Market Talk – July 28, 2021

ASIA:

The International Monetary Fund (IMF) on Tuesday cut its economic growth forecast for China this year because of the patchy recovery from new coronavirus variants, as Beijing focuses on reducing debt and public investment. The Washington-based organization trimmed China’s gross domestic product (GDP) growth estimate to 8.1 per cent, down from April’s projection of 8.4 per cent. But the country’s growth forecast for next year edged up 0.1 percentage points from April to 5.7 per cent. The IMF also scaled back its forecast for emerging Asia and developing economies to 7.5 per cent this year from 8.6 per cent in April. By contrast, it upgraded its estimate for the United States to 7 per cent this year from 6.4 per cent in its previous forecast. Emerging markets and developing economies could face a double hit from the worsening health crisis as new variants spread and tighter external financial conditions, the IMF said.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 decreased 388.56 points or -1.39% to 27,581.66
  • Shanghai decreased 19.59 points or -0.58% to 3,361.59
  • Hang Seng increased 387.45 or 1.54% to 25,473.88
  • ASX 200 decreased 52.10 points or -0.70% to 7,379.30
  • Kospi increased 4.33 points or 0.13% to 3,236.86
  • SENSEX decreased 135.05 points or -0.26% to 52,443.71
  • Nifty50 decreased 37.05 points or -0.24% to 15,709.40

 

 

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.00176 or -0.24% to 0.73492
  • NZDUSD decreased 0.0027 or -0.39% to 0.69350
  • USDJPY increased 0.27 or 0.25% to 110.04
  • USDCNY decreased 0.02335 or -0.36% to 6.49950

 

Precious Metals:

  • Gold increased 2.4 USD/t oz. or 0.13% to 1,801.13
  • Silver increased 0.175 USD/t. oz or 0.71% to 24.850

 

Some economic news from last night:

South Korea:

Consumer Confidence (Jul) decreased from 110.3 to 103.2

Australia:

CPI (QoQ) (Q2) increased from 0.6% to 0.8%

CPI (YoY) (Q2) increased from 1.1% to 3.8%

CPI Index Number (Q2) increased from 117.90 to 118.80

Trimmed Mean CPI (QoQ) (Q2) increased from 0.3% to 0.5%

Trimmed Mean CPI (YoY) (Q2) increased from 1.1% to 1.6%

Weighted mean CPI (YoY) (Q2) increased from 1.3% to 1.7%

Weighted mean CPI (QoQ) (Q2) increased from 0.4% to 0.5%

 

Some economic news from today:

Japan:

Coincident Indicator (MoM) decreased from -2.6% to -3.2%

Leading Index (MoM) decreased from 1.4% to -1.2%

Leading Index decreased from 103.8 to 102.6

 

 

EUROPE/EMEA:

Britain’s economy will grow faster than any major economy in Europe as it rebounds from the COVID-19 recession and emerges from lockdown, the International Monetary Fund (IMF) has predicted. In the latest update to its World Economic Outlook – its periodical look at the state of the global economy – the IMF forecast that the UK economy would grow by 7% this year. The UK growth rate this year is stronger than Germany (3.6%), France (5.8%), and Italy (4.9%), though the UK economy contracted more than those other countries in 2020. The IMF’s updated forecasts also anticipate the UK growing by 4.8% next year, implying that the UK economy will regain its pre-COVID levels around the turn of the year.

The major Europe stock markets had a green day:

  • CAC 40 increased 77.39 points or 1.19% to 6,609.31
  • FTSE 100 increased 20.55 points or 0.29% to 7,016.63
  • DAX 30 increased 51.23 points or 0.33% to 15,570.36

 

The major Europe currency markets had a mixed day today:

  • EURUSD decreased 0.00086 or -0.07% to 1.18127
  • GBPUSD increased 0.00023 or 0.02% to 1.38829
  • USDCHF decreased 0.00118 or -0.13% to 0.91315

 

Some economic news from Europe today:

UK:

Nationwide HPI (YoY) (Jul) decreased from 13.4% to 10.5%

Nationwide HPI (MoM) (Jul) decreased from 0.7% to -0.5%

Germany:

German Import Price Index (MoM) (Jun) decreased from 1.7% to 1.6%

German Import Price Index (YoY) (Jun) increased from 11.8% to 12.9%

GfK German Consumer Climate (Aug) remain the same at -0.3

Norway:

Core Retail Sales (MoM) (Jun) decreased from 5.8% to -0.1%

France:

French Consumer Confidence (Jul) decreased from 103 to 101

Italy:

Italian Business Confidence (Jul) increased from 114.8 to 115.7

Italian Consumer Confidence (Jul) increased from 115.1 to 116.6

Swiss:

ZEW Expectations (Jul) decreased from 51.3 to 42.8

US/AMERICAS:

The Federal Open Market Committee unanimously voted to leave rates unchanged. Chairman Jerome Powell noted that the labor market has “continued to strengthen” it has “a ways to go” with unemployment standing at 5.9% in June, well above the pre-pandemic low of 3.5%. Real GDP is “on track to post its fastest rate of increase in decades,” with household spending “rising at an especially rapid pace.” However, sectors impacted by the pandemic continue to struggle, such as the motor vehicle industry that has been impacted by the worldwide chip shortage.

Powell partially blamed supply bottlenecks for putting upward pressure on prices, and noted that inflation “increased notable and will likely remain elevated in coming months before moderating.” The Fed is maintaining their 2% inflation target. “If we saw signs that the path of inflation or longer-term inflation expectations were moving materially and persistently beyond levels consistent with our goal, we’d be prepared to adjust the stance of policy,” Powell noted. In terms of the large repo program, the Fed plans to open two facilities– one for primary dealers and one for international investments that are designed to “serve as backstops in money markets.”

The US federal ban on evictions is set to expire on July 31, which could affect more than 15 million Americans who are behind on rental payments. The National Equity Atlas estimates that Americans owe $21 billion in unpaid rent, which could lead to evictions, lawsuits, and debt collections. However, the government is failing to effectively distribute $46 billion in federal aid that was set aside by Congress for renters and landlords. During the first six months of the year, the program distributed $3 billion in funds or roughly 6.6% of the funds allocated to prevent millions of evictions and foreclosures. Last week, the Treasury Department said, “Money is available in every state to help renters at risk of eviction – and the urgency has never been greater.” Still, the department noted that many programs “lag far behind” expectations, with some only launching in recent weeks.

US Market Closings:

  • Dow declined 127.59 points or -0.36% to 24,930.93
  • S&P 500 declined 0.82 of a point or -0.02% to 4,400.64
  • Nasdaq advanced 102.01 points or 0.7% to 14,762.58
  • Russell 2000 advanced 33.12 points or 1.51% to 2,224.96

 

Canada Market Closings:

  • TSX Composite advanced 57.05 points or 0.28% to 20,230.4
  • TSX 60 advanced 1.81 points or 0.15% to 1,213.79

 

Brazil Market Closing:

  • Bovespa advanced 1,673.56 points or 1.34% to 126,285.59

 

ENERGY:

The oil markets had a mixed day today:

 

  • Crude Oil increased 0.6 USD/BBL or 0.84% to 72.2500
  • Brent increased 0.32 USD/BBL or 0.43% to 74.8000
  • Natural gas increased 0.049 USD/MMBtu or 1.23% to 4.0200
  • Gasoline decreased 0.0121 USD/GAL or -0.52 % to 2.3020
  • Heating oil increased 0.0111 USD/GAL or 0.52% to 2.1550

 

The above data was collected around 12:49 EST on Wednesday

  • Top commodity gainers: Wheat (2.22%), Cocoa (1.38%), Bitumen (2.04%) and Sugar (1.36%)
  • Top commodity losers: Copper (-1.45%), Palm Oil (-2.83%), Orange Juice (-3.47%), and Lumber (-2.39%)

The above data was collected around 12:55 EST on Wednesday.

BONDS:

 

Japan 0.015%(-0bp), US 2’s 0.2015%(-0.01%), US 10’s 1.2560%(+1.66bps); US 30’s 1.9124%(+0.02%), Bunds -0.4520% (-1.1bp), France -0.0870% (-0.1bp), Italy 0.6218% (-0.43bp), Turkey 17.02% (+2bp), Greece 0.6210% (-0bp), Portugal 0.199% (+0bp); Spain 0.300% (+8.41bp) and UK Gilts 0.576% (+1.6bp).

 

The post Market Talk – July 28, 2021 first appeared on Armstrong Economics.

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Author: Martin Armstrong


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