Market Talk – July 20, 2022

ASIA:

Chinese authorities on Sunday violently broke up a peaceful protest by hundreds of depositors who tried in vain to demand the return of their savings from banks facing a deepening monetary crisis. Since April, four rural banks in central China’s Henan province have frozen millions of dollars of deposits, jeopardizing the livelihoods of hundreds of thousands of customers in an economy already hit by draconian Covid restrictions. Worried depositors have staged several demonstrations in Zhengzhou, the capital of Henan province, over the past two months, but their demands have consistently fallen on deaf ears. The demonstration is one of the largest in China since the pandemic, with domestic travel limited by various Covid movement restrictions. Last month, Zhengzhou authorities even resorted to interfering with Covid’s digital health code system to restrict depositors’ movements and disrupt their planned protests, sparking a nationwide outcry.

Morgan Stanley today cut India’s GDP growth forecast by 0.4 percent to 7.2 percent for fiscal year 23 due to slower global growth. It goes on to say that growth will slow further to 6.4% in FY24, down 0.3% from the previous forecast. According to other major estimates, including the RBI, FY23 GDP growth is likely to exceed 7 percent. The RBI also estimated a GDP growth rate of 7.2 percent for the current fiscal year. The brokerage firm said the continued slowdown in commodity prices improves the short-term trajectory of macroeconomic stability and also lowers the average inflation target for FY23 to 6.5 percent from 7 percent earlier.

Consumer prices in Russia fell 0.17% in the week to July 15 after falling 0.03% the week before, data showed on Wednesday, leaving the central bank open to consider cutting rates as early as this week. A stronger ruble and falling consumer demand have helped Russia curb inflation, which soared to a 20-year high on an annualized basis after Moscow sent tens of thousands of troops to Ukraine on Feb. 1. 24. Since the beginning of this year, consumer prices have risen by 11.41% compared with an increase of 4.51% in the same period in 2021, according to Rosstat. The prices of almost everything, from vegetables and sugar to clothes and smartphones, have risen sharply since February. 24. Meanwhile, inflation expectations among Russian households eased to 10.8% in July, the lowest level since March 2021, from 12.4% in June, data showed on Wednesday.

Major Asian stock markets had a green day today:

  • The NIKKEI 225 rose 718.58 points, or 2.67%, to 27,680.26.
  • Shanghai added 25.29 points, or 0.77%, to 3304.72.
  • Hang Seng rose 229.16 points or 1.11% to 20,890.22.
  • The ASX 200 rose 109.60 points or 1.65% to hit 6759.20.
  • Kospi rose 15.88 points or 0.67% to 2386.85.
  • SENSEX increased by 629.91 points or 1.15% to 55,397.53.
  • Nifty50 increased by 180.30 points or 1.10% to 16,520.85.

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

  • AUDUSD fell 0.00214 or -0.31% to hit 0.68787.
  • NZDUSD dropped 0.00069 or -0.11% to hit 0.62221.
  • USDJPY rose 0.091 or 0.07% to hit 138,274.
  • USDCNY rose 0.02891 or 0.43% to hit 6.77301.

Precious metals:

l Gold fell by $10.8/t. or -0.63% to 1700.27

l Silver fell by $0.036/t. ounces or -0.19% to 18,698

Some economic news from last night:

Australia:

MI Leading Index (MoM) fell from -0.1% to -0.2%

EUROPE/EEA:

The Bank of England has urged lenders to brace for a “worse economic outlook”. The bank said the outlook for the UK economy was “very uncertain”. He also added that he had been forced to raise interest rates to fight rising inflation, but acknowledged that it would make it harder for businesses and households to repay debt. Despite warnings from the International Monetary Fund and the OECD that the UK is more recession-prone and persistently high inflation than other Western countries, the Bank said UK lenders are well positioned to handle even a severe economic downturn.

The main stock markets in Europe had a negative day:

  • CAC 40 fell 16.56 points or -0.27% to 6,184.66.
  • The FTSE 100 fell 31.97 points, or -0.44%, to 7,264.31.
  • The DAX 30 was down 26.43 points, or -0.20%, at 13,281.98.

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

  • EURUSD fell 0.00706 or -0.69% to hit 1.01604.
  • GBPUSD fell 0.00415 or -0.35% to hit 1.19613.
  • USDCHF rose 0.00399 or 0.41% to hit 0.97249.

Some economic news from Europe today:

GREAT BRITAIN:

House Price Index (YoY) increased from 12.4% to 12.8%

Core CPI (YoY) (June) down from 5.9% to 5.8%

Core CPI m/m (m/m) (June) down from 0.5% to 0.4%

Core PPI (YoY) (June) increased from 15.0% to 15.2%.

Core PPI (MoM) (June) fell from 1.5% to 0.8%.

Underlying RPI (MoM) (June) increased from 0.7% to 0.8%

Underlying RPI (YoY) (June) increased from 11.8% to 11.9%

CPI (MoM) (June) up from 0.7% to 0.8%

CPI (YoY) (June) up from 9.1% to 9.4%

CPI, ns (June) increased from 120.80 to 121.80

PPI input (YoY) (June) increased from 22.4% to 24.0%

Input PPI (MoM) (June) decreased from 2.4% to 1.8%.

Producer price index (MoM) (June) fell from 1.6% to 1.4%.

Producer price index (YoY) (June) increased from 15.8% to 16.5%.

RPI YoY (June) increased from 11.7% to 11.8%

RPI (MoM) (June) increased from 0.7% to 0.9%.

Germany:

German producer price index (MoM) (June) fell from 1.6% to 0.6%.

German Producer Price Index (YoY) (June) decreased from 33.6% to 32.7%.

euro area:

Consumer confidence (July) decreased from -23.8 to -27.0.

The current account (May) increased from -5.8 billion to -4.5 billion.

The current account of the nsa (May) fell from -5.4 billion to -15.4 billion.

USA/AMERICA:

US mortgage demand continues to decline as rates rise and uncertainty continues. Mortgage demand hit a 22-year low last week after a 6% decline, according to the Mortgage Bankers Association. Mortgage applications fell 7% in a week and were 19% lower than in the same period a year ago. The average fixed rate for 30 years is now 5.82% for loans with a down payment of 20% – a year ago the rate was 3.11%.

Home sales in June fell 5.4% from the previous month, according to new data from the National Association of Realtors. Sales fell seasonally adjusted to 5.12 million year-on-year, down 14.2% from sales in June 2021. three years. Median home prices hit an all-time high of $416,000, up 13.4% year-on-year.

US Market Closing:

  • The Dow rose 47.79 points, or 0.15%, to 31,874.84.
  • The S&P 500 rose 23.21 points, or 0.59%, to 3959.9.
  • The Nasdaq rose 184.5 points, or 1.58%, to 11,897.65.
  • Russell 2000 advanced 28.62 points or 1.59% to 1827.95.

Closing the Canadian Market:

  • The TSX Composite advanced 82.96 points or 0.44% to hit 19,020.67.
  • The TSX 60 edged up 4.23 points or 0.37% to hit 1150.07.

Brazil Market Closing:

  • Bovespa climbed 42.03 points, or 0.04%, to 98,286.83 points.

ENERGY:

Oil markets have had a mixed day today:

l Crude oil fell $2.39/bbl. or -2.29% to 101,830

l Brent fell by $1.24 per barrel. or -1.16% to 106.11.

l Natural gas increased $0.645/mbtu, or 8.88%, to 7.9090.

l Gasoline fell $0.0583/gal or -1.76% to $3.2492.

l Heating oil fell $0.0632/gal or -1.74% to 3.5636.

The above data was collected around 2:05 pm EST on Wednesday.

Major gains in commodities: natural gas (8.88%), palm oil (3.23%), zinc (1.80%) and lean pigs (1.77%).

Commodities that lost the most were rapeseed (-2.65%), soybeans (-2.03%), lumber (-3.40%) and crude oil (-2.29%).

The above data was collected around 2:13 pm EST on Wednesday.

BONDS:

Japan 0.243% (+0.9bp), US 2 3.24% (+0.009%), US 10 3.0321% (+1.31bp); US 30’s 3.18% (-0.002%), Bunds 1.2600% (-1.8 bp), France 1.8210% (-3.2 bp), Italy 3.4980% (+ 5.7 bp) , Turkey 16.93% (-107 bp), Greece 3.458% (-0.4 bp), Portugal 2.414% (+1.2 bp); Spain 2.491% (+0.5 bp) and UK gilts 2.1410% (-3.7 bp).