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Market Talk – August 23, 2022


ASIA:

Growth in Japanese factory activity slowed to a 19-month low in August as declines in output and new orders deepened, amid mounting pressure from sustained rises in raw material and energy prices and weakening global demand. Activity in the services sector fell for the first time in five months as a drop in new business raised concerns about lackluster domestic demand. The au Jibun Bank Flash Japan Manufacturing Purchasing Managers’ Index (PMI) fell to a seasonally adjusted 51.0 in August from a final 52.1 in July, marking the slowest expansion since January last year. 50 points separate contraction from expansion. Au Jibun Bank Flash Services PMI fell to a seasonally adjusted 49.2 in August from July’s final 50.3, for the first time since March. The Au Jibun Bank Flash Japan Composite PMI, which is calculated using both manufacturing and services, fell sharply to 48.9 from July’s final 50.2.

India’s headline retail inflation may ease below 6% by the fourth quarter of this financial year, ending the current cycle of rate hikes, analysts said at the weekend. Following the release of the central bank’s monetary policy committee minutes on Friday, analysts said the Reserve Bank of India (RBI) may raise repo rates by 50-60 basis points by December. Consumer inflation in India eased to 6.71% in July, easing for the third consecutive month, but remained above the RBI’s set target band of 2-6% for the seventh consecutive month.

 

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 decreased 341.75 points or -1.19% to 28,452.75
  • Shanghai decreased 1.57 points or -0.05% to 3,276.22
  • Hang Seng decreased 153.73 points or -0.78% to 19,503.25
  • ASX 200 decreased 85.10 points or -1.21% to 6,961.80
  • Kospi decreased 27.16 points or -1.10% to 2,435.34
  • SENSEX increased 257.43 points or 0.44% to 59,031.30
  • Nifty50 increased 86.80 points or 0.50% to 17,577.50

 

The major Asian currency markets had a mixed day today:

  • AUDUSD increased 0.00648 or 0.94% to 0.69410
  • NZDUSD increased 0.00587 or 0.95% to 0.62247
  • USDJPY decreased 1.192 or -0.87% to 136.362
  • USDCNY decreased 0.01596 or -0.23% to 6.85074

 

Precious Metals:

Gold  increased 13.64 USD/t oz. or 0.79% to 1,749.35

Silver increased 0.152 USD/t. oz or  0.80% to 19.162

 

Some economic news from last night:

Japan:

Manufacturing PMI (Aug) decreased from 52.1 to 51.0

Services PMI decreased from 50.3 to 49.2

South Korea:

Consumer Confidence (Aug) increased from 86.0 to 88.8

Australia:

Manufacturing PMI decreased from 55.7 to 54.5

Services PMI decreased from 50.9 to 49.6

Some economic news from today:

Japan:

BoJ Core CPI (YoY) increased from 1.6% to 1.8%

Singapore:

Core CPI (YoY) (Jul) increased from 4.40% to 4.80%

CPI (YoY) (Jul) increased from 6.7% to 7.0%

 

EUROPE/EMEA:

Growth in Japanese factory activity slowed to a 19-month low in August as declines in output and new orders deepened, amid mounting pressure from sustained rises in raw material and energy prices and weakening global demand. Activity in the services sector fell for the first time in five months as a drop in new business raised concerns about lackluster domestic demand. The au Jibun Bank Flash Japan Manufacturing Purchasing Managers’ Index (PMI) fell to a seasonally adjusted 51.0 in August from a final 52.1 in July, marking the slowest expansion since January last year. 50 points separate contraction from expansion. Au Jibun Bank Flash Services PMI fell to a seasonally adjusted 49.2 in August from July’s final 50.3, for the first time since March. The Au Jibun Bank Flash Japan Composite PMI, which is calculated using both manufacturing and services, fell sharply to 48.9 from July’s final 50.2.

India’s headline retail inflation may ease below 6% by the fourth quarter of this financial year, ending the current cycle of rate hikes, analysts said at the weekend. Following the release of the central bank’s monetary policy committee minutes on Friday, analysts said the Reserve Bank of India (RBI) may raise repo rates by 50-60 basis points by December. Consumer inflation in India eased to 6.71% in July, easing for the third consecutive month, but remained above the RBI’s set target band of 2-6% for the seventh consecutive month.

 

The major Europe stock markets had a negative day:

CAC 40 decreased 16.72 points or -0.26% to 6,362.02

FTSE 100 decreased 45.68 points or -0.61% to 7,488.11

DAX 30 decreased 36.34 points or -0.27% to 13,194.23

The major Europe currency markets had a mixed day today:

  • EURUSD increased 0.00317 or 0.32% to 0.99686
  • GBPUSD increased 0.00778 or 0.66% to 1.18414
  • USDCHF decreased 0.00058 or -0.06% to 0.96382

 

Some economic news from Europe today:

France:

French Manufacturing PMI (Aug) decreased from 49.5 to 49.0

French S&P Global Composite PMI (Aug) decreased from 51.7 to 49.8

French Services PMI (Aug) decreased from 53.2 to 51.0

Germany:

German Composite PMI (Aug) decreased from 48.1 to 47.6

German Manufacturing PMI (Aug) increased from 49.3 to 49.8

German Services PMI (Aug) decreased from 49.7 to 48.2

UK:

CBI Industrial Trends Orders (Aug) decreased from 8 to -7

Composite PMI decreased from 52.1 to 50.9

Manufacturing PMI decreased from 52.1 to 46.0

Services PMI decreased from 52.6 to 52.5

Euro Zone:

Consumer Confidence (Aug) increased from -27.0 to -24.9

Manufacturing PMI (Aug) decreased from 49.8 to 49.7

S&P Global Composite PMI (Aug) decreased from 49.9 to 49.2

Services PMI (Aug) decreased from 51.2 to 50.2

US/AMERICAS:

Existing home sales in the US fell last month by 20.2%, leading some to question if the home buying frenzy is finally in the past. There are currently 4.8 million homes on the market, however, the median home price is up 10.8% YoY to $403,800. Mortgage rates have doubles from the beginning of the year, but that does not seem to be the deterrent. Homes are still flying off the market, averaging only 14 days listed, according to the Realtors Association.

A recent report by Clever Real Estate as reported by CNBC shows that American homeowners are having buyers remorse for buying at the top. In fact, 72% of respondents said that they regretted their past purchases. Around 30% of those polled believe they spent too much money on their home, while 26% noted they rushed to make their decision. Admittedly, 31% did pay over asking price at a median of $65,000. Further showing issue, 36% made an offer on a home without seeing it in person first. Now that real estate is cooling and prices are slipping from historic highs, these sentiments seem to be prevalent among those who bought during the post-pandemic frenzy.

US Market Closings:

  • Dow declined 154.62 points or -0.47% to 32,908.99
  • S&P 500 declined 9.28 points or -0.22% to 4,128.71
  • Nasdaq declined 0.27 of a point or 0% to 12,381.3
  • Russell 2000 advanced 3.4 points or 0.18% to 1,919.14

 

Canada Market Closings:

  • TSX Composite advanced 10.43 points or 0.05% to 19,985.35
  • TSX 60 declined 2.25 points or -0.19% to 1,208.42

 

Brazil Market Closing:

  • Bovespa advanced 2,356.57 points or 2.13% to 112,857.1

 

ENERGY:

The oil markets had a green day today:

 

Crude Oil increased 2.64 USD/BBL or 2.92% to 93.000

Brent increased 2.72 USD/BBL or 2.82% to 99.200

Natural gas increased 0.0048 USD/MMBtu or 0.05% to 9.6848

Gasoline increased 0.0029 USD/GAL or 0.10% to 2.8941

Heating oil increased 0.0403 USD/GAL or 1.07% to 3.8165

The above data was collected around 12:13 EST on Tuesday

Top commodity gainers: Wheat (3.02%), Soybeans(3.34%), Lumber (5.18%) and Corn (4.83%)

Top commodity losers: Palladium (-0.66%), Cotton(-3.90%),  Rhodium (-2.11%) and Cocoa (-1.66%)

 

The above data was collected around 12:22 EST on Tuesday.

 

BONDS:

 

Japan 0.225%(+0.6bp), US 2’s 3.26% (-0.077%), US 10’s 3.0017% (-3.33bps); US 30’s 3.22% (-0.021%), Bunds 1.321% (+9.6bp), France 1.9270% (+2.2bp), Italy 3.6520% (+2.5bp), Turkey 13.29% (-65bp), Greece 3.940% (+15.9bp), Portugal 2.433% (+5.6bp); Spain 2.530% (+2.8bp) and UK Gilts 2.5810% (+6.5bp).

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