whether to go ahead with another big interest rate hike in September, politician and fiscal hawk Robert Holzmann said on Sunday. The ECB was also trying to prevent expectations of higher inflation from taking root among the general public, he added. The ECB raised its key deposit rate by 50 basis points to zero on Thursday, the first increase in 11 years, as it joined global rivals in raising borrowing costs.

 

The major Europe stock markets had a mixed day:

 

l CAC 40 increased 81.27 points or 1.30% to 6,339.21

 

l FTSE 100 decreased -2.98 points or -0.04% to 7,345.25

 

l DAX 30 increased 115.73 points or 0.88% to 13,282.11

 

The major Europe currency markets had a negative day today:

 

  • EURUSD decreased 0.00469 or -0.46% to 1.01563

 

  • GBPUSD decreased 0.00296 or -0.24% to 1.21363

 

  • USDCHF decreased 0.00327 or -0.34% to 0.95643

 

Some economic news from Europe today:

 

France:

 

French PPI (MoM) (Jun) increased from -0.3% to 1.3%

 

Spain:

 

Spanish Retail Sales (YoY) (Jun) decreased from 1.3% to 1.0%

 

Spanish Unemployment Rate (Q2) decreased from 13.65% to 12.48%

 

Spanish Business Confidence decreased from 2.3 to -5.2

 

Italy:

 

Italian Industrial Sales (YoY) (May) increased from 22.00% to 23.60%

 

Italian Industrial Sales (MoM) (May) decreased from 2.80% to 1.40%

 

Italian Trade Balance Non-EU (Jun) decreased from -0.26B to -2.82B

 

Germany:

 

German CPI (YoY) (Jul) decreased from 7.6% to 7.5%

 

German CPI (MoM) (Jul) increased from 0.1% to 0.9%

 

German HICP (YoY) (Jul) increased from 8.2% to 8.5%

 

German HICP (MoM) (Jul) increased from -0.1% to 0.8%

 

Euro Zone:

 

Business and Consumer Survey (Jul) decreased from 103.5 to 99.0

 

Business Climate (Jul) decreased from 1.45 to 1.14

 

Consumer Confidence (Jul) decreased from -23.8 to -27.0

 

Consumer Inflation Expectation (Jul) increased from 42.6 to 42.8

 

Selling Price Expectations (Jul) decreased from 50.1 to 45.1

 

Services Sentiment (Jul) decreased from 14.1 to 10.7

 

Industrial Sentiment (Jul) decreased from 7.0 to 3.5

US/AMERICAS:

GDP has declined for the second consecutive quarter in America. This would be considered the warning sign of a recession, but the White House changed the definition of a “recession” earlier in the week. Analysts were expecting a 0.3% gain in GPD after the first quarter contracted -1.6%. However, economic growth plummeted -0.9% during the second quarter.

Initial jobless claims rose in the US last week by 5,000 to 256,000, according to the Labor Department. The previous week’s level was revised up by 10,000 to 261,000 from 251,000. The four-week moving average now stands at 249,000, an uptick of 6,250 from the previous week’s calculated average.

US Market Closings:

  • Dow advanced 332.04 points or 1.03% to 32,529.63
  • S&P 500 advanced 48.78 points or 1.21% to 4,072.39
  • Nasdaq advanced 130.17 points or 1.08% to 12,162.59
  • Russell 2000 advanced 24.69 points or 1.34% to 1,873.03

 

Canada Market Closings:

  • TSX Composite advanced 202.15 points or 1.05% to 19,456.71
  • TSX 60 advanced 9.92 points or 0.85% to 1,175.35

 

Brazil Market Closing:

  • Bovespa advanced 1,158.7 points or 1.14% to 102,596.66

 

ENERGY:

 

The oil markets had a mixed day today:

 

  • Crude Oil decreased 0.74 USD/BBL or -0.76% to 96.482

 

  • Brent increased 0.12 USD/BBL or 0.11% to 106.958

 

  • Natural gas decreased 0.479 USD/MMBtu or -5.51% to 8.1993

 

  • Gasoline decreased 0.0623 USD/GAL or -1.82% to 3.3597

 

  • Heating oil decreased 0.0753 USD/GAL or -2.03% to 3.6347

 

The above data was collected around 13:37 EST on Thursday

 

  • Top commodity gainers: Silver (4.06%), Palm Oil(3.42%), Canola (3.97%) and Zinc (4.15%)

 

  • Top commodity losers: Heating Oil (-2.03%), Gasoline (-1.82%), Lumber (-3.58%) and Natural Gas (-5.51%)

 

The above data was collected around 13:48 EST on Thursday.

 

BONDS:

 

Japan 0.204%(+0.1bp), US 2’s 2.89% (-0.082%), US 10’s 2.6777% (-5.43bps); US 30’s 3.00% (-0.004%), Bunds 0.8120% (-12.6bp), France 1.3840% (-15.3bp), Italy 3.250% (-17.6bp), Turkey 17.18% (-19bp), Greece 2.923% (-11.4bp), Portugal 1.905% (-16.3bp); Spain 1.972% (-18.1bp) and UK Gilts 1.8660% (-9.4bp).

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