Market Talk – September 22, 2021

ASIA:

Chinese leader Xi Jinping said on Tuesday that China would not build new coal-fired power projects abroad, using his address at the United Nations General Assembly to add to pledges to deal with climate change. China has been under heavy diplomatic pressure to put an end to its coal financing overseas because it could make it easier for the world to stay on course to meet the goals of the Paris climate agreement to reduce carbon emissions. In a measured speech, Xi made no direct mention of China’s often bitter rivalry with the United States, where the Biden administration has made policies on climate change mitigation a top priority and sought to cooperate with Beijing.

India’s Prime Minister Narendra Modi has embarked on a five-day visit to the United States on Wednesday where he will address the UN General Assembly, attend the Quad Summit, and will hold a bilateral meeting with US President Joe Biden at the White House. This is Modi’s first visit to the US since Biden assumed charge early this year. The two have met virtually on at least three occasions – the Quad summit in March, the climate change summit in April, and the G7 summit in June this year.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 decreased 200.31 points or -0.67% to 29,639.40
  • Shanghai increased 14.52 points or 0.40% to 3,628.49
  • Hang Seng closed
  • ASX 200 increased 23.10 points or 0.32% to 7,296.90
  • Kospi closed
  • SENSEX decreased 77.94 points or -0.13% to 58,927.33
  • Nifty50 decreased 15.35 points or -0.09% to 17,546.65

 

 

The major Asian currency markets had a mixed day today:

  • AUDUSD increased 0.00336 or 0.46% to 0.72603
  • NZDUSD increased 0.00286 or 0.41% to 0.70254
  • USDJPY increased 0.44 or 0.40% to 109.59
  • USDCNY decreased 0.02411 or -0.37% to 6.46000

 

Precious Metals:

  • Gold increased 4.35 USD/t oz. or 0.25% to 1,778.60
  • Silver increased 0.458 USD/t. oz or 2.04% to 22.930

 

Some economic news from last night:

China:

PBoC Loan Prime Rate remain the same at 3.85%

Japan:

BoJ Interest Rate Decision remain the same at -0.10%

Australia:

MI Leading Index (MoM) decreased from -0.1% to -0.3%

 

Some economic news from today:

India:

M3 Money Supply decreased from 9.5% to 9.4%

Indonesia:

M2 Money Supply (YoY) (Aug) decreased from 8.90% to 6.90%

 

EUROPE/EMEA:

UK public borrowing overshot economists’ forecast last month as rising inflation pushed up the cost of index-linked public debt. Public sector net borrowing was £20.5bn in August, £5.5bn less than in the same month last year, data from the Office for National Statistics showed on Tuesday. Net borrowing was marginally lower than the £21.6bn forecast by the Office for Budget Responsibility, the UK fiscal watchdog, but much higher than the £15.6bn forecast by economists polled by Reuters. Interest payments on public debt rose to £6.3bn, which was £2.9bn higher than in the same month last year and the biggest August figure since records began in 1997.

UK chancellor Rishi Sunak is planning to use next month’s Budget to set out new rules to rein in government borrowing, as the Treasury fears that higher inflation could force a rise in interest rates that would make it difficult to reduce public debt. The Bank of England has signalled that some tightening of monetary policy may be necessary to keep inflation under control.

The major Europe stock markets had a green day:

  • CAC 40 increased 84.27 points or 1.29% to 6,637.00
  • FTSE 100 increased 102.39 points or 1.47% to 7,083.37
  • DAX 30 increased 158.21 points or 1.03% to 15,506.74

 

The major Europe currency markets had a mixed day today:

  • EURUSD increased 0.00111 or 0.09% to 1.17338
  • GBPUSD decreased 0.00061 or -0.04% to 1.36510
  • USDCHF decreased 0.00043 or -0.05% to 0.92324

 

Some economic news from Europe today:

Italy:

Italian Industrial Sales (YoY) (Jul) decreased from 28.50% to 19.10%

Italian Industrial Sales (MoM) (Jul) decreased from 3.10% to 0.90%

Euro Zone:

Consumer Confidence (Sep) increased from -5.3 to -4.0

US/AMERICAS:

Interest rates in the US are staying firm, as per the official announcement from the Federal Open Market Committee (FOMC) this Wednesday. The benchmark interest rate remains near zero, but that could rise sooner than originally anticipated. The FOMC will not begin to taper their $120 billion monthly asset purchase program, as of yet, but conditions may soon warrant the decision to do so. “If progress continues broadly as expected, the Committee judges that a moderation in the pace of asset purchases may soon be warranted,” per the announcement.  The central bank adjusted its GPD forecast for 2021 to 5.9%, significantly down from June’s forecast of 7%. The committee believes GDP will grow by 3.8% in 2023, compared to the last forecast of 3.3%, and will rise 2.5% in 2023.

Fed Chairman Jerome Powell downplayed the role of inflation in the US economy, despite the Fed noting there will be an uptick in the coming years. “I wouldn’t be too concerned about a tenth of a point,” Powell stated in numerous ways. In his last major public announcement, Powell stated inflation will remain “temporary,” despite notable price increases in most sectors.

“It’s going to take more time,” Powell said regarding the US labor market. The chairman described the US workforce as “tight,” underperforming expectations. The widespread view was the labor market would improve in the fall once kids went back to school, enabling caregivers to return to work, and the disincentive of not doing so with enhanced unemployment benefits endings in many states. “What happened was delta happened,” Powell told reporters in regard to the variant. Since schools are “always at a threat of being closed,” caregivers are reluctant to return to work. “People don’t want to take a job and have to quit after three weeks,” he stated. The largest labor shortfalls are in travel and leisure, impacted by prolonged COVID fears. As for the unemployment rate in relation to the Fed’s purchasing program, Powell stated that he personally does not feel the need for a “super strong” report in order to begin tapering, leading many to believe the Fed will begin to do so as soon as November if employment remains stable.

US Market Closings:

  • Dow advanced 338.48 points or 1% to 34,258.32
  • S&P 500 advanced 41.45 points or 0.95% to 4,395.64
  • Nasdaq advanced 150.45 points or 1.02% to 14,896.85
  • Russell 2000 advanced 32.38 points or 1.48% to 2,218.56

 

Canada Market Closings:

  • TSX Composite advanced 157.2 points or 0.78% to 20,401.49
  • TSX 60 advanced 9.18 points or 1.03% to 51,349.54

 

Brazil Market Closing:

  • Bovespa advanced 2,032.55 points or 1.84% to 112,282.28

 

 

ENERGY:

 

The oil markets had a green day today:

 

  • Crude Oil increased 1.52 USD/BBL or 2.16% to 72.0100
  • Brent increased 1.56 USD/BBL or 2.10% to 75.9200
  • Natural gas increased 0.019 USD/MMBtu or 0.40% to 4.8240
  • Gasoline increased 0.0083 USD/GAL or 0.39% to 2.1135
  • Heating oil increased 0.0297 USD/GAL or 1.37% to 2.2035

 

The above data was collected around 13:20 EST on Wednesday

 

  • Top commodity gainers: Oat (4.69%) and Platinum (5.14%), Tin (4.08%) and Palladium (6.66%)
  • Top commodity losers: Orange Juice (-0.99%), Rice (-0.54%), Lean Hogs (-0.53%), and Bitumen (-1.21%)

 

The above data was collected around 13:28 EST on Wednesday.

 

BONDS:

 

Japan 0.034%(-0.6bp), US 2’s 0.2160%(-0.00%), US 10’s 1.3091%(-1.86bps); US 30’s 1.8417%(-0.02%),Bunds -0.326% (+0.2bp), France 0.0080% (-0.2bp), Italy 0.6664% (-2.43bp), Turkey 16.57% (-5bp), Greece 0.7540% (+0.90bp), Portugal 0.244% (+0.70bp); Spain 0.327% (-0.44bp) and UK Gilts 0.797% (-1.1bp).

 

The post Market Talk – September 22, 2021 first appeared on Armstrong Economics.

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Author: Martin Armstrong


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