Market Talk – October 22, 2021

ASIA:

China Evergrande Group appeared to have averted default with a last-minute bond coupon payment, a source said on Friday, buying it another week to wrestle with a debt crisis looming over the world’s second-biggest economy. Facing a deadline on Saturday to pay interest on a US dollar bond, Evergande sent $83.5 million to a Citibank trustee account on Thursday, Reuters reported. Still, the world’s most indebted property firm — with more than $300 billion in liabilities — needs to make payments on a string of other bonds, with the next major deadline to avoid default on Oct. 29. The property developer also announced plans to give future priority to its electric vehicles business over real estate.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 increased 96.27 or 0.34% to 28,804.85
  • Shanghai decreased 12.18 or -0.34% to 3,582.60
  • Hang Seng increased 109.40 points or 0.42% to 26,126.93
  • ASX 200 increased 0.10 points or 0.00 to 7,415.50
  • Kospi decreased 1.17 points or -0.04% to 3,006.16
  • SENSEX decreased 101.88 points or -0.17% to 60,821.62
  • Nifty50 decreased 63.20 points or -0.35% to 18,114.90

 

 

The major Asian currency markets had a mixed day today:

  • AUDUSD increased 0.00012 or 0.02% to 0.74654
  • NZDUSD decreased 0.00098 or -0.14% to 0.71447
  • USDJPY decreased 0.45 or -0.40% to 113.48
  • USDCNY decreased 0.00827 or -0.13% to 6.38499

 

Precious Metals:

  • Gold increased 12.29 USD/t oz. or 0.69% to 1,795.05
  • Silver increased 0.265 USD/t. oz or 1.10% to 24.400

 

Some economic news from last night:

Japan:

CPI, n.s.a (MoM) (Sep) increased from 0.2% to 0.4%

National Core CPI (YoY) (Sep) increased from -0.2% to 0.1%

National CPI (MoM) increased from -0.2% to 0.4%

National CPI (YoY) (Sep) increased from -0.4% to 0.2%

Manufacturing PMI (Oct) increased from 51.5 to 53.0

Services PMI increased from 47.8 to 50.7

Australia:

Services PMI increased from 45.5 to 52.0

Manufacturing PMI increased from 56.8 to 57.3

Singapore:

URA Property Index (QoQ) (Q3) increased from 0.90% to 1.10%

 

Some economic news from today:

Hong Kong:

CPI (YoY) (Sep) decreased from 1.60% to 1.40%

India:

Bank Loan Growth decreased from 6.7% to 6.5%

Deposit Growth increased from 9.3% to 10.2%

FX Reserves, USD increased from 639.52B to 641.01B

 

 

EUROPE/EMEA:

The European Central Bank will be one of the last major central banks to raise interest rates after the COVID-19 pandemic, according a Reuters poll of economists, who still say the risk is a rate rise comes sooner than their current prediction of 2024. While the ECB has said the recent inflation surge will be transitory and has clearly indicated no policy tightening until it averages around its 2% target, financial markets are pricing in a hike later next year. The Oct. 18-21 Reuters poll consensus pointed to no rate rise through to the end of 2023, but nearly 90% of economists who responded to an additional question, 35 of 40, said the risk as it comes earlier than expected.

The major Europe stock markets had a green day:

  • CAC 40 increased 47.52 points or 0.71% to 6,733.69
  • FTSE 100 increased 14.25 points or 0.20% to 7,204.55
  • DAX 30 increased 70.42 points or 0.46% to 15,542.98

 

 

The major Europe currency markets had a mixed day today:

  • EURUSD increased 0.0006 or 0.05% to 1.16300
  • GBPUSD decreased 0.00447 or -0.32% to 1.37476
  • USDCHF decreased 0.00151 or -0.16% to 0.91669

 

Some economic news from Europe today:

UK:

Core Retail Sales (YoY) (Sep) decreased from -0.9% to -2.6%

Core Retail Sales (MoM) (Sep) increased from -1.2% to -0.6%

Retail Sales (YoY) (Sep) decreased from -0.2% to -1.3%

Retail Sales (MoM) (Sep) increased from -0.6% to -0.2%

Composite PMI (Oct) increased from 54.9 to 56.8

Manufacturing PMI (Oct) increased from 57.1 to 57.7

Services PMI (Oct) increased from 55.4 to 58.0

Norway:

Industrial Confidence (Q3) decreased from 11.0 to 8.8

France:

French Manufacturing PMI (Oct) decreased from 55.0 to 53.5

French Markit Composite PMI (Oct) decreased from 55.3 to 54.7

French Services PMI (Oct) increased from 56.2 to 56.6

Germany:

German Composite PMI (Oct) decreased from 55.5 to 52.0

German Manufacturing PMI (Oct) decreased from 58.4 to 58.2

German Services PMI (Oct) decreased from 56.2 to 52.4

Euro Zone:

Manufacturing PMI (Oct) decreased from 58.6 to 58.5

Markit Composite PMI (Oct) decreased from 56.2 to 54.3

Services PMI (Oct) decreased from 56.4 to 54.7

US/AMERICAS:

Federal Reserve Chairman Jerome Powell admitted that inflation is not “transitory,” as it is likely to last well into next year. Powell noted that supply shortages are contributing to record inflation and that the central bank is unable to predict when the crisis will ease accurately. If needed, the Fed is ready to employ additional tools to lower inflation. Based on current conditions and the labor market beneath maximum employment, Powell said raising rates now would be premature. In regards to the buying program, the chairman hinted that it could be “time to taper.” The Federal Open Market Committee will meet on November 2-3 to determine future policy.

Alaskan Senator Dan Sullivan criticized the Biden Administration and OPEC for rising prices. “Now we have the national security adviser, the president, the secretary of energy, begging OPEC, which includes many of our adversaries to produce more,” Sullivan said. This comes after President Biden stated he does not foresee gas prices declining before 2022. “I have a better idea than begging OPEC to produce more energy, produce more oil: How about getting the jackboot of the federal government off the throat of Alaskan producers, of other American energy producers?” the senator criticized.

US Market Closings:

  • Dow advanced 73.94 points or 0.21% to 35,677.02
  • S&P 500 declined 4.88 points or -0.11% to 4,544.9
  • Nasdaq declined 125.5 points or -0.82% to 15,090.2
  • Russell 2000 declined 4.92 points or -0.21% to 2,291.27

 

Canada Market Closings:

  • TSX Composite advanced 3.76 points or 0.02% to 21,216.15
  • TSX 60 advanced 0.21 of a point or 0.02% to 1,274.54

 

Brazil Market Closing:

  • Bovespa declined 1,438.83 points or -1.34% to 106,296.18

 

ENERGY:

 

The oil markets had a mixed day today:

 

  • Crude Oil increased 0.87 USD/BBL or 1.05% to 83.3700
  • Brent increased 0.67 USD/BBL or 0.79% to 85.2800
  • Natural gas increased 0.08 USD/MMBtu or 1.56% to 5.1950
  • Gasoline increased 0.0031 USD/GAL or 0.12% to 2.4832
  • Heating oil decreased 0.0037 USD/GAL or -0.15% to 2.5454

 

The above data was collected around 12:45 EST on Friday

 

  • Top commodity gainers: Natural Gas (1.56%) and Wheat (1.45%), Cocoa (1.68%) and Cotton (1.68%)
  • Top commodity losers: Coffee (-1.67%), Methanol (-8.80%), Rubber (-3.56%), and Steel (-5.76%)

 

 

The above data was collected around 13:00 EST on Friday

 

 

BONDS:

 

Japan 0.099%(+1bp), US 2’s 0.4636% (+0.01%), US 10’s 1.6492%(-4.66bps); US 30’s 2.0840%(

-0.06%), Bunds -0.109% (-1.2bp), France 0.2300% (-0.9bp), Italy 0.9504% (-0.05bp), Turkey 19.61% (+24bp), Greece 1.053% (+3.9bp), Portugal 0.435% (+2.1bp); Spain 0.541% (+1.17bp) and UK Gilts 1.145% (-5.8bp).

 

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

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Author: Martin Armstrong


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