Market Talk – 20 September 2022

Asia:

China left benchmark interest rates unchanged at its one-month peg on Tuesday, as expected, as authorities appeared to put off immediate monetary easing after the local currency fell sharply and central banks tightened policy elsewhere. The one-year prime rate was left at 3.65%, while the five-year prime rate remained unchanged at 4.30%. The stable LPR reforms came after the People’s Bank of China (PBOC) left the medium-term interest rate unchanged last week as some liquidity was drained from the banking system. The decision came just days before the Federal Reserve’s monetary policy meeting in September, when the US central bank is widely expected to aggressively raise interest rates to stem rampant rate increases.

Japan’s core consumer inflation accelerated to 2.8% in August, the fastest annual pace in nearly eight years and above the central bank’s 2% target for a fifth month as price pressures from raw materials widened and the yen weakened. The strength of August inflation fueled growing skepticism among economists that price pressures will last longer than the Bank of Japan (BOJ) expected, although many still do not expect any immediate change to its ultra-easy policy. The Bank of Japan concludes its two-day meeting on Thursday, with analysts expecting to balance the fragility of the economic recovery with a decision to keep short-term and long-term interest rates close to zero. Growth in core CPI, which excludes volatile fresh food but includes fuel costs, was slightly larger than the median market expectation of a 2.7% increase, after a 2.4% increase in July. Analysts expect core consumer inflation to top 3% in October, when many retailers plan to raise prices and the primary effect of further cuts in mobile phone fees in 2021 will be out of the equation.

Major Asian stock markets had a green day today:

  • The NIKKEI 225 increased 120.77 points, or 0.44%, to 27,688.42 points
  • The Shanghai index rose 6.80 points, or 0.22%, to 3,122.41 points
  • The Hang Seng Index rose 215.45 points, or 1.16%, to 18,781.42
  • The Kospi added 12.19 points, or 0.52 percent, to 2,367.85
  • The ASX 200 rose 86.50 points, or 1.29%, to 6,806.40 points
  • Sensex shares increased 578.51 points, or 0.98%, to 59,719.74 points
  • Nifty50 rose 194.00 points or 1.10% to 17,816.25

The major Asian currency markets had a mixed day today:

  • AUDUSD fell 0.00358 or -0.53% to 0.66900
  • NZDUSD 0.00675 or -1.13% fell to 0.58935
  • USDJPY rose 0.414 or 0.29% to 143.671
  • USDCNY rose 0.02435 or 0.35% to 7.02815

Precious metals:

  • Gold is down $11.61/ton per ounce. or -0.69% to 1,664.17
  • Silver price decreased by 0.396 USD/ton. Ounces or -2.02% to 19.214

Some economic news from last night:

China:

The basic interest rate of the People’s Bank of China (PBoC) loan remains the same at 3.65%

Japan:

CPI (MoM) (August) decreased from 0.5% to 0.4%

Core National CPI (YoY) (August) increased from 2.4% to 2.8%

National CPI (YoY) (August) increased from 2.6% to 3.0%

Some economic news of the day:

New Zealand:

Global Dairy trade price index fell from 4.9% to 2.0%

Europe/Europe, Middle East and Africa:

Ukraine will pay for unprecedented, tailored packages from the International Monetary Fund and the World Bank worth tens of billions of dollars in the coming weeks to shore up its war-ravaged finances, the chief director of Ukraine’s debt management told Reuters. Ukraine’s military has retaken parts of its territory from Russia in recent weeks, but the financial and humanitarian costs of the nearly eight-month-old war continue to mount. Its budget this month estimates that it will run a deficit of $38 billion next year, money that must either come from Western backers and multilateral actors or be printed. These Western backers and multilateral partners are already ready to provide nearly $20 billion this year. The International Monetary Fund appears ready to give it a boost by allowing countries grappling with rising global food prices – a group that includes Ukraine – to draw more money from their main rapid financing instrument. International Monetary Fund chief Kristalina Georgieva said after a meeting with Ukrainian President Volodymyr Zelensky last week that the fund would continue to support Ukraine, but the country wanted things to happen faster.

Major European stock markets had a negative day:

  • The CAC 40 index fell 82.12 points, or -1.35%, to 5,979.47 points
  • The FTSE 100 fell 44.02 points, or -0.61%, to 7,192.66
  • The DAX 30 Index fell 132.41 points, or -1.03%, to 12,670.83 points

The major European currency markets had a negative day today:

  • EURUSD fell 0.00486 or -0.48% to 0.99766
  • GBPUSD fell 0.00547 or -0.48% to 1.13812
  • USDCHF fell 0.00085 or -0.09% to 0.96345

Some economic news from Europe today:

Swiss:

Trade balance (August) decreased from 3.522 billion to 3.424 billion

Germany:

German PPI (YoY) (August) increased from 37.2% to 45.8%

German PPI (MoM) (August) increased from 5.3% to 7.9%

Spain:

Spain’s trade balance fell from -5.39 billion to -6.56 billion

Euro-zone:

Current account (July) decreased from 4.2 billion to -19.9 billion

NSA Current Account (July) decreased from 3.2 billion to -10.1 billion

United States / America:

Sentiment for US homebuilders slipped 3 points in September to 46, according to the National Association of Builders/Wells Fargo Housing Market Index. A reading below 50 indicates contracture. This marks the ninth straight month of declines and the lowest reading since May 2014. The year started with a solid reading of 83, but that was when the 30-year average mortgage rate was around the 3% level. Nearly a quarter of construction companies said they had lowered their order prices. Current sales conditions slipped 3 points to 54, while the six-month sales forecast fell 1 point to 46.

Today, Canadian inflation report for August was released – 7%. This is a slight slowdown from the 7.6% announcement in July, but still high compared to the central bank’s target. Statistics Canada believes that lower gas prices helped cool the overall CPI. The Bank of Canada will meet on October 26th and is expected to raise interest rates again.

US market closing:

  • The Dow fell 313.45 points, or -1.01%, to 30,706.23 points
  • The S&P 500 fell 109.97 points, or -0.95%, to 11,425.05
  • The Nasdaq fell 43.96 points, or -1.13%, to 3,855.93 points
  • Russell 2000 slipped 25.34 points or -1.4% to 1,787.5

Canada market closing:

  • The TSX Composite Index fell 193.69 points, or -0.99%, to 19,368.69 points
  • TSX 60 fell 10.59 points, or -0.9%, to 1,172.64

Brazil market closing:

  • Bovespa advances 693.02 points or 0.62% to 112.516.91

energy:

OPEC+ is now producing less than its targets by a record 3.58 million barrels per day – about 3.5% of global demand – highlighting the underlying supply shortfall in the oil market, even as recession fears drive oil prices lower. Data from the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia showed that the organization, known as OPEC+, showed that the shortfall in August, which exceeded the United Arab Emirates’ No. 3 OPEC production, was 24% higher than that of July. 2.89 million barrels per day. On Tuesday, oil prices rose above $92, buoyed in part by news of the OPEC+ deficit, but are heading for a fourth monthly decline before another expected increase in US interest rates that could limit economic growth and fuel demand.

Oil markets had a mixed day today:

  • Crude Oil is down $1,263/BBL or -1.47% to 84.467
  • Brent crude fell $1.418/BBL or -1.54% to 90,582
  • Natural gas rose $0.0505/MMBtu or 0.65% to 7.8025
  • Gasoline decreased $0.0135/gallon or -0.55% to 2.4506
  • Heating oil increased $0.064/gallon or 1.93% to 3.3748

The above data was collected around 13:01 EST on Tuesday

  • Top Gainers in Commodities: Wheat (7.08%), Wood (6.80%), Sugar (2.66%), Oats (2.69%)
  • The biggest losers in commodities: methanol (-2.07%), palladium (-2.96%), cotton (-2.95%) and Brent (-1.54%).

The above data was collected at around 13:09 EST on Tuesday.

Bonds:

Japan 0.256% (+0.2 basis points), US 2 by 3.95% (+0.001%), $10 3.5434% (+5.44 basis points); US 30 3.54% (+0.039%), Bund 1.916% (+12.5 bps), France 2.468% (+11.8 bps), Italy 4.161% (+10 bps), Turkey 11.32% (+2 bps) , Greece 4.465% (+0.1 bp), Portugal 2.979% (+13.2 bp); Spain 3.093% (+13.9 basis points) and UK bonds 3.2860% (+12.7 basis points).

« Market Talk – September 19, 2022

Related Posts

Leave a Reply

Your email address will not be published.