Market Talk – June 30, 2022

ASIA:

China’s manufacturing and service sectors recorded a three-month drop in activity in June, business surveys showed on Thursday, as authorities lifted a strict lockdown in Shanghai, revitalizing manufacturing and consumer spending. The official Manufacturing Purchasing Managers’ Index (PMI) rose to 50.2 in June from 49.6 in May, the National Bureau of Statistics (NBS) said. While activity has accelerated since the various COVID lockdowns imposed since March were lifted, headwinds remain, including a still-pressed real estate market, low consumer spending and fear of any recurring waves of infections.

Japan’s manufacturing output posted its biggest monthly drop in two years in May as China’s COVID-19 lockdown and shortages in semiconductors and other parts hit manufacturers, putting more pressure on the economy trying to achieve a strong recovery. Official data released on Thursday showed that factory production fell by a seasonally adjusted 7.2% in May from the previous month, as production of goods such as automobiles and electrical and general equipment fell sharply. The data comes a day after Toyota Motor Corp, the world’s largest automaker by sales, said it missed its already lowered global production target for May.

Today was a mixed day for major Asian stock markets:

  • The NIKKEI 225 was down 411.56 points, or -1.54%, at 26,393.04.
  • Shanghai rose 37.10 points or 1.10% to 3398.62.
  • The Hang Seng shed 137.10 points, or -0.62%, at 21,859.79.
  • The ASX 200 was down 132.10 points, or -1.97%, at 6,568.10.
  • Kospi fell 45.35 points or -1.91% to 2,332.64.
  • SENSEX was down 8.03 points or -0.02% to 53,018.94 points.
  • Nifty50 fell 18.85 points or -0.12% to 15,780.25.

Today was a mixed day for the major Asian currency markets:

  • AUD/USD rose 0.00332, or 0.48%, to hit 0.69107.
  • NZDUSD rose 0.00309 or 0.50% to hit 0.62479.
  • USDJPY fell 0.905 or -0.66% to hit 135.636.
  • USDCNY fell 0.01242 or -0.19% to hit 6.69438.

Precious metals:

l Gold fell by $8.64/t. or -0.48% to 1,808.47

l Silver fell by $0.351/t. ounces or -1.69% to 20,358

Some economic news from last night:

China:

The Chinese composite PMI (June) rose from 48.4 to 54.1.

Manufacturing PMI (June) increased from 49.6 to 50.2.

Non-manufacturing PMI (June) increased from 47.8 to 54.7.

Japan:

The purchase of foreign bonds decreased from -489.5 billion to -1,600.6 billion.

Foreign investment in Japanese stocks rose from -941.6 billion to -429.7 billion.

Industrial production (MoM) (May) fell from -1.5% to -7.2%

Industrial production forecast 1 month ahead (MoM) (June) raised from 4.8% to 12.0%

Industrial production forecast 2 months ahead (MoM) (July) down from 8.9% to 2.5%

South Korea:

BSI manufacturing index (July) fell from 85 to 82

Industrial production (MoM) (May) increased from -3.3% to 0.1%

Industrial production (y/y) (May) increased from 3.5% to 7.3%

Retail sales (MoM) increased from -0.2% to -0.1%

Australia:

Housing loan (May) remains the same at 0.6%

Private sector credit (MoM) (May) flat at 0.8%

New Zealand:

ANZ business confidence (June) fell from -55.6 to -62.6.

NBNZ own activity (June) decreased from -4.7% to -9.1%

Singapore:

Bank lending decreased from 841.6 billion to 839.8 billion.

Some economic news for today:

Japan:

Construction orders (YoY) (May) fell from 30.5% to 19.5%

The number of new buildings (y/y) (May) decreased from 2.4% to -4.3%.

Hong Kong:

M3 money supply (May) decreased from 1.2% to -0.1%

Retail sales (YoY) (May) down from 11.7% to -1.7%

India:

The federal budget deficit (May) increased from 748.46 billion to 2039.21 billion.

The M3 money supply decreased from 8.6% to 7.8%.

External debt (USD) (Q1) increased from 614.9 billion to 620.7 billion.

Infrastructure output (YoY) (May) increased from 9.3% to 18.1%

EUROPE/EEA:

Credit rating agency Fitch downgraded its outlook on sovereign debt on Thursday due to concerns about rising global borrowing costs and the possibility of new defaults. Fitch, which tracks more than 100 countries, notes that the war between Ukraine and Russia has exacerbated issues such as higher inflation, trade disruptions and a weaker economy that are now worsening sovereign lending conditions. The number of countries whose credit ratings have been downgraded has started to rise again this year as pressure builds. The ratings agency also said that while commodity exporters would benefit from higher prices, those forced to import most of their energy or food would suffer.

Hungary expects to sign an agreement with the European Union by autumn worth more than 22 billion euros ($23 billion) in development funds as part of the bloc’s 2021-2027 budget, Marton Nagy, the country’s economic development minister, said Thursday. The funds deal has been delayed by Prime Minister Viktor Orban’s many disputes with the EU, such as migration, human rights and his stance on Russia, but he is under increasing pressure to make a deal as the Hungarian currency hits new lows. and rising inflation. The European Commission said on Wednesday it had “no update” on granting Hungary access to 15.5 billion euros in COVID-19 economic stimulus funds. The EU representative also said he was reviewing Budapest’s response to his concerns about Hungary’s public procurement system.

The main stock markets in Europe had a negative day:

l CAC 40 decreased by 108.62 points or -1.80% to 5,922.86.

l The FTSE 100 fell 143.04 points, or -1.96%, to 7,169.28.

l DAX 30 fell 219.58 points or -1.69% to 12,783.77.

Today was a mixed day in the major currency markets in Europe:

  • EURUSD rose 0.00388 or 0.37% to hit 1.04837.
  • GBPUSD rose 0.00507 or 0.42% to hit 1.21787.
  • USDCHF shed 0.00102 or -0.11% to hit 0.95418.

Some economic news from Europe today:

GREAT BRITAIN:

Investment in business (QoQ) (Q1) decreased from -0.5% to -0.6%

Investment in business (y/y) (Q1) decreased from 8.5% to 8.3%

Current account (Q1) decreased from -7.3 billion to -51.7 billion.

GDP (y/y) (Q1) increased from 6.6% to 8.7%

GDP (QoQ) (Q1) decreased from 1.3% to 0.8%

Nationwide HPI (MoM) (June) fell from 0.9% to 0.3%.

Nationwide HPI (YoY) (June) down from 11.2% to 10.7%

Germany:

German Import Price Index (MoM) (May) fell from 1.8% to 0.9%.

Import price index in Germany (y/y) (May) decreased from 31.7% to 30.6%.

Retail sales in Germany (YoY) (May) decreased from -0.4% to -3.6%.

Retail sales in Germany (MoM) (May) increased from -5.4% to 0.6%.

The change in unemployment in Germany (June) increased from -4 thousand to 133 thousand.

Unemployment rate in Germany (June) increased from 5.0% to 5.3%

Unemployment in Germany (June) increased from 2,284 million to 2,417 million

Unemployment in Germany (June) increased from 2,260 million to 2,363 million

Swiss:

Retail sales (YoY) (May) increased from -5.5% to -1.6%

Leading indicators KOF (June) fell from 97.7 to 96.9.

France:

French consumer spending (MoM) (May) increased from -0.7% to 0.7%

French CPI (YoY) increased from 5.2% to 5.8%

French CPI (MoM) flat at 0.7%

HICP in France (MoM) flat at 0.8%

HICP in France (YoY) increased from 5.8% to 6.5%.

Italy:

The monthly unemployment rate in Italy (May) fell from 8.3% to 8.1%.

Italian Producer Price Index (YoY) (May) fell from 35.3% to 34.6%.

Italian Producer Price Index (MoM) (May) rose from 0.2% to 0.6%.

Spain:

Spain’s current account (April) fell from 0.29 billion to -0.48 billion.

euro area:

Unemployment rate (May) fell from 6.7% to 6.6%

USA/AMERICA:

Another Fed-approved inflation measure rose in May, according to the Commerce Department. Core personal consumption spending rose 4.7% year on year. While this represents a 0.2 percentage point decline from April, levels are at their highest levels not seen since the 1980s. Headline inflation rose naturally after rising 6.3% year-on-year and 0.6% month-on-month.

US personal income increased 0.5% in May, beating most estimates of 0.4%. However, disposable income declined 0.1% MoM and 3.3% YoY. Adjusted for inflation, spending fell 0.4% on the month. Good inflation jumped 9.6% and services rose 4.7%. The personal savings rate increased by 0.2 percentage points per month and by 5.4% compared to the previous year.

US jobless claims fell 2,000 positions to 231,000 in the week ended June 25. Continuing claims also declined slightly after hitting 1.33 million.

US Market Closing:

  • The Dow was down 253.88 points, or -0.82%, at 30,775.43.
  • The S&P 500 was down 33.45 points, or -0.88%, at 3785.38.
  • The Nasdaq fell 149.16 points or -1.33% to 11,028.
  • Russell 2000 fell 11.38 points or -0.66% to 1707.99.

Closing the Canadian Market:

  • The TSX Composite was down 217.28 points, or -1.14%, at 18,861.36.
  • The TSX 60 was down 13.66 points or -1.18% at 1,146.43.

Brazil Market Closing:

  • Bovespa was down 1,079.63 points, or -1.08%, at 98,541.95.

ENERGY:

The oil markets had a negative day today:

l Crude oil fell $3.63/bbl. or -3.31% to 106.150.

l Brent fell by $1.44 per barrel. or -1.24% to 114.82.

l Natural gas was down $0.904/MMBtu or -13.91% to 5.5940

l Gasoline was down $0.1666/gallon, or -4.35%, at 3.6604.

l Heating oil fell $0.1312/gal or -3.25% to 3.9055.

The above data was collected around 2:12 pm EST on Thursday.

The main gains in commodities were rapeseed (3.31%), lumber (2.59%), fattening cattle (1.82%) and sugar (1.51%).

The worst losing commodities were zinc (-5.88%), wheat (-4.67%), natural gas (-13.91%) and gasoline (-4.35%).

The above data was collected around 2:18 pm EST on Thursday.

BONDS:

Japan 0.225% (-0.5 bp), USA 2 2.94% (-0.116%), USA 10 2.9870% (-10.6 bp); US 30’s 3.13% (-0.078%), Bunds 1.355% (-14.9 bp), France 1.9570% (-10.6 bp), Italy 3.392% (-10.9 bp), Turkey 18, 54% (+8 bp), Greece 3.599% (-6.5 bp), Portugal 2.460% (-11.5 bp); Spain 2.454% (-14.2 bp) and UK gilts 2.2410% (-13.9 bp).