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Market Talk – September 2, 2022


ASIA:

The Japanese Yen is trading at a fresh 24-year low against the US dollar as the short-term yield spread between the two countries continues to widen. Two-year Japanese bonds are currently trading with an 8bp negative yield, while the US two-year offers a meaty 3.51%, its highest level in 15 years. This gulf in yields, caused by the ever-widening monetary policy stance of the two countries, will eventually force the Bank of Japan into acting to stem the Yen’s weakness otherwise the countries’ trade partners will start questioning whether Japan is actively keeping its currency artificially low. The Japanese central bank has already started to warn the market that they are closely watching the exchange rate, but actions, not words will be needed to stop this move.

The major Asian stock markets had a mixed day today:

 

  • NIKKEI 225 decreased 10.63 points or -0.04% to 27,650.84

 

  • Shanghai increased 1.50 points or 0.05% to 3,186.48

 

  • Hang Seng decreased 145.22 points or -0.74% to 19,452.09

 

  • Kospi decreased 6.20 points or -0.26% to 2,409.41

 

  • ASX 200 decreased 16.90 points or -0.25% to 6,828.70

 

  • SENSEX increased 36.74 points or 0.06% to 58,803.33

 

  • Nifty50 decreased 3.35 points or -0.02% to 17,539.45

 

The major Asian currency markets had a mixed day today:

 

  • AUDUSD increased 0.00410 or 0.60% to 0.68326

 

  • NZDUSD increased 0.00450 or 0.73% to 0.61245

 

  • USDJPY increased 0.058 or 0.04% to 140.120

 

  • USDCNY decreased 0.00820 or -0.12% to 6.90680

 

Precious Metals:

 

l Gold increased 18.51 USD/t oz. or 1.09% to 1,714.60

 

l Silver increased 0.303 USD/t. oz or 1.69% to 18.153

 

Some economic news from last night:

 

Japan:

 

Monetary Base (YoY) decreased from 2.8% to 0.4%

 

South Korea:

 

CPI (MoM) (Aug) decreased from 0.5% to -0.1%

 

CPI (YoY) (Aug) decreased from 6.3% to 5.7%

 

New Zealand:

 

Terms of Trade – Exports Prices (Q2) decreased from 7.8% to 3.7%

 

Terms of Trade – Exports Volume (QoQ) (Q2) increased from -7.0% to 3.0%

 

Terms of Trade – Imports Prices (Q2) decreased from 7.2% to 6.5%

 

Terms of Trade Index (QoQ) (Q2) decreased from 0.6% to -2.4%

 

Some economic news from today:

 

India:

 

FX Reserves, USD decreased from 564.05B to 561.05B

 

EUROPE/EMEA:

Britain overtook India to become the world’s sixth-largest economy, dealing another blow to the government in London, which is dealing with a brutal cost-of-living shock. India overtook the UK to become the fifth largest economy in the last three months of 2021. The calculation is based on US dollars, and India extended its lead in the first quarter, according to GDP data from the International Monetary Fund. The UK’s decline in international rankings is an unwelcome backdrop for the new prime minister. Conservative Party members choose Boris Johnson’s successor on Monday, with Foreign Secretary Liz Truss expected to beat former Chancellor of the Exchequer Rishi Sunak in a run-off.

The major Europe stock markets had a green day:

 

l CAC 40 increased 133.20 points or 2.21% to 6,167.51

 

l FTSE 100 increased 132.69 points or 1.86% to 7,281.19

 

l DAX 30 increased 420.04 points or 3.33% to 13,050.27

 

The major Europe currency markets had a mixed day today:

 

  • EURUSD increased 0.00255 or 0.26% to 0.99748

 

  • GBPUSD decreased 0.00129 or -0.11% to 1.15330

 

  • USDCHF decreased 0.00054 or -0.05% to 0.98146

 

Some economic news from Europe today:

 

Germany:

 

German Exports (MoM) (Jul) decreased from 4.2% to -2.1%

 

German Imports (MoM) (Jul) decreased from 0.1% to -1.5%

 

German Trade Balance (Jul) decreased from 6.2B to 5.4B

 

Swiss:

 

Employment Level (Q2) increased from 5.273M to 5.316M

 

Spain:

 

Spanish Unemployment Change increased from 3.2K to 62.1K

 

Euro Zone:

 

PPI (YoY) (Jul) increased from 36.0% to 37.9%

 

PPI (MoM) (Jul) increased from 1.3% to 4.0%

 

ENERGY:

 

The oil markets had a mixed day today:

 

l Crude Oil increased 1.344 USD/BBL or 1.55% to 87.954

 

l Brent increased 1.813 USD/BBL or 1.96% to 94.172

 

l Natural gas decreased 0.351 USD/MMBtu or -3.79% to 8.9110

 

l Gasoline increased 0.0978 USD/GAL or 4.10% to 2.4831

 

l Heating oil increased 0.0528 USD/GAL or 1.48% to 3.6140

 

The above data was collected around 12:49 EST on Friday

 

l Top commodity gainers: Gasoline (4.10%), Brent (1.96%), Soybeans (2.68%) and Wheat (1.93%)

 

l Top commodity losers: Natural Gas (-3.79%), Steel (-2.67%), Cotton (-3.53%) and Zinc (-3.77%)

 

The above data was collected around 13:05 EST on Friday.

US/AMERICAS:

The nonfarm payrolls report was released this Friday – the American economy added 315,000 jobs in August. The unemployment rate currently sits at 3.7%. Wages continued to accelerate and hourly earnings increased 5.2% YoY and 0.3% on a monthly level. Professionals services saw the largest growth after adding 68,000 positions, followed by the health care sector at 48,000, and retail at 44,000. Formerly a leader in job creation, the leisure and hospitality sector grew by 31,000 last month and has grown by 90,000 since the start of the year. Manufacturing saw a 22,000 uptick, financial services grew by 17,000, and wholesale trade rose by 15,000. Job openings are still outnumbering available workers by 2-to-1. Numerous companies have announced hiring freezes and the Federal Reserve expects unemployment to rise as a necessary evil to push down inflation.

US Market Closings:

  • Dow declined 337.98 points or -1.07% to 31,318.44
  • S&P 500 declined 42.59 points or -1.07% to 3,924.26
  • Nasdaq declined 154.26 points or -1.31% to 11,630.86
  • Russell 2000 declined 13.07 points or -0.72% to 1,809.75

 

Canada Market Closings:

  • TSX Composite advanced 128.13 points or 0.67% to 19,270.85
  • TSX 60 advanced 7.52 points or 0.65% to 1,164.88

 

Brazil Market Closing:

  • Bovespa advanced 458.94 points or 0.42% to 110,864.24

 

BONDS:

 

Japan 0.240%(+0.1bp), US 2’s 3.40% (-0.118%), US 10’s 3.1988% (-6.62bps); US 30’s 3.35% (-0.024%), Bunds 1.51% (-6.1bp), France 2.135% (-5bp), Italy 3.801% (-14.5bp), Turkey 12.45% (-21bp), Greece 4.211% (-1.8bp), Portugal 2.597% (-8.5bp); Spain 2.693% (-8.8bp) and UK Gilts 2.9010% (+2.1bp).

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