Market Talk – July 30, 2021

ASIA:

A report published by US-based Peterson Institute for International Economics said that China’s purchases of U.S. goods are still falling short of trade agreement levels, even as overall Chinese imports from the U.S. have surged. In January 2020, before the coronavirus pandemic and under former U.S. President Donald Trump, China agreed to buy at least $200 billion more in U.S. goods and services over the next two years, relative to the 2017 level. Known as the phase one trade deal, the purchase agreement included specific agriculture, energy and manufactured products. However, as of June, both Chinese and U.S. government data indicated that China had bought less than 70% of the year-to-date target, according to estimates from Peterson Institute senior fellow Chad P. Bown. The shortfall comes as trade between the two countries has grown, according to Chinese customs data. China’s imports from the U.S. in the first half of the year rose to $87.94 billion, up 55.5% from the same period in 2020 and up nearly 49.3% from the first six months of 2019.

Japan’s factory output jumped in June and job availability rose to the highest level in nearly a year, data showed, a sign robust overseas demand was offsetting the drag to consumption from the coronavirus pandemic. Industrial output rose 6.2% in June after a sharp 6.5% drop in May, data showed on Friday, marking the highest growth since July last year and recovering to pre-pandemic levels. The increase, which exceeded a median market forecast for a 5.0% gain, was driven mainly by a 22.6% surge in auto production as manufacturers sought to make up for the slump in May. But a spike in domestic infections to new records and a lingering global chip shortage adds to woes for the world’s third largest-economy, dashing policymakers’ hopes for a strong rebound in July-September growth, analysts say.

The major Asian stock markets had a negative day today:

  • NIKKEI 225 decreased 498.83 points or -1.80% to 27,283.59
  • Shanghai decreased 14.37 points or -0.42% to 3,397.36
  • Hang Seng decreased 354.29 or -1.35% to 25,961.03
  • ASX 200 decreased 24.80 points or -0.33% to 7,392.60
  • Kospi decreased 40.33 points or -1.24% to 3,202.32
  • SENSEX decreased 66.23 points or -0.13% to 52,586.84
  • Nifty50 decreased 15.40 points or -0.10% to 15,763.05

 

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.00518 or -0.70% to 0.73493
  • NZDUSD decreased 0.00354 or -0.50% to 0.69796
  • USDJPY increased 0.30000 or 0.28% to 109.72
  • USDCNY increased 0.00343 or 0.05% to 6.46121

 

Precious Metals:

  • Gold decreased 7.45 USD/t oz. or -0.41% to 1,820.51
  • Silver decreased 0.02 USD/t. oz or -0.06% to 25.515

 

Some economic news from last night:

Japan:

Jobs/applications ratio (Jun) increased from 1.09 to 1.13

Unemployment Rate (Jun) decreased from 3.0% to 2.9%

Industrial Production (MoM) (Jun) increased from -6.5% to 6.2%

Industrial Production forecast 1m ahead (MoM) (Jul) decreased from 9.1% to -1.1%

Industrial Production forecast 2m ahead (MoM) (Aug) increased from -1.4% to 1.7%

Retail Sales (YoY) (Jun) decreased from 8.3% to 0.1%

South Korea:

Manufacturing BSI Index (Aug) decreased from 101 to 96

Industrial Production (MoM) (Jun) increased from -1.0% to 2.2%

Industrial Production (YoY) (Jun) decreased from 14.9% to 11.9%

Retail Sales (MoM) increased from -1.8% to 1.4%

Service Sector Output (MoM) (Jun) increased from -0.4% to 1.6%

Australia:

Housing Credit (Jun) increased from 0.6% to 0.7%

PPI (YoY) (Q2) increased from 0.2% to 2.2%

PPI (QoQ) (Q2) increased from 0.4% to 0.7%

Private Sector Credit (MoM) (Jun) increased from 0.4% to 0.9%

New Zealand:

Building Consents (MoM) (Jun) increased from -2.4% to 3.8%

Singapore:

Bank Lending (Jun) increased from 693.7B to 703.9B

Unemployment Rate decreased from 2.9% to 2.7%

 

Some economic news from today:

India:

Federal Fiscal Deficit (Jun) increased from 1,231.74B to 2,742.45B

Bank Loan Growth increased from 6.1% to 6.5%

Deposit Growth increased from 9.8% to 10.7%

FX Reserves, USD decreased from 612.73B to 611.15B

Infrastructure Output (YoY) (Jun) decreased from 16.3% to 8.9%

Hong Kong:

M3 Money Supply (Jun) increased from 8.5% to 10.9%

Japan:

Construction Orders (YoY) (Jun) increased from 7.4% to 32.3%

Housing Starts (YoY) (Jun) decreased from 9.9% to 7.3%

Singapore:

Business Expectations (Q1) decreased from 32.00 to 20.00

 

EUROPE/EMEA:

New data show that the number of jobs supported by the UK’s government furlough scheme dropped in June from around 2.5 million to 1.9 million, ending the month at the lowest level since the pandemic began. It was the first time since March 23, 2020, that the Coronavirus Job Retention Scheme paid for the furloughs of fewer than 2 million employees, according to data from HM Revenue and Customs. The scheme paid 80% of employees’ regular wages for any hours they couldn’t work, up to a maximum of £2,500 a month. The scheme is already being phased out. In July, the government paid 70% of wages up to £2,187, and in August and September, it will pay 60% up to £1,875. On Sep. 30, the furlough program will end altogether.

The German economy returned to growth in the second quarter but bounced back less strongly than expected amid supply chain bottlenecks that are hitting industry, data showed on Friday. Europe’s largest economy grew by 1.5% quarter on quarter, compared with a revised contraction of 2.1% in the first quarter, and by 9.2% on the year, the Federal Statistics Office said. A Reuters poll had forecast increases of 2.0% and 9.6% respectively. Supply chain worries and rising coronavirus infections have dampened the outlook for the economy. A survey showed on Monday that German business morale fell unexpectedly in July, the first decline since January

The major Europe stock markets had a negative day:

  • CAC 40 decreased 21.01 points or -0.32% to 6,612.76
  • FTSE 100 decreased 46.12 points or -0.65% to 7,032.30
  • DAX 30 decreased 96.08 points or -0.61% to 15,544.39

 

The major Europe currency markets had a mixed day today:

  • EURUSD decreased 0.00328 or -0.28% to 1.18605
  • GBPUSD decreased 0.00622 or -0.45% to 1.39066
  • USDCHF increased 0.00054 or 0.06% to 0.90596

 

Some economic news from Europe today:

France:

French Consumer Spending (MoM) (Jun) decreased from 10.6% to 0.3%

French GDP (QoQ) (Q2) increased from -0.1% to 0.9%

French CPI (YoY) decreased from 1.5% to 1.2%

French CPI (MoM) remain the same at 0.1%

French HICP (MoM) decreased from 0.2% to 0.1%

French HICP (YoY) decreased from 1.9% to 1.6%

Germany:

German GDP (YoY) (Q2) increased from -3.4% to 9.6%

German GDP (QoQ) (Q2) increased from -2.1% to 1.5%

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

Italy:

Italian Monthly Unemployment Rate (Jun) decreased from 10.2% to 9.7%

Italian Quarterly Unemployment Rate decreased from 10.2% to 9.7%

Italian GDP (YoY) (Q2) increased from -0.7% to 17.3%

Italian GDP (QoQ) (Q2) increased from 0.2% to 2.7%

Italian CPI (MoM) (Jul) increased from 0.1% to 0.3%

Italian CPI (YoY) (Jul) increased from 1.3% to 1.8%

Italian HICP (MoM) (Jul) decreased from 0.2% to -1.1%

Italian HICP (YoY) (Jul) decreased from 1.3% to 0.9%

Swiss:

KOF Leading Indicators (Jul) decreased from 133.3 to 129.8

Spain:

Spanish GDP (YoY) (Q2) increased from -4.2% to 19.8%

Spanish GDP (QoQ) (Q2) increased from -0.4% to 2.8%

Spanish Retail Sales (YoY) (Jun) decreased from 19.7% to 1.4%

Spanish Current account (May) increased from 0.40B to 0.90B

Norway:

Central Bank Currency Purchase (Aug) remain the same at -1,700.0M to -1,700.0M

Unemployment Change (Jul) increased from 102.85K to 103.39K

Unemployment Rate n.s.a. (Jul) increased from 2.90% to 3.10%

Euro Zone:

CPI (YoY) (Jul) increased from 1.9% to 2.2%

CPI (MoM) decreased from 0.3% to -0.1%

CPI, n.s.a (Jul) decreased from 107.70 to 107.59

GDP (YoY) increased from -1.3% to 13.7%

GDP (QoQ) increased from -0.3% to 2.0%

HICP ex Energy & Food (YoY) (Jul) remain the same at 0.9%

HICP ex Energy and Food (MoM) decreased from 0.2% to -0.3%

Unemployment Rate (Jun) decreased from 8.0% to 7.7%

US/AMERICAS:

An indicator of key inflation used by the Federal Reserve rose 3.5% in June, as reported by the Commerce Department. Personal consumption expenditures price index (omitting food and energy), represents the sharpest increase since July 1911. The Core PCE index advanced 0.4% MoM, beneath analysts’ estimates of 0.6%. Personal income rose 0.1% and spending increased 1%. Fed Chairman Jerome Powell insists rising inflation is temporary and will wane.

The Canadian economy expanded 0.7% in June amid a slow reopening for businesses. Statistics Canada reported that Q2 growth reached 2.5%, beating the Bank of Canada’s forecast of 2%. The general consensus is that Q3 will see stronger numbers, but much depends on the Trudeau Administration’s handling of COVID restrictions. June’s growth shows promise for the nation after the economy contracted -0.3% in May and -0.5% in April.

Prolonged lockdowns have damaged Canada’s tourism sector significantly. According to the Canadian Tourism Activity Tracker, tourism in May was down -68.9% YoY, falling lower than April’s reading of -66.3% YoY. Domestic travel plummeted -55.8% in May, and, as to be expected, incoming international travel declined -93.8%. The Canadian border to the US is expected to reopen on August 9 to fully vaccinated travelers. Those wishing to travel from other countries will be permitted to do so, if fully vaccinated on September 9. However, the Trudeau Administration has pushed back reopening dates numerous times. As the delta variant remains a concern, the future of Canada’s tourism sector will largely depend on how the government handles border reopenings.

US Market Closings:

  • Dow declined 149.06 points or -0.42% to 34,935.47
  • S&P 500 declined 23.89 points or -0.54% to 4,395.26
  • Nasdaq declined 105.59 points or -0.71% to 14,672.68
  • Russell 2000 declined 13.78 points or -0.62% to 2,226.25

Canada Market Closings:

  • TSX Composite declined 23.98 points or -0.12% to 20,287.8
  • TSX 60 declined 1.98 points or -0.16% to 1,216.51

 

Brazil Market Closing:

  • Bovespa declined 3,874.54 points or -3.08% to 121,800.79

 

ENERGY:

 

The oil markets had a mixed day today:

 

  • Crude Oil increased 0.31 USD/BBL or 0.42% to 73.9300
  • Brent increased 0.26 USD/BBL or 0.34% to 76.3100
  • Natural gas decreased 0.177 USD/MMBtu or -4.36% to 3.8820
  • Gasoline increased 0.0092 USD/GAL or 0.39% to 2.3606
  • Heating oil increased 0.0044 USD/GAL or 0.20% to 2.1938

 

The above data was collected around 12:33 EST on Friday

  • Top commodity gainers: Steel (1.56%), Soda Ash (3.01%), Methanol (3.18%) and Aluminum (1.20%)
  • Top commodity losers: Coffee (-8.68%), Canola (-4.62%), Orange Juice (-3.51%), and Natural Gas (-4.36%)

The above data was collected around 12:40 EST on Friday.

BONDS:

Japan 0.018%(-0bp), US 2’s 0.1898%(-0.01%), US 10’s 1.2306%(-3.53bps); US 30’s 1.8922%(-0.03%), Bunds -0.4580% (-0.7bp), France -0.1020% (-0.6bp), Italy 0.6301% (+0.66bp), Turkey 16.86% (-6bp), Greece 0.6030% (-0bp), Portugal 0.185% (+0bp); Spain 0.272% (+5.79bp) and UK Gilts 0.564% (-0.9bp).

 

The post Market Talk – July 30, 2021 first appeared on Armstrong Economics.

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Author: Martin Armstrong


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