Market Talk – September 20, 2021

ASIA:

Leaders of the United States, Japan, India and Australia will agree to take steps to build secure semiconductor supply chains when they meet in Washington next week, Reuters reported. US President Joe Biden will host a first in-person summit of leaders of the “Quad” countries, which have sought to boost cooperation to push back against China’s growing assertiveness. The United States and China are at odds over issues across the board, including trade and technology, while Biden said in April his country and Japan, a US ally, will invest together in areas such as 5G and semiconductor supply chains.

Amid the political uncertainties in Japan right now with Prime Minister Suga stepping aside and his replacement to be chosen by his party on September 29, the Bank of Japan will be a rock at its meeting this week, Wednesday, September 22. There are expected to be no changes to any of the major policy plans. The central bank is expected to maintain its short-term interest rate target at -0.1% and for 10-year bond yields around 0%. The economy is stagnating in the current quarter, which is causing some delay in Japan’s recovery.

Singapore’s finance minister Lawrence Wong said on last Tuesday companies would move their business to other places if the financial hub’s policies turned overly restrictive, which would send its small and open economy into a tailspin. Foreign labor has long been a hot-button issue in Singapore, but uncertainties due to the COVID-19 pandemic have increased employment worries among locals as the city state recovers from last year’s record recession. Just under 30% of Singapore’s 5.7 million people are non-residents, up from around 10% in 1990, according to government statistics. But fewer foreigners pushed the overall population down 0.3% last year due to travel curbs and pandemic-related job losses.

 

The major Asian stock markets had a negative day today:

  • NIKKEI 225 closed
  • Shanghai closed
  • Hang Seng decreased 821.62 or -3.30% to 24,099.14
  • ASX 200 decreased 155.50 points or -2.10% to 7,248.20
  • Kospi closed
  • SENSEX decreased 524.96 points or -0.89% to 58,490.93
  • Nifty50 decreased 188.25 points or -1.07% to 17,396.90

 

 

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.00236 or -0.32% to 0.72414
  • NZDUSD decreased 0.00219 or -0.31% to 0.70215
  • USDJPY decreased 0.63 or -0.58% to 109.34
  • USDCNY increased 0.01647 or 0.25% to 6.48460

 

Precious Metals:

  • Gold increased 8.38 USD/t oz. or 0.48% to 1,762.54
  • Silver decreased 0.193 USD/t. oz or -0.86% to 22.200

 

No economic news from last night:

 

Some economic news from today:

Hong Kong:

CPI (YoY) (Aug) decreased from 3.70 to 1.60%

Indonesia:

Motorbike Sales (YoY) (Aug) increased from 28.90% to 48.20%

 

 

EUROPE/EMEA:

The Independent Workers’ Union of Great Britain (IWGB) said it had received at least 90 reports from couriers who had faced some form of harassment at work in recent months, with more than 40 complaining that such incidents occurred at least once a week. The head of the IWGB, Alex Marshall, said, “Harassment is endemic in the so-called gig economy because corporations treat it as a wild west, where they have no responsibilities and their workers have no rights.”

 

After long-standing and influential German Chancellor Angela Merkel leaves office after the country’s upcoming federal election. French President Emmanuel Macron is waiting in the wings for an opportunity to try to replace Germany as Europe’s de facto leader and, arguably, the region’s superpower. Macron is likely to attempt to become Europe’s central figurehead once Merkel leaves, analysts say, and has been positioning himself to achieve that for a while.

The major Europe stock markets had a negative day:

  • CAC 40 decreased 114.38 points or -1.74% to 6,455.81
  • FTSE 100 decreased 59.73 points or -0.86% to 6,903.91
  • DAX 30 decreased 358.11 points or -2.31% to 15,132.06

 

The major Europe currency markets had a negative day today:

  • EURUSD decreased 0.00003 or 0.00% to 1.17247
  • GBPUSD decreased 0.00791 or -0.58% to 1.36490
  • USDCHF decreased 0.00423 or -0.45% to 0.92785

 

Some economic news from Europe today:

Germany:

German PPI (MoM) (Aug) decreased from 1.9% to 1.5%

German PPI (YoY) (Aug) increased from 10.4% to 12.0%

Spain:

Spanish Trade Balance decreased from -0.98B to -1.60B

US/AMERICAS:

Canadians are flocking to the polls this Monday to decide the fate of their next prime minister. Acting PM Justin Trudeau called for a snap election in an effort to gain power in the House of Commons. Still, early polls show a close race between Liberal Leader Justin Trudeau and Conservative Leader Erin O’Toole. The election was originally stated for 2023 before Trudeau declared the snap election. Trudeau was first elected in 2015, and was re-elected in 2019 amid a strew of controversies. Once the votes are counted, Canadians will learn if Trudeau’s plan worked in his favor.

The sell-off continued this Monday, with Dow futures declining over 500 points before the opening bell rang. Uncertainty is breeding volatility ahead of the Federal Reserve’s two-day policy meeting. Rising inflation has become more apparent to the average retail consumer. The Fed is expected to announce plans to taper its buying program as unemployment declines, but inflation has fears running high. Additionally, the debt ceiling is rapidly approaching with no apparent solution in sight. At the close of Monday’s session, the Dow declined 614 points or -1.78%, with all of Wall Street closing in the red.

SpaceX completed a historic mission over the weekend after launching an all civilian crew of four into space. Senator Bill Nelson congratulated SpaceX CEO Elon Musk by stating that he “helped demonstrate that low-Earth orbit is open for business.” This newly founded business sector is launching interest from many other companies, including Boeing, Lockheed Martin, Blue Origin, Virgin Galactic, and other heavy hitters. The successful mission proves that space tourism may become a lucrative business venture in the not so distance future. The flight raised $210 million for St. Jude Children’s Research Hospital, with CEO Musk pledging $50 million personally.

US Market Closings:

  • Dow declined 614.41 points or -1.78% to 33,970.47
  • S&P 500 declined 75.26 points or -1.7% to 4,357.73
  • Nasdaq declined 330.06 points or -2.19% to 14,713.9
  • Russell 2000 declined 54.67 points or -2.44% to 2,182.2

 

Canada Market Closings:

  • TSX Composite declined 335.82 points or -1.64% to 20,154.54
  • TSX 60 declined 19.22 points or -1.57% to 1,205.22

 

Brazil Market Closing:

  • Bovespa declined 2,595.63 points or -2.33% to 108,843.74

 

ENERGY:

 

The oil markets had a negative day today:

 

  • Crude Oil decreased 1.62 USD/BBL or -2.25% to 70.3500
  • Brent decreased 1.37 USD/BBL or -1.82% to 73.9700
  • Natural gas decreased 0.15 USD/MMBtu or -2.94% to 4.9550
  • Gasoline decreased 0.0561 USD/GAL or -2.58% to 2.1152
  • Heating oil decreased 0.0495 USD/GAL or -2.24% to 2.1596

 

The above data was collected around 15:10 EST on Monday

 

  • Top commodity gainers: Cheese (0.12%) and Gold (0.48%), Feeder Cattle (0.05%) and Rhodium (2.02%)

 

  • Top commodity losers: Copper (-3.26%), Platinum (-3.84%), Lumber (-6.62%), and Palladium (-6.38%)

 

The above data was collected around 15:15 EST on Monday.

 

BONDS:

 

Japan 0.065%(+2.4bp), US 2’s 0.2137%(-0.01%), US 10’s 1.3057%(-5.76bps); US 30’s 1.8438%(-0.06%),Bunds -0.3240% (-4.5bp), France 0.0170% (-3.2bp), Italy 0.7115% (-0.83bp), Turkey 16.64% (+15bp), Greece 0.7980% (-2.20bp), Portugal 0.239% (-1.50bp); Spain 0.347% (-1.11bp) and UK Gilts 0.787% (-6.1bp).

 

The post Market Talk – September 20, 2021 first appeared on Armstrong Economics.

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Author: Martin Armstrong


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