Market Talk – July 15, 2022

ASIA:

China will be worst off if a spike in inflation, slower growth and higher interest rates lead to stagflation, according to a stress test of 20,000 companies by S&P Global Ratings. The company said that more than 90% of its sample are unrated companies with a total debt of $37 trillion, representing 41% of total global corporate debt. The companies were divided into four levels of risk: low, moderately low, moderately high and high.

Today was a mixed day for major Asian stock markets:

  • The NIKKEI 225 rose 145.08 points, or 0.54%, to trade at 26,788.47.
  • Shanghai fell 53.68 points or -1.64% to 3228.06.
  • The Hang Seng shed 453.49 points or -2.19% to hit 20,297.72.
  • The ASX 200 edged down 45.00 points or -0.68% to hit 6,605.60.
  • Kospi rose 8.66 points or 0.37% to 2330.98.
  • SENSEX increased by 344.63 points or 0.65% to 53,760.78.
  • Nifty50 increased by 110.55 points or 0.69% to 16,049.20.

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

  • AUD/USD rose 0.00357 or 0.53% to hit 0.67901.
  • NZDUSD rose 0.00269 or 0.44% to hit 0.61559.
  • USDJPY fell 0.437 or -0.31% to hit 138,552.
  • USDCNY edged down 0.00425 or -0.06% to hit 6.75685.

Precious metals:

  • Gold fell by $4.68/t. or -0.27% to 1704.77
  • Silver has risen in price by $0.291/t. ounces or 59% up to 18,675

Some economic news from last night:

China:

House prices (YoY) (June) fell from -0.1% to -0.5%

China Thomson Reuters IPSOS PCSI (July) fell from 72.96 to 71.52.

Fixed capital investment (YoY) (June) decreased from 6.2% to 6.1%.

GDP (yoy) (Q2) decreased from 4.8% to 0.4%

GDP (QoQ) (Q2) decreased from 1.4% to -2.6%

China’s GDP YTD (YoY) (Q2) down from 4.8% to 2.5%

Industrial production (YoY) (June) increased from 0.7% to 3.9%

China’s industrial production YTD (YoY) (June) increased from 3.3% to 3.4%.

Retail sales (yoy) (June) increased from -6.7% to 3.1%

Retail sales in China YTD (YoY) (June) rose from -1.51% to -0.69%.

Japan:

Thomson Reuters IPSOS PCSI (July) decreased from 39.57 to 37.39.

South Korea:

Export Price Index (YoY) (June) up from 23.4% to 23.7%

Import Price Index (YoY) (June) down from 36.5% to 33.6%

Exports (y/y) (June) decreased from 5.4% to 5.2%.

Imports (yoy) (June) did not change and amounted to 19.4%.

The trade balance (June) decreased from -2.47 billion to -2.58 billion.

New Zealand:

Business PMI New Zealand (June) fell from 52.6 to 49.7.

Some economic news for today:

Japan:

The index of activity in the services sector (mom) increased from 0.7% to 0.8%.

India:

The growth of bank loans increased from 13.2% to 14.4%.

Deposit growth increased from 8.3% to 9.8%

Foreign exchange reserves in US dollars decreased from $588.31 billion to $580.25 billion.

EUROPE/EEA:

The European Central Bank has cracked down hard on Proof-of-Work consensus algorithms, most notably Bitcoin. To highlight concerns about Proof-of-Work power consumption, the report also cites previous data that claims that the annual electricity consumption of Bitcoin and Ethereum is in line with that of individual countries such as Spain, the Netherlands or Austria. In addition, the ECB claims that the current carbon footprint of Bitcoin and Ethereum as of May 2022 negates the greenhouse gas emission reduction targets for most euro area countries. The report concludes that EU authorities are likely not to implement plans to limit the use of fossil fuel vehicles by the target date of 2035 without also taking action against Proof-of-Work cryptocurrencies. Under the Markets in Crypto Assets Regulation (MiCA), which is currently under consideration in the European Parliament, 2025 is now the target date for punitive measures targeting Proof-of-Work crypto assets.

Europe’s major stock markets had a green day:

  • CAC 40 increased by 120.59 points or 2.04% to 6036.00.
  • The FTSE 100 rose 119.20 points, or 1.69%, to 7,159.01 points.
  • The DAX 30 rose 345.06 points or 2.76% to hit 12,864.72.

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

  • EURUSD rose 0.00521 or 0.52% to hit 1.00749.
  • GBPUSD rose 0.00177 or 0.15% to hit 1.18543.
  • USDCHF shed 0.00572 or -0.58% to hit 0.97808.

Some economic news from Europe today:

Germany:

Vehicle registrations in Germany (YoY) (June) decreased from -10.2% to -18.1%.

Car registrations in Germany (MoM) (June) decreased from 14.9% to 8.4%.

GREAT BRITAIN:

Vehicle registrations (MoM) (June) increased from 4.4% to 13.3%

Vehicle registrations (YoY) (June) decreased from -20.6% to -24.3%

Italy:

Italian car registrations (YoY) (June) increased from -15.1% to -15.0%

Italian car registrations (MoM) (June) fell from 24.6% to 4.9%.

Italian CPI (MoM) (June) remained unchanged at 1.2%.

Italian CPI (YoY) (June) remained unchanged at 8.0%.

Italian CPI without tobacco (MoM) (June) rose from 6.8% to 7.8%.

Italian HICP (MoM) (June) unchanged at 1.2%

Italy HICP (YoY) (June) unchanged at 8.5%

France:

Car registrations in France (YoY) (June) decreased from -10.1% to -14.2%.

Car registrations in France (MoM) (June) increased from 16.6% to 34.9%.

euro area:

The trade balance (May) increased from -32.8 billion to -26.3 billion.

Total reserve assets (June) increased from 1,108.25 billion to 1,122.09 billion.

USA/AMERICA:

US retail sales rose 1% in June, according to US Department of Commerce data released this Friday. This marks a significant reversal from the May report of -0.1%, which was revised down to show a steeper -0.3% drop. Members of the Federal Reserve said they will use this report as one of the key indicators for making decisions to raise interest rates at the end of the month.

Restaurant and bar sales rose 1% during the first month of summer in the US, helping the struggling hospitality sector. Online sales rose 2.2%, while sales of furniture and home goods rose 1.4%. The popularity of brick-and-mortar stores is declining and decreased by 0.2%. Gasoline sales rose 3.6% as prices topped $5 a gallon in June, but began a slow decline in July.

U.S. consumer sentiment, compiled by the University of Michigan, was 51.1, better than a score of 50 but still low by historical standards. Inflation expectations are high, with most predicting 5.2% growth for the year.

US Market Closing:

  • The Dow advanced 658.09 points, or 2.15%, to 31,288.26.
  • The S&P 500 rose 72.78 points, or 1.92%, to 3863.16.
  • The Nasdaq rose 201.24 points, or 1.79%, to 11,452.42.
  • Russell 2000 advanced 36.87 points or 2.16% to 1744.37.

Closing the Canadian market:

  • The TSX Composite advanced 65.39 points or 0.36% to hit 18,394.45.
  • The TSX 60 edged up 3.73 points or 0.34% to hit 1116.13.

Brazil Market Closing:

  • Bovespa is up 430.15 points, or 0.45%, to 96,551 points.

ENERGY:

It was a green day in the oil markets today:

  • Crude oil rose $1.92/bbl. or by 2.00% to 97,700.
  • Brent rose by $1.99 per barrel. or 2.01% to 101.09.
  • Natural gas rose $0.514/mbtu, or 7.79%, to 7.1140.
  • Gasoline rose $0.0124/gal or 0.39% to $3.1992.
  • Heating oil rose $0.0434/gallon, or 1.19%, to $3.6928.

The above data was collected around 3:07 pm EST on Friday.

  • Commodity growth leaders: natural gas (7.79%), bitumen (10.28%), potatoes (8.55%) and lumber (6.56%).
  • The main losers were rapeseed (-5.82%), wheat (-1.76%), feed cattle (-1.29%) and palladium (-2.62%).

The above data was collected around 3:15 pm EST on Friday.

BONDS:

Japan 0.234% (+0 bp), USA 2 3.14% (-0.004%), USA 10 2.9337% (-2.53 bp); US 30’s 3.10% (-0.008%), Bunds 1.135% (-4.4 bp), France 1.6680% (-1.7 bp), Italy 3.3620% (-0.7 bp), Turkey 18.14% (-5 bp), Greece 3.517% (-1.7 bp), Portugal 2.340% (-1.9 bp); Spain 2.326% (-0.1 bp) and UK gilts 2.0900% (-1.1 bp).