Market Talk - Tuesday, Sept. 27

ASIA:

To stabilize China’s foreign exchange market and support the value of the yuan, the country’s central bank, the People’s Bank of China (PBC), announced that it will raise the foreign exchange (FX) risk ratio for foreign exchange forward trading from 0 to 20 percent, effective Wednesday. It will increase the cost of foreign exchange forward trading by banks, reducing demand for foreign exchange forward purchases in the market to stabilize yuan exchange rates, economists said. The Chinese yuan’s central parity rate weakened 378 basis points to 7.0298 against the US dollar on Monday, according to the China Foreign Exchange Trading System. The offshore yuan closed at 7.1173 the previous trading day.

Apple Inc said on Monday it will manufacture its latest iPhone 14 in India, as the tech giant moves some of its production away from China. Analysts at J.P. Morgan expect Apple to move about 5% of iPhone 14 production from late 2022 to India, which is the world’s second-biggest smartphone market after China. Apple could make one out of four iPhones in India by 2025, JPM analysts said in a note last week.

Sri Lanka will step up efforts to revive a stalled free trade pact with Singapore, President Ranil Wickremesinghe told the city-state’s prime minister on Tuesday, Reuters reported. The leader of the crisis-hit Indian Ocean nation met Singaporean Prime Minister Lee Hsien Loong in Japan on the sidelines of a state funeral for Shinzo Abe, the former prime minister assassinated in July. A free trade pact signed in January 2018 was suspended due to objections from Sri Lankan opposition parties and professional bodies. Sri Lanka proposed more than a dozen amendments in May 2021, but talks have largely stalled.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 increased 140.32 points or 0.53% to 26,571.87
  • Shanghai increased 42.64 points or 1.40% to 3,093.86
  • Hang Seng increased 5.17 points or 0.03% to 17.860.31
  • Kospi increased 2.92 points or 0.13% to 2,223.86
  • ASX 200 increased 26.80 points or 0.41% to 6,496.20
  • SENSEX decreased 37.70 points or -0.07% to 57,107.52
  • Nifty50 decreased 8.90 points or -0.05% to 17,007.40

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.00197 or -0.30% to 0.64463
  • NZDUSD increased 0.0011 or 0.20% to 0.56480
  • USDJPY increased 0.12 or 0.08% to 144.692
  • USDCNY increased 0.00981 or 0.14% to 7.18241

Precious Metals:

  • Gold increased 13.91 USD/t oz. or 0.86% to 1,635.48
  • Silver increased 0.242 USD/t. oz or 1.32% to 18.577

Some economic news from last night:

China:

Chinese Industrial profit YTD (Aug) decreased from -1.1% to -2.1%

Japan:

Corporate Services Price Index (CSPI) (YoY) decreased from 2.0% to 1.9%

South Korea:

Consumer Confidence (Sep) increased from 88.8 to 91.4.

EUROPE/EMEA:

The global economy will suffer a $2.8trn (£2.6trn) hit next year in the wake of Russia’s war in Ukraine, according to an international policy forum that is predicting zero growth for the UK. The Organisation for Economic Cooperation and Development (OECD) said its projection for lost output worldwide was based on a comparison between its pre-invasion forecast and its latest projections. The report said economic growth worldwide was slowing more than expected as energy prices spike, and the resulting inflation crisis takes its toll on demand. The OECD was particularly gloomy about Germany’s Russian-gas dependent economy, forecasting it would contract 0.7% next year, slashed from a June estimate for 1.7% growth. The OECD said it expected the UK to grow by 3.4% in 2022 – above the international average – as a whole but that achieving growth in gross domestic product (GDP) next year would be difficult.

The European Central Bank (ECB) is moving ahead with its plans to launch a digital version of the euro. To this end, the regional banking regulator said it will collaborate with five companies to test “user interfaces” for the central bank digital currency (CBDC). Each of the five companies will be tasked with focusing on one use case of the digital euro, with Amazon testing the application of e-commerce payments. Nexi and EPI will focus on point-of-sale transactions initiated by the payer and the payee, respectively, while CaixaBank and Worldline will cater to offline/online peer-to-peer payments

The major Europe stock markets had a negative day:

  • CAC 40 decreased 15.57 points or -0.27% to 5,753.82
  • FTSE 100 decreased 36.36 points or -0.52% to 6,984.59
  • DAX 30 decreased 88.24 points or -0.72% to 12,139.68

The major Europe currency markets had a mixed day today:

  • EURUSD increased 0.00119 or 0.12% to 0.96229
  • GBPUSD increased 0.00478 or 0.45% to 1.07740
  • USDCHF decreased 0.00448 or -0.45% to 0.98872

Some economic news from Europe today:

France:

France Jobseekers Total decreased from 2,967.0K to 2,966.0K

Italy:

Italian Trade Balance Non-EU (Aug) decreased from -2.83B to -5.79B

Euro Zone:

M3 Money Supply (YoY) (Aug) increased from 5.5% to 6.1%

Loans to Non Financial Corporations (Aug) increased from 7.7% to 8.7%

Private Sector Loans (YoY) remain the same at 4.5%

US/AMERICAS:

Treasury Secretary Janet Yellen praised the Inflation Reduction Act for providing tax credits toward green investments. Yellen claims the $329 billion that will be spent on climate initiatives will somehow lower costs for consumers. “These investments will accelerate the transition to our green energy future and lower energy costs for American households and businesses,” Yellen said. The infrastructure likely will not be available for decades to come and will not help consumers amid the current energy crisis.

Housing prices are declining across the US at the fastest pace in the history of the S&P CoreLogic Case-Shriller Index. Prices still remain high compared to the pre-pandemic era, however, home prices in July reflect a large deceleration when compared to the previous month. Prices rose 15.8% this July compared to the year prior, but are still beneath the 18.1% YoY increase reported in June. The 10-city composite rose 14.9%, down from 17.4% in June. The 20-city composite rose 16.1%, also down from June’s recording of 18.7%. Tampa (31.8%), Miami (31.7%), and Dallas (24.7%) saw the largest increases in the nation.

US Market Closings:

  • Dow declined 125.82 points or -0.43% to 29,134.99
  • S&P 500 declined 7.75 points or -0.21% to 3,647.29
  • Nasdaq advanced 26.58 points or 0.25% to 10,829.5
  • Russell 2000 advanced 6.63 points or 0.4% to 1,662.51

Canada Market Closings:

  • TSX Composite declined 19.13 points or -0.1% to 18,307.91
  • TSX 60 declined 2.56 points or -0.23% to 1,112.05

Brazil Market Closing:

  • Bovespa declined 737.81 points or -0.68% to 108,376.35

ENERGY:

The oil markets had a green day today:

  • Crude Oil increased 1.834 USD/BBL or 2.39% to 78.544
  • Brent increased 2.026 USD/BBL or 2.41% to 86.086
  • Natural gas increased 0.0084 USD/MMBtu or 0.12% to 6.9114
  • Gasoline increased 0.091 USD/GAL or 3.82% to 2.4752
  • Heating oil increased 0.1332 USD/GAL or 4.26% to 3.2623

The above data was collected around 11:50 EST on Tuesday  

  • Top commodity gainers: Heating Oil (4.26%), Gasoline (3.82%), Methanol (5.47%) and Lumber (7.96%)
  • Top commodity losers: Oat (-0.53%), Cotton (-1.34%), Lean Hogs (-0.60%) and Feeder Cattle (-0.78%)

The above data was collected around 11:57 EST on Tuesday.

BONDS:

Japan 0.250%(-0.1bp), US 2’s 4.31% (-0.007%), US 10’s 3.9553% (+7.53bps); US 30’s 3.81% (+0.114%), Bunds 2.231% (+13.9bp), France 2.841% (+14.4bp), Italy 4.748% (+22.2bp), Turkey 11.50% (-3p), Greece 4.930% (+25bp), Portugal 3.357% (+17.5bp); Spain 3.435% (+15.1bp) and UK Gilts 4.5040% (+25.3bp).  


More By This Author:

Market Talk - Friday, Sept. 23
Market Talk - Thursday, Sept. 22
Market Talk - Wednesday, Sept. 21

Disclosure: None.

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