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Market Talk – September 20, 2022


ASIA:

 

China left its benchmark interest rates unchanged at a one-month peg on Tuesday, as expected, as authorities appeared to delay immediate monetary easing after the local currency fell sharply and central banks tightened policy elsewhere. The one-year prime rate (LPR) was left at 3.65%, while the five-year LPR remained unchanged at 4.30%. The stable LPR fixes came after the People’s Bank of China (PBOC) left its medium-term policy rate unchanged last week while draining some liquidity from the banking system. The decision came just days before the Federal Reserve’s September policy meeting, at which the US central bank is widely expected to make another hawkish interest rate hike to stem rampant price increases.

Japan’s core consumer inflation accelerated to 2.8% in August, the fastest annual pace in nearly eight years and above the central bank’s 2% target for a fifth month as price pressures from raw materials and a weaker yen widened. The strength of August inflation fueled growing suspicions among economists that price pressures will last longer than the Bank of Japan (BOJ) expected, although many still do not expect any immediate change to its ultra-easy policy. The BOJ wraps up a two-day meeting on Thursday, where analysts expect it to weigh the fragility of the economic recovery in deciding to keep both short-term and long-term interest rates close to zero. Growth in the core consumer price index (CPI), which excludes volatile fresh food but includes fuel costs, was slightly larger than the market’s median forecast for a 2.7% increase, following a 2.4% increase in July. Analysts expect core consumer inflation to top 3% in October, when many retailers plan to raise prices and the underlying effect of further cuts in mobile phone charges in 2021 will fall out of the equation.

 

 

The major Asian stock markets had a green day today:

  • NIKKEI 225 increased 120.77 points or 0.44% to 27,688.42
  • Shanghai increased 6.80 points or 0.22% to 3,122.41
  • Hang Seng increased 215.45 points or 1.16% to 18.781.42
  • Kospi increased 12.19 points or 0.52% to 2,367.85
  • ASX 200 increased 86.50 points or 1.29% to 6,806.40
  • SENSEX increased 578.51 points or 0.98% to 59,719.74
  • Nifty50 increased 194.00 points or 1.10% to 17,816.25

 

 

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.00358 or -0.53% to 0.66900
  • NZDUSD decreased 0.00675 or -1.13% to 0.58935
  • USDJPY increased 0.414 or 0.29% to 143.671
  • USDCNY increased 0.02435 or 0.35% to 7.02815

 

Precious Metals:

  • Gold decreased 11.61 USD/t oz. or -0.69% to 1,664.17
  • Silver decreased 0.396 USD/t. oz or -2.02% to 19.214

 

Some economic news from last night:

China:

PBoC Loan Prime Rate remain the same at 3.65%

Japan:

CPI, n.s.a (MoM) (Aug) decreased from 0.5% to 0.4%

National Core CPI (YoY) (Aug) increased from 2.4% to 2.8%

National CPI (YoY) (Aug) increased from 2.6% to 3.0%

 

Some economic news from today:

New Zealand:

GlobalDairyTrade Price Index decreased from 4.9% to 2.0%

 

EUROPE/EMEA:

Ukraine will push for unprecedented and tailor-made packages from the International Monetary Fund and World Bank worth tens of billions of dollars in the coming weeks to shore up its war-ravaged finances, the country’s top debt management chief told Reuters. Ukraine’s military has reclaimed parts of its territory from Russia in recent weeks, but the financial and humanitarian costs of the nearly eight-month-old war continue to mount. Its budget this month estimates it will face a $38 billion shortfall next year, money that will either have to come from Western backers and multilaterals or be printed. These Western backers and multilateral partners are already ready to provide roughly $20 billion this year. The International Monetary Fund appears poised to give it a boost by allowing countries grappling with global food price hikes — a group that includes Ukraine — to draw more money from its main rapid financing tool. IMF chief Kristalina Georgieva said after a meeting with Ukrainian President Volodymyr Zelensky last week that the fund will continue to support Ukraine, but the country wants things to happen faster.

 

 

The major Europe stock markets had a negative day:

  •  CAC 40 decreased 82.12 points or -1.35% to 5,979.47
  •  FTSE 100 decreased 44.02 points or -0.61% to 7,192.66
  •  DAX 30 decreased 132.41 points or -1.03% to 12,670.83

 

The major Europe currency markets had a negative day today:

  • EURUSD decreased 0.00486 or -0.48% to 0.99766
  • GBPUSD decreased 0.00547 or -0.48% to 1.13812
  • USDCHF decreased 0.00085 or -0.09% to 0.96345

 

Some economic news from Europe today:

Swiss:

Trade Balance (Aug) decreased from 3.522B to 3.424B

Germany:

German PPI (YoY) (Aug) increased from 37.2% to 45.8%

German PPI (MoM) (Aug) increased from 5.3% to 7.9%

Spain:

Spanish Trade Balance decreased from -5.39B to -6.56B

Euro Zone:

Current Account (Jul) decreased from 4.2B to -19.9B

Current Account n.s.a. (Jul) decreased from 3.2B to -10.1B

 

US/AMERICAS:

Homebuilder sentiment in the US fell by 3 points this September to 46, according to the National Association of Builders/Wells Fargo Housing Market Index. A reading beneath 50 indicates a contraction. This marks the ninth consecutive month of declines and the lowest reading since May of 2014. The year began with a strong reading of 83, but that was when the average 30-year mortgage rate was around the 3% level. Nearly a quarter of builders said they had lowered their asking prices. Current sales conditions fell 3 points to 54, while sales expectations for six months out fell 1 point to 46.

Canada’s inflation report for August was released today – 7%. This is a slight deceleration from July’s posting of 7.6%, but still high compared to the central bank’s target. Statistics Canada believes lower gas prices helped to cool overall CPI. The Bank of Canada will meet on October 26 and is expected to raise rates once again.

US Market Closings:

  • Dow declined 313.45 points or -1.01% to 30,706.23
  • S&P 500 declined 109.97 points or -0.95% to 11,425.05
  • Nasdaq declined 43.96 points or -1.13% to 3,855.93
  • Russell 2000 declined 25.34 points or -1.4% to 1,787.5

 

Canada Market Closings:

  • TSX Composite declined 193.69 points or -0.99% to 19,368.69
  • TSX 60 declined 10.59 points or -0.9% to 1,172.64

 

Brazil Market Closing:

  • Bovespa advanced 693.02 points or 0.62% to 112,516.91

 

 

ENERGY:

OPEC+ is now producing below its targets by a record 3.58 million barrels per day – about 3.5% of global demand – highlighting underlying tight supply in the oil market, even as recession fears drag oil prices lower. Data from the Organization of the Petroleum Exporting Countries and allies led by Russia showed the group, known as OPEC+, showed that shortfall in August, which stood at more than OPEC number 3 producer, the UAE’s output, was a record 24% higher than July’s 2.89 million bpd. Oil prices rose on Tuesday to above $92, partly supported by news of the OPEC+ shortfall, but were headed for a fourth monthly decline ahead of an expected further U.S. interest rate hike which may curb economic growth and fuel demand.

The oil markets had a mixed day today:

 

  •  Crude Oil decreased 1.263 USD/BBL or -1.47% to 84.467
  •  Brent decreased 1.418 USD/BBL or -1.54% to 90.582
  •  Natural gas increased 0.0505 USD/MMBtu or 0.65% to 7.8025
  •  Gasoline decreased 0.0135 USD/GAL or -0.55% to 2.4506
  •  Heating oil increased 0.064 USD/GAL or 1.93% to 3.3748

 

The above data was collected around 13:01 EST on Tuesday

 

  •  Top commodity gainers: Wheat (7.08%), Lumber (6.80%), Sugar (2.66%) and Oat (2.69%)
  •  Top commodity losers: Methanol (-2.07%), Palladium (-2.96%), Cotton (-2.95%) and Brent (-1.54%)

 

The above data was collected around 13:09 EST on Tuesday.

 

 

BONDS:

 

Japan 0.256%(+0.2bp), US 2’s 3.95% (+0.001%), US 10’s 3.5434% (+5.44bps); US 30’s 3.54% (+0.039%), Bunds 1.916% (+12.5bp), France 2.468% (+11.8bp), Italy 4.161% (+10bp), Turkey 11.32% (+2bp), Greece 4.465% (+0.1bp), Portugal 2.979% (+13.2bp); Spain 3.093% (+13.9bp) and UK Gilts 3.2860% (+12.7bp).

 

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