Market Talk - Wednesday, Oct. 26

ASIA:

China has decided the status quo of Taiwan’s situation is no longer acceptable and has begun to ratchet up pressure on the self-governing island, including holding out the possibility of using force, U.S. Secretary of State Antony Blinken said on Wednesday. Speaking at an event organized by Bloomberg, Blinken said China had altered a decades-old basic understanding between Washington and Beijing that its differences with Taiwan would be managed peacefully. China’s leader Xi Jinping told the five-yearly congress of China’s ruling Communist Party this month that Beijing would never renounce the right to use force over Taiwan, but that it would strive for a peaceful resolution.

The Bank of Japan offered to buy more bonds than planned at its regular market operations on Wednesday. The BOJ will purchase 100 billion yen ($675 million) more bonds than planned across three- to 25-year tenors. Purchases of debt due in more than 25 years were raised by 50 billion yen. The central bank separately offered to buy an unlimited amount of 10-year notes at a yield of 0.25%. Ten-year bond futures gained 45 ticks to 148.45. There has been no cash trading for this tenor so far Wednesday after yields closed at 0.25% on Tuesday, which is the upper end of the trading band that the BOJ tolerates.

The major Asian stock markets had a green day today:

  • NIKKEI 225 increased 181.56 points or 0.67% to 27,431.84
  • Shanghai increased 23.22 points or 0.78% to 2,999.50
  • Hang Seng increased 152.08 points or 1.00% to 15,317.67
  • Kospi increased 14.49 points or 0.65% to 2,249.56
  • ASX 200 increased 12.30 points or 0.18% to 6,810.90
  • SENSEX closed
  • Nifty50 closed

The major Asian currency markets had a mixed day today:

  • AUDUSD increased 0.01210 or 1.90% to 0.65030
  • NZDUSD increased 0.00860 or 1.50% to 0.58392
  • USDJPY decreased 1.673 or -1.13% to 146.364
  • USDCNY decreased 0.11730 or -1.60% to 7.19670

Precious Metals:

  • Gold increased 14.99 USD/t oz. or 0.91% to 1,667.51
  • Silver increased 0.206 USD/t. oz or 1.07% to 19.546

Some economic news from last night:

Japan:

Corporate Services Price Index (CSPI) (YoY) increased from 2.0% to 2.1%

South Korea:

Manufacturing BSI Index (Nov) increased from 73 to 75

Australia:

CPI (YoY) (Q3) increased from 6.1% to 7.3%

CPI (QoQ) (Q3) remain the same at 1.8%

Trimmed Mean CPI (QoQ) (Q3) increased from 1.5% to 1.8%

New Zealand:

ANZ Business Confidence (Oct) decreased from -36.7 to -42.7

NBNZ Own Activity (Oct) decreased from -1.8% to -2.5%

Some economic news from today:

Japan:

Coincident Indicator (MoM) increased from 1.6% to 1.7%

Leading Index (MoM) increased from 2.0% to 2.4%

Leading Index increased from 98.9 to 101.3

EUROPE/EMEA:

The European Central Bank (ECB) has announced that the launch of new real-time gross settlement system and T2 are rescheduled from 21 November 2022 to 20 March 2023. An additional four-month period is meant to ensure greater system stability and user readiness, as well as smooth transition to new platform, according to the official ECB press release. The Governing Council of the European Central Bank (ECB) has decided to reschedule the launch of the new real-time gross settlement (RTGS) system and its central liquidity management model, T2. The date for the go-live has been postponed by four months, from 21 November 2022 to 20 March 2023.

Germany will permit adults to purchase and possess up to 30 grams of cannabis for recreational use as part of its plan to legalize weed, Bloomberg reported. The cabinet approved a proposal by the health ministry on Wednesday that will allow state-licensed and controlled commercial cultivation and distribution of cannabis. Europe’s biggest economy aims to curb the black market and organized drug crime with its decision. There will be a limitation of permitted purchase and possession of as much 30 grams for personal consumption, which is higher than previous proposals.

The major Europe stock markets had a green day:

  • CAC 40 increased 25.76 points or 0.41% to 6,276.31
  • FTSE 100 increased 42.59 points or 0.61% to 7,056.07
  • DAX 30 increased 142.85 points or 1.09% to 13,195.81

The major Europe currency markets had a mixed day today:

  • EURUSD increased 0.01185 or 1.19% to 1.00798
  • GBPUSD increased 0.01753 or 1.53% to 1.16305
  • USDCHF decreased 0.00874 or -0.88% to 0.98606

Some economic news from Europe today:

France:

France Jobseekers Total decreased from 2,966.0K to 2,946.0K

French Consumer Confidence (Oct) increased from 79 to 82

Italy:

Italian Trade Balance Non-EU (Sep) increased from -5.79B to -5.44B

Swiss:

ZEW Expectations (Oct) increased from -69.2 to -53.1

Euro Zone:

M3 Money Supply (YoY) (Sep) increased from 6.1% to 6.3%

Loans to Non Financial Corporations (Sep) increased from 8.7% to 8.9%

Private Sector Loans (YoY) decreased from 4.5% to 4.4%

US/AMERICAS:

The Bank of Canada voted to raise rates as expected. The overnight rate rose by 50 basis points with the overnight and deposit rates at 3 ¾ and the bank rate at 4%. The bank will continue quantitative tightening aimed at controlling inflation. The bank noted that housing activity has retreated, as well as household and business spending. The central bank projects Canada’s GDP to rise by less than 1% next year, followed by a mere 2% in 2024. CPI inflation is projected to fall to 3% by late 2023, with the 2% target coming to fruition by the end of the following year. The central bank will announce its next rate policy on December 7, 2022.

US Market Closings:

  • Dow advanced 2.37% to 0.01% to 31,839.11
  • S&P 500 declined 28.51 points or -0.74% to 3,830.6
  • Nasdaq declined 228.12 points or -2.04% to 10,970.99
  • Russell 2000 advanced 8.18 points or 0.46% to 1,804.33

Canada Market Closings:

  • TSX Composite advanced 182.75 points or 0.96% to 19,279.76
  • TSX 60 advanced 10.22 points or 0.88% to 1,166.00

Brazil Market Closing:

  • Bovespa declined 1,861.8 points or -1.62% to 112,763.79

ENERGY:

The oil markets had a mixed day today:

  • Crude Oil increased 2.895 USD/BBL or 3.39% to 88.215
  • Brent increased 2.473 USD/BBL or 2.64% to 95.993
  • Natural gas decreased 0.0445 USD/MMBtu or -0.79% to 5.5685
  • Gasoline decreased 0.0176 USD/GAL or -0.60% to 2.8984
  • Heating oil increased 0.2544 USD/GAL or 6.41% to 4.2216

The above data was collected around 12:38 EST on Wednesday

  • Top commodity gainers: Heating Oil (6.41%), Platinum (4.73%), Copper (3.96%) and Aluminum (5.55%)
  • Top commodity losers: Coffee (-3.26%), Bitumen (-2.97%), HRC Steel (-8.39%) and Lumber (-3.03%)

The above data was collected around 12:45 EST on Wednesday

BONDS:

Japan 0.25%(-0.5bp), US 2’s 4.42% (-0.061%), US 10’s 4.0173% (-9.27bps); US 30’s 4.17% (-0.092%), Bunds 2.129% (-4.1bp), France 2.657% (-3.5bp), Italy 4.323% (-4.9bp), Turkey 11.75% (+44p), Greece 4.639% (-4.8bp), Portugal 3.146% (-3.5bp); Spain 3.278% (+0.7bp) and UK Gilts 3.568% (-6.3bp).


More By This Author:

Market Talk - Tuesday, Oct. 25
Market Talk - Friday, Oct. 21
Market Talk - Thursday, Oct. 20

Disclosure: None.

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