Market Talk - Wednesday, Dec. 22

ASIA:

Japan’s parliament on Monday approved a record extra budget of nearly 36 trillion yen ($317 billion) for the fiscal year through March to help pandemic-hit households and businesses. The budget largely is to fund COVID-19 measures, including booster shot vaccines and oral medicines. It also includes cash payouts for families with children and a promotion campaign for the hard-hit tourism industry, which critics said are pork barrel giveaways. Prime Minister Kishida Fumio said the supplementary budget is meant to revive an economy not yet fully recovered from the pandemic and to achieve stronger growth and a more equitable distribution of wealth under his “new capitalism” policy. It allocates 617 billion yen ($5.4 billion) for promoting semiconductor manufacturing inside Japan as the country moves to improve its economic security and counter shortages of computer chips that are vital for a wide range of products. The budget will also fund the promotion of tourism, sustainability, and digitalization.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 increased 44.62 points or 0.16% to 28,562.21
  • Shanghai decreased 2.51 or -0.07% to 3,622.62
  • Hang Seng increased 131.00 points or 0.57% to 23,102.33
  • ASX 200 increased 9.80 points or 0.13 to 7,364.80
  • Kospi increased 9.45 points or 0.32% to 2,984.48
  • SENSEX increased 611.55 points or 1.09% to 56,930.56
  • Nifty50 increased 184.60 points or 1.10% to 16,955.45

The major Asian currency markets had a green day today:

  • AUDUSD increased 0.00711 or 0.99% to 0.72173
  • NZDUSD increased 0.00506 or 0.75% to 0.68177
  • USDJPY increased 0.21 or 0.19% to 114.20
  • USDCNY increased 0.0003 or 0.00% to 6.37722

Precious Metals:

  • Gold increased 11.22 USD/t oz. or 0.63% to 1,799.58
  • Silver increased 0.23 USD/t. oz or 1.02% to 22.720

Some economic news from last night:

Australia:

MI Leading Index (MoM) decreased from 0.3% to 0.1%

EUROPE/EMEA:

The European Central Bank is poised to unveil a gradual withdrawal from the extraordinary pandemic stimulus in the face of soaring inflation whose path is further clouded by the omicron coronavirus variant. At an important meeting on Thursday President Christine Lagarde is expected to confirm that net bond-buying under the 1.85 trillion-euro ($2.1 trillion) program known as PEPP will end as scheduled in March. A regular asset-purchase plan may be re-calibrated to smooth the wind-down. But in the absence of a consensus on the health and economic dangers posed by the new strain of Covid-19, officials will be keen to retain flexibility and may even delay some decisions.

Banks in Europe are issuing a particular type of bond in droves, locking in super-low borrowing costs ahead of possibly tighter monetary policy in 2022. Issuance of covered bonds—a type of debt sold by lenders—recently rose to the highest monthly level since before the pandemic began, according to data from Natixis. Banks sold 20.8 billion euros’ worth, equivalent to around $23.5 billion, in September and 13.6 billion euros in October. In December, banks sold more than last year, although issuance typically slows during this month. Major lenders that have issued covered bonds this quarter include France’s Société Générale SA, Amsterdam-based ING Groep and Italy’s UniCredit SpA. Banks are trying to get ahead of central-bank policy shifts by issuing debt while interest rates are still low. Globally, corporate debt issuance has stayed strong, defying expectations that the market would calm after companies built up cash cushions last year due to pandemic-fueled uncertainty. Financial firms raised more debt this quarter than in any fourth quarter in the last 15 years, according to Dealogic.

The major Europe stock markets had a green day:

  • CAC 40 increased 86.68 points or 1.24% to 7,051.67
  • FTSE 100 increased 44.25 points or 0.61% to 7,341.66
  • DAX 30 increased 146.03 points or 0.95% to 15,593.47

The major Europe currency markets had a mixed day today:

  • EURUSD increased 0.00418 or 0.37% to 1.13288
  • GBPUSD increased 0.00876 or 0.66% to 1.33558
  • USDCHF decreased 0.0032 or -0.35% to 0.91995

Some economic news from Europe today:

UK:

Business Investment (QoQ) (Q3) decreased from 4.5% to -2.5%

Business Investment (YoY) (Q3) decreased from 12.9% to 2.6%

Current Account decreased from -13.5B to -24.4B

GDP (YoY) (Q3) decreased from 24.6% to 6.8%

GDP (QoQ) (Q3) decreased from 5.4% to 1.1%

France:

French PPI (MoM) (Nov) increased from 2.9% to 3.5%

Spain:

Spanish PPI (YoY) increased from 31.9% to 33.1%

Italy:

Italian Trade Balance Non-EU (Nov) increased from 3.59B to 4.21B

US/AMERICAS:

The Commerce Department announced that US GDP growth grew 2.3% from July to September. The original forecast has placed Q3 growth at 2%. The US economy has advanced at an annual rate of 6.7% in the last quarter.

The Food and Drug Administration (FDA) approved the first coronavirus treatment pill this Wednesday. Pfizer was granted emergency authorization to approve their new pill, which will be available to patients over 12 with mild to moderate symptoms. Pfizer claims the drug should be prescribed as soon as symptoms begin. The US government has already purchased 10 million courses of the pill in a $5 billion deal.

Retail sales in Canada increased by 1.6% to C$57.6 billion in October, according to Statistics Canada. Seven of the 11 subsectors saw increases, representing 5.9% of retail trade. Core retail sales rose 1.5%, and overall volume of general sales rose 0.9%. Statistics Canada now believes the nation will post a growth of 1.2% in November.

US Market Closings:

  • Dow advanced 261.19 points or 0.74% to 35,753.89
  • S&P 500 advanced 47.33 points or 1.02% to 4,969.56
  • Nasdaq advanced 180.81 points or 1.18% to 15,521.89
  • Russell 2000 advanced 18.96 points or 0.86% to 2,221.9

Canada Market Closings:

  • TSX Composite advanced 145.18 points or 0.69% to 21,070.05
  • TSX 60 advanced 8.66 points or 0.68% to 1,279.11

Brazil Market Closing:

  • Bovespa declined 256.16 points or -0.24% to 105,243.72

ENERGY:

The oil markets had a green day today:

  • Crude Oil increased 1.21 USD/BBL or 1.70% to 72.3300
  • Brent increased 0.91 USD/BBL or 1.23% to 74.8900
  • Natural gas increased 0.113 USD/MMBtu or 2.92% to 3.9820
  • Gasoline increased 0.0058 USD/GAL or 0.27% to 2.1580
  • Heating oil increased 0.0292 USD/GAL or 1.29% to 2.2870

The above data was collected around 13:30 EST on Wednesday

  • Top commodity gainers: Natural Gas (2.92%) and Platinum (4.07%), Orange Juice (4.46%), Palladium (5.67%)
  • Top commodity losers: Canola (-0.57%), Tin (-0.24%), Methanol (-1.77%), and Steel (-0.41%)

The above data was collected around 13:40 EST on Wednesday.

BONDS:

Japan 0.061%(+1.2bp), US 2’s 0.6687% (+0.00%), US 10’s 1.4600%(-0.68bps); US 30’s 1.8592% (-0.01%), Bunds -0.288% (+1.5bp), France 0.079% (+2bp), Italy 1.066% (+4.9bp), Turkey 22.29% (-10bp), Greece 1.308% (+2.5bp), Portugal 0.368% (+1.9bp); Spain 0.489% (+3.24bp) and UK Gilts 0.889% (+1.5bp).

Disclosure: None.

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