Market Talk – August 3, 2022

Asia:

China announced Tuesday that the Chinese People’s Liberation Army will launch a series of targeted military operations on the island in response to House Speaker Nancy Pelosi’s visit to Taiwan and her resolute defense of national sovereignty and territorial integrity. The announcement came shortly after Pelosi arrived in Taiwan, the first time in 25 years for a speaker of the US House of Representatives. China considers Taiwan a “breakaway province”. However, Taipei has insisted on its independence since 1949. The Eastern Theater Command of the People’s Liberation Army also announced that it would conduct joint military operations around Taiwan, with joint naval and air maneuvers in the north, southwest and southeast of the island, long-range artillery fire in the Taiwan Strait and launched missiles In the offshore areas east of the island starting Tuesday evening, China’s Global Times reported.

Japan and the United States plan to combine their economic influence to prevent China from turning its vast resources into strategic victories. Secretary of State Anthony Blinken, Secretary of Commerce Gina Raimondo and their Japanese counterparts have stopped talking about the concept of an “economic NATO” proposed by some US lawmakers and allies. Friday’s meeting took place under the banner of the US-Japan Economic Policy Advisory Committee, a new form of the Quartet of diplomatic and economic policymakers to coordinate their efforts to “make our economies more competitive and resilient.”

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 rose 147.17 points, or 0.53%, to 27,741.90
  • Shanghai Index fell 22.59 points, or -0.71%, to 3,163.67 points
  • Hang Seng Index rose 77.88 points, or 0.40%, to 19767.09 points
  • The ASX 200 fell 22.20 points, or -0.32%, to 6,975.90
  • The Kospi added 21.83 points, or 0.89%, to 2461.45 points
  • Sensex shares rose 214.17 points, or 0.37 percent, to 58,350.53 points
  • Nifty50 rose 42.70 points, or 0.25%, to 17,388.15

The major Asian currency markets had a mixed day today:

  • AUDUSD rose 0.00363 or 0.53% to 0.69395
  • NZDUSD rose 0.00014 or 0.02% to 0.62574
  • USDJPY rose 0.845 or 0.63% to 134.179
  • USDCNY fell 0.01604 or -0.24% to 6.76116

Precious metals:

Gold rose $1.14/ton an ounce. or 0.06% to 1,764.41

Silver rose by 0.021 USD/ton. Ounces or 0.11% to 19.988

Some economic news from last night:

China:

Caixin Services PMI (July) increased from 54.5 to 55.5

Hong Kong:

Manufacturing PMI (July) fell from 52.4 to 52.3

Japan:

Services PMI (July) fell from 54.0 to 50.3

South Korea:

Foreign exchange reserves – US dollar (July) increased from 438.28 billion to 438.61 billion

Australia:

AIG Construction Index (July) fell from 46.2 to 45.3

Services PMI fell from 52.6 to 50.9

Retail Sales (MoM) decreased from 0.9% to 0.2%

Retail Sales (QoQ) (Q2) increased from 1.0% to 1.4%

New Zealand:

ANZ Commodity Price Index fell from -0.4% to -2.2%

Employment Change (QoQ) (Q2) remains the same at 0.0%

Labor Cost Index (YoY) (Q2) increased from 3.1% to 3.4%

Labor Cost Index (Quarterly) (Second Quarter) increased from 0.7% to 1.3%

Participation rate (second quarter) decreased from 70.90% to 70.80%

Unemployment rate (second quarter) increased from 3.2% to 3.3%

Some economic news of the day:

India:

The Nikkei Services PMI (July) fell from 59.2 to 55.5

Europe/Europe, Middle East and Africa:

The Bank of England (BoE) has made it clear that it will act aggressively to control record high inflation, and markets are unsure of a rare half-percentage point rate hike on Thursday. A 50 basis point increase to 1.75% would be the highest rate in 27 years and accelerate a historic tightening of monetary policy to choke off the highest level of inflation in 40 years. Inflation reached 9.4% in June, and the Bank of England expects it to peak at 11% by the end of the year, well above its 2% target.

The European Central Bank (ECB) favors central bank currencies as a cross-border payment method via Bitcoin (BTC), banking, and stablecoins, among others, reports a major online daily newspaper. Although the study included issues with scalability and speed inherent to Bitcoin, it neglected the upgrades required by Taproot and Lightning Network, which upgraded network performance, assuming that “the underlying technology (and in particular its “Proof of Work” layer) is inherently expensive and wasteful.” Conversely, the European Central Bank has recognized central bank digital currencies as a prominent counterpart to cross-border payments that have better compatibility with foreign exchange (FX) transformations, as their advantages include the protection of monetary strength and the convenience of instant payments through central bank-identical intermediaries. .

Major European stock markets had a green day:

The CAC 40 rose 62.26 points, or 0.97%, to 6,472.06 points

The FTSE 100 rose 36.57 points, or 0.49%, to 7,445.68 points

The DAX 30 rose 138.36 points, or 1.03%, to 13,587.56

The major European currency markets had a mixed day today:

  • EURUSD fell 0.0003 or -0.03% to 1.01534
  • GBPUSD fell 0.00076 or -0.06% to 1.21429
  • The US dollar against the Swiss franc rose 0.00492 or 0.51% to 0.96232

Some economic news from Europe today:

Germany:

German Exports (MoM) (June) increased from 1.3% to 4.5%

German Imports (MoM) (June) decreased from 3.2% to 0.2%

German Trade Balance (June) increased from 0.8 billion to 6.4 billion

German Composite PMI (July) fell from 51.3 to 48.1

German Services PMI (July) fell from 52.4 to 49.7

Swiss:

CPI (MoM) (Jul) down 0.5% to 0.0%

CPI (YoY) (Jul) Unchanged at 3.4%

Spain:

Spanish Services PMI (July) fell from 54.0 to 53.8

Italia:

Italian Composite PMI (July) fell from 51.3 to 47.7

Italian Services PMI (July) fell from 51.6 to 48.4

Italian Retail Sales (YoY) (June) decreased 6.8% to 1.4%

Italian Retail Sales (MoM) (June) decreased from 2.0% to -1.1%

France:

The balance of the French government budget (June) increased from -82.3 billion to -76.1 billion

France’s S&P Composite Global PMI (July) fell from 52.5 to 51.7

French Services PMI (July) fell from 53.9 to 53.2

Euro-zone:

S&P Global Composite PMI (July) fell from 52.0 to 49.9

Services PMI (July) fell from 53.0 to 51.2

PPI (YoY) (June) decreased from 36.2% to 35.8%

PPI (MoM) (June) increased from 0.5% to 1.1%

Retail Sales (YoY) (June) decreased from 0.4% to -3.7%

Retail Sales (MoM) (June) decreased from 0.4% to -1.2%

United kingdom:

Composite PMI (July) fell from 53.7 to 52.1

Services PMI (July) fell from 54.3 to 52.6

United States / America:

Louis Fed President James Bullard expressed hawkish sentiment on Wednesday because he believes the central bank will need to raise interest rates once it meets again in September. His message was not surprising as the Fed said it would need to see convincing evidence of low inflation for several months. Pollard, the voting member, would like to see interest rates rise to 3.75% to 4% by the end of the year. In September, however, he saw another 1.5 percentage point increase.

In more central bank news, San Francisco Fed President Mary Daly stressed that the fight against inflation is far from over. “The number of people who can’t easily afford what they paid this week six months ago means our business is out of reach,” she told CNBC on Tuesday. Despite the recent large interest rate increases, Daly cautioned that there is no indication that the Fed will soften before there is consistent data that indicates lower inflationary pressures.

US market closing:

  • Dow advanced 416.33 points, or 1.29%, to 38,812.5
  • The S&P 500 advances 63.98 points, or 1.56%, to 4155.17
  • Nasdaq advanced 319.4 points, or 2.59%, to 12,668.16
  • Russell 2000 advanced 26.48 points or 1.41% to 1908.93 points

Canada market closing:

  • TSX Composite advances 40.61 points, or 0.21%, to 19,545.94 points
  • TSX 60 advanced 4.06 points, or 0.21%, to 19,545.94

Brazil market closing:

  • Bovespa advanced 412.98 points or 0.4% to 103774.68 points

energy:

Oil markets had a mixed day today:

l Crude Oil fell $3.73/BBL or -3.95% to 90.816

Brent crude fell $3.81/BBL or -3.79% to 96.600

Natural gas rose $0.541/MMBtu or 7.02% to 8.2319

l Gasoline decreased $0.1542/gallon or -0.04% to 2.9018

Heating oil increased $0.0251/gallon or 0.74% to 3.4042

The above data was collected around 14:55 EST on Wednesday

Top Gainers in Commodities: Natural Gas (7.02%), Coffee (2.26%), Orange Juice (2.76%), Butter (1.94%)

Biggest losers in commodities: wood (-4.99%), cheese (-10.5%), milk (-10.56%) and gasoline (-0.04%)

The above data was collected around 15:05 EST on Wednesday.

bonds:

Japan 0.189% (+1.4 bps), US 2 3.10% (+0.019%), $10 2.7464% (+0.54 bps); US 30 2.98% (-0.008%), Bond 0.8740% (+9.2 bps), France 1.4400% (+6.1 bps), Italy 3.023% (-0.8 bps), Turkey 16.81% (-19 bps) , Greece 3.046% (+8.9 basis points), Portugal 1.914% (+4.6 basis points); Spain 1.984% (+5 basis points) and the UK bond 1.9140% (+4.8 basis points).

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