Market Talk – September 15, 2022

Asia:

Revised government data released on Wednesday showed that India’s merchandise trade deficit in August widened to $27.98 billion from $11.71 billion a year earlier. India’s merchandise exports rose to $33.92 billion from $33.38 billion

Japan posted its largest-ever month’s trade deficit in August as imports surged amid higher energy prices and a weaker yen, exposing the economy’s vulnerability to external price pressures. Imports jumped 49.9% in the year to August, driven by the cost of oil, coal and liquefied natural gas (LNG), causing the trade deficit to widen to 2.8173 trillion yen ($19.71 billion), the largest deficit ever. The increase in imports was larger than the median market expectation of a 46.7% increase in a Reuters poll, according to Treasury data, and outpaced the 22.1% year-on-year increase in exports in the same month. It was the 13th consecutive month of year-on-year deficits, and was larger than the 2.3982 trillion yen deficit projected in a Reuters poll. The widening trade deficit underscores the fragile nature of Japan’s economic recovery, which has so far remained largely intact despite the higher prices companies pay for imports, exacerbated by the yen’s plunge to a 24-year low and the rising prospects of a global slowdown.

The major Asian stock markets had a mixed day today:

  • The NIKKEI 225 Index rose 57.29 points, or 0.21%, to 27,875.91 points
  • The Shanghai Index fell 37.62 points, or -1.16%, to 3,199.92 points
  • Hang Seng rose 83.28 points, or 0.44%, to 18,930.38 points
  • The Kospi fell 9.59 points, or -0.40%, to 2401.83 points
  • The ASX 200 rose 14.30 points, or 0.21%, to 6,842.90
  • SENSEX stock fell 412.96 points, or -0.68%, to 59,934.01
  • Nifty50 fell 126.35 points or -0.70% to 17,877.40 points

The major Asian currency markets had a mixed day today:

  • AUDUSD fell 0.00293 or -0.43% to 0.67242
  • NZDUSD fell 0.00161 or -0.27% to 0.59849
  • USDJPY rose 0.611 or 0.43% to 143.467
  • USDCNY rose 0.03412 or 0.49% to 7.00742

Precious metals:

l Gold decreased by 27.91 USD / ton per ounce. or -1.65% to 1,667.88

Silver price decreased by 0.406 USD/ton. ounces or -2.06% to 19.284

Some economic news from last night:

Japan:

Adjusted trade balance decreased from -2.16T to -2.37T

Exports (YoY) (August) increased from 19.0% to 22.1%

Trade Balance (August) decreased from -1,433.9 billion to -2,817.3 billion

Australia:

Employment Change (August) increased from -41.0K to 33.5K

The full employment change rate (August) increased from -86.9 thousand to 58.8 thousand

Unemployment rate (August) increased from 3.4% to 3.5%

New Zealand:

GDP (Quarterly) (Q2) increased from -0.2% to 1.7%

Some economic news of the day:

Japan:

Third Industry Activity Index (MoM) decreased from -0.4% to -0.6%

Europe/Europe, Middle East and Africa:

Bank of France Governor Francois Villeroy de Gallo said the European Central Bank could raise interest rates to nearly 2% by the end of the year. Villeroy de Gallo said monetary policy normalization is “fully justified” at the Michel Camdessus Central Banking Lecture at the International Monetary Fund’s headquarters in Washington, DC on September 14. Eurozone inflation rose 9.1% year-on-year in August, a record. On September 8, the European Central Bank’s Governing Council raised interest rates by 75%.

While overall inflation reached 9.1 percent in August and is expected to rise further, most indicators of long-term inflation expectations are still hovering around the ECB’s 2 percent target. However, recent revisions to some indicators above the target have alarmed policy makers, who have vowed to monitor developments closely. The European Central Bank has faced criticism for its too slow response to price hikes. The Vice President of the European Central Bank, de Guindos, warned that the central bank should not undermine its credibility.

Major European stock markets had a mixed day:

The CAC 40 fell 64.57 points, or -1.04%, to 6,157.84 points

The FTSE 100 rose 4.77 points, or 0.07%, to 7,282.07

The DAX 30 Index fell 71.34 points, or -0.55%, to 12,956.66 points

The major European currency markets had a mixed day today:

  • EURUSD rose 0.00278 or 0.28% to 1.00100
  • GBPUSD fell 0.00469 or -0.41% to 1.14976
  • USDCHF fell 0.0029 or -0.30% to 0.95930

Some economic news from Europe today:

Germany:

German WPI (YoY) (Aug) down 19.5% to 18.9%

German WPI (MoM) (August) increased from -0.4% to 0.1%

France:

French CPI (MoM) (August) increased from 0.3% to 0.5%

French HICP (MoM) (August) increased from 0.3% to 0.5%

Euro-zone:

Eurozone wages rose (yoy) (second quarter) from 3.7% to 4.1%.

Trade Balance (July) decreased from -25.4 billion to -34.0 billion

United States / America:

Union leaders and rail companies agreed to a deal a day before the start of the national rail strike. Failure to reach a deal would have cost an estimated $2 billion a day for pets as 40% of American goods are transported by rail. Employees will now receive a 24% wage increase, as well as immediate payouts of about $11,000 for lost wages in the past.

Mortgages in the US crossed the 6% level this week. This is the first time a 30-year fixed-rate mortgage has reached 6% since 2008 during the Great Recession. Unsurprisingly, refinancing continues to decline and is down 4% on the week and 83% year over year. Mortgage applications are down 29% year over year, down 0.2% on the week.

US market closing:

  • The Dow fell 173.27 points, or -0.56%, to 30,961.82
  • The S&P 500 fell 44.66 points, or -1.13%, to 3,901.35
  • The Nasdaq fell 167.32 points, or -1.43%, to 11,552.36
  • Russell 2000 fell 13.23 points, or -0.72%, to 1,825.23

Canada market closing:

  • The TSX Composite Index fell 165.98 points, or -0.84%, to 19,560.16
  • TSX 60 fell 8.88 points or -0.75% to 1182.1

Brazil market closing:

  • The Bovespa Index fell 593.02 points, or -0.54%, to 109,953.65 points

energy:

Oil markets had a negative day today:

l Crude Oil decreased by $2,937/BBL or -3.32% to 85,543

Brent crude fell $2.612/BBL or -2.78% to 91.488

l Natural gas fell $0.6529/MMBtu or -7.16% to 8.4611

l Gasoline decreased $0.0866/gallon or -3.43% to 2.4379

l Heating oil decreased $0.1688/gallon or -5.00% to 3.2101

The above data was collected around 13:37 EST on Thursday

Top Gainers in Commodities: Methanol (4.53%), Orange Juice (1.52%), Cocoa (2.77%) and Aluminum (1.83%)

Biggest losers in commodities: lumber (-5.38%), natural gas (-7.16%), heating oil (-5.00%) and gasoline (-3.43%)

The above data was collected around 13:47 EST on Thursday

Bonds:

Japan 0.256% (+0.6 basis points), US 2 3.85% (+0.070%), US$10 3.4451% (+3.31 basis points); US 30 3.47% (+0.002%), Bond 1.753% (+5.5bp), France 2.299% (+3.5bp), Italy 4.03% (+5bp), Turkey 11.20% (+8bp) , Greece 4.268% (-1.3 bp), Portugal 2.836% (+ 7.9 bp); Spain 2.905% (+5.3 basis points) and UK bonds 3.1660% (+3.2 basis points).

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