Market Talk – February 25, 2021

ASIA:

US Agriculture Secretary Tom Vilsack believes China is making good on promises it made as part of the landmark phase one trade deal it signed with the US last year. Vilsack said that the deal allows for market conditions to dictate how much Beijing is required to purchase from US farmers. The COVID pandemic, he added, would qualify as a material market condition that would impact how much China has to buy.

India’s Prime Minister Narendra Modi announced late Wednesday night that India would privatize 100 state assets, ranging from oil and gas projects to ports and airports and those in the power sector. The investment opportunities are said to total 2.5 trillion Indian rupees ($3.4 trillion), Reuters reported. India has subsequently launched the National Asset Monetization Pipeline to manage the shift.

The major Asian stock markets had a green day today:

  • NIKKEI 225 increased 496.57 points or 1.67% to 30,168.27
  • Shanghai increased 20.97 points or 0.59% to 3,585.05
  • Hang Seng increased 355.93 points or 1.20% to 30,074.17
  • ASX 200 increased 56.20 points or 0.83% to 6,834.00
  • Kospi increased 104.71 points or 3.50% to 3,099.69
  • SENSEX increased 257.62 points or 0.51% to 51,039.31
  • Nifty50 increased 115.35 points or 0.77% to 15,097.35

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.00209 or -0.26% to 0.79526
  • NZDUSD decreased 0.00102 or -0.14% to 0.74342
  • USDJPY increased 0.35 or 0.33% to 106.26
  • USDCNY increased 0.01359 or 0.21% to 6.46065

Precious Metals:

  • Gold decreased 28.16 USD/t oz. or -1.56% to 1,776.20
  • Silver decreased 0.265 USD/t. oz or -0.95% to 27.715

Some economic news from last night:

South Korea:

Interest Rate Decision (Feb) remain the same at 0.50%

Australia:

Building Capital Expenditure (MoM) (Q4) increased from -3.7% to 0.7%

Plant/Machinery Capital Expenditure (QoQ) (Q4) increased from -2.2% to 5.7%

Private New Capital Expenditure (QoQ) (Q4) increased from -3.0% to 3.0%

New Zealand:

NZ Business Confidence (Feb) decreased from 9.4 to 7.0

NBNZ Own Activity (Feb) decreased from 21.7% to 21.3%

Some economic news from today:

Japan:

Coincident Indicator (MoM) (Jan) decreased from -0.4% to -0.7%

Leading Index (MoM) (Jan) decreased from 2.1% to -0.8%

Leading Index decreased from 96.1 to 95.3

Hong Kong:

Exports (MoM) (Jan) increased from 11.7% to 44.0%

Imports (MoM) (Jan) increased from 14.1% to 37.7%

Trade Balance increased from -45.7B to -25.2B

India:

M3 Money Supply increased from 12.1% to 12.6%

Indonesia:

Motorbike Sales (YoY) (Jan) increased from -45.10% to -14.70%

EUROPE/EMEA:

The UK aerospace industry feels it is in limbo over how the country’s new aviation regulations interact with those of the EU and global counterparts. Chief executive of aerospace trade body ADS Group Paul Everett told the UK’s Business and Brexit Preparedness Committee getting to grips with the new regulatory environment would not be achieved without filling in gaps in the post-Brexit regime. Everett said, left unattended, the additional complexities and all-around Brexit uncertainty would hit the competitiveness of the UK’s aerospace business, which presently ranks fourth in the world behind the US, France, and Germany.

The major Europe stock markets had a negative day:

  • CAC 40 decreased 14.09 points or -0.24% to 5,783.89
  • FTSE 100 decreased 7.01 points or -0.11% to 6,651.96
  • DAX 30 decreased 96.67 points or -0.69% to 13,879.33

The major Europe currency markets had a mixed day today:

  • EURUSD increased 0.00535 or 0.44% to 1.22226
  • GBPUSD decreased 0.00109 or -0.08% to 1.41336
  • USDCHF decreased 0.00358 or -0.39% to 0.90324

Some economic news from Europe today:

Germany:

GfK German Consumer Climate (Mar) increased from -15.5  to -12.9

France:

French Consumer Confidence (Feb) decreased from 92 to 91

Spain:

Spanish PPI (YoY) increased from -1.4% to 0.9%

Italy:

Italian Business Confidence (Feb) increased from 95.6 to 99.0

Italian Consumer Confidence (Feb) increased from 100.7 to 101.4

Euro Zone:

Business and Consumer Survey (Feb) increased from 91.5 to 93.4

Consumer Confidence (Feb) increased from -15.5 to -14.8

Consumer Inflation Expectation (Feb) increased from 15.4 to 15.7

Selling Price Expectations (Feb) increased from 4.8 to 9.7

Services Sentiment (Feb) increased from -17.7 to -17.1

Industrial Sentiment (Feb) increased from -6.1 to -3.3

M3 Money Supply (YoY) (Jan) increased from 12.3% to 12.5%

Loans to Non Financial Corporations (Jan) remain the same at 7.0%

US/AMERICAS:

A “flash spike” in 10-year Treasury yields worried investors and caused the major US indexes to fall into the red. The 10-year Treasury spiked to 1.6% unexpectedly before falling to 1.5%, marking its highest level since last February. The Nasdaq experienced a -3.52% decline in daily trading after loosing over 470 points, which marks its lowest level since October 2020.

Kansas City Federal Reserve Bank President Esther George was optimistic about a slight rise in long-term rates as it “reflects growing optimism in the strength of the recovery and could be viewed as an encouraging sign of increasing growth expectations.” She said the decision-making branch of the Federal Reserve would remain “accommodative” and “patient” as it waits to see how the economy will respond to the ongoing pandemic. In terms of policy changes, George said it was too early to change course. “It is too early to discuss pulling back on accommodation given continue elevated unemployment, below-target inflation, and the uncertainties surrounding the outlook,” George said.

The US Labor Department’s weekly jobless report showed a promising drop in unemployment. First-time filers fell from 841,000 (revised down by 20,000 filers) to 730,000 during the week ending on February 20. Continuing claims dropped by 101,000 to 4.42 million, marking a new low for the post-pandemic era workforce. Still, policymakers are concerned about the number of Americans currently out of work, with Federal Reserve Chairman Jerome Powell citing unemployment as the biggest challenge to the nation’s economic recovery.

US GDP advanced 4.1% in the fourth quarter of 2020, according to new data by the Bureau of Economic Analysis. The figure was revised up from the previous estimate of 4% due to government spending, fixed residential investment, and private inventory investment.

US Market Closings:

  • Dow declined 559.91 points or -1.75% to 31,401.95
  • S&P 500 declined 96.13 points or -2.45% to 3,829.3
  • Nasdaq declined 478.54 points or -3.52% to 13,119.43
  • Russell 2000 declined 84.21 points or -3.69% to 2,200.17

Canada Market Closings:

  • TSX Composite declined 260.99 points or -1.41% to 18,223.54
  • TSX 60 declined 14.59 points or -1.33% to 1,084.27

Brazil Market Closing:

  • Bovespa declined 3,411.42 points or -2.95% to 112,256.36

ENERGY:

The oil markets had a mixed day today:

  • Crude Oil increased 0.1 USD/BBL or 0.16% to 63.3200
  • Brent decreased 0.1 USD/BBL or -0.15% to 66.9400
  • Natural gas decreased 0.012 USD/MMBtu or -0.43% to 2.7830
  • Gasoline decreased 0.0088 USD/GAL or -0.46% to 1.8868
  • Heating oil decreased 0.0078 USD/GAL or -0.41% to 1.9005

 

  • Top commodity gainers: Bitumen (3.80%), Coal (2.19%), Aluminum (2.99%) and Soda Ash (4.77%)
  • Top commodity losers: Cotton (-2.63%), Canola (-3.61%), Sugar (-2.26%), and Orange Juice (-3.04%)

The above data was collected around 11:35 EST on Thursday.

BONDS:

Japan 0.14%(+2bp), US 2’s 0.00%(+0.03%), US 10’s 1.46%(+8bps); US 30’s 2.00%(+0.06%), Bunds -0.26% (+8bp), France 0.01% (+5bp), Italy 0.80% (+10bp), Turkey 12.90% (+13bp), Greece 1.13% (+12bp), Portugal 0.37% (+9bp); Spain 0.48% (+15bp) and UK Gilts 0.80% (+7bp).

 

The post Market Talk – February 25, 2021 first appeared on Armstrong Economics.

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Author: Martin Armstrong


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