Market talk: Profits at China’s industrial firms grew for the eighth straight month in December

ASIA

Profits at China’s industrial firms grew for the eighth straight month in December, suggesting a sustained recovery as the manufacturing sector rapidly emerged from its COVID-19 slump, Reuters reported. Profits surged 20.1% year-on-year in December to 707.11-billion-yuan ($109.40 billion), after rising 15.5% in November, the National Bureau of Statistics (NBS) data showed on Wednesday. China is the only major economy in the world to avoid a contraction in 2020, with gross domestic product up 2.3% for the full year, while many countries remain crippled by the pandemic. For the full year of 2020, annual profits for China’s industrial firms grew 4.1% year-on-year to 6.45 trillion yuan, recovering from a 3.3% on-year decline seen in 2019.

India is likely to double health spending in the next fiscal year with the aim of raising expenditure in the sector to 4% of gross domestic output in the coming four years, two officials said, as the country looks to fix its health system after the coronavirus pandemic. Reuters reported India will likely raise its health spending to 1.2-1.3 trillion rupees (USD 16.46- USD 17.83 billion) in the fiscal year starting April 1, from the current year’s projected spending of 626 billion rupees.

Japan’s economy will likely recover to levels before the coronavirus pandemic as early as March next year, Bank of Japan Governor Haruhiko Kuroda said on Monday, offering an upbeat view on its recovery prospect despite headwinds from COVID-19. Kuroda also said a combination of expansionary fiscal and monetary policies have successfully stabilized Japan’s economy, signaling that the BOJ has offered sufficient stimulus for now to cushion the economic blow from the health crisis.

The major Asian stock markets had a mixed day today

• NIKKEI 225 increased 89.03 points or 0.31% to 28,635.21.

• Shanghai increased 3.91 points or 0.11% to 3,573.34.

• Hang Seng decreased 93.73 points or -0.32% to 29,297.53.

• ASX 200 decreased 44.10 points or -0.65% to 6,780.60.

• Kospi decreased 17.75 points or -0.57% to 3,122.56.

• SENSEX decreased 937.66 points or -1.94% to 47,409.93.

• Nifty50 decreased 271.40 points or -1.91% to 13,967.50.

The major Asian currency markets had a mixed day today

• AUDUSD decreased 0.00611 or -0.79% to 0.76862.

• NZDUSD decreased 0.00504 or -0.70% to 0.71814.

• USDJPY increased 0.5 or 0.48% to 104.12.

• USDCNY increased 0.01984 or 0.31% to 6.49369.

Precious Metals

• Gold decreased 1.39 USD/t oz. or -0.08% to 1,848.92.

• Silver decreased 0.133 USD/t. oz or -0.52% to 25.310.

Some economic news from last night

China：

Chinese Industrial profit (YoY) (Dec) increased from 15.50% to 20.10%

Chinese Industrial profit YTD (Dec) increased from 2.4% to 4.1%

Australia:

MI Leading Index (MoM) decreased from 0.7% to 0.1%

CPI (QoQ) (Q4) decreased from 1.6% to 0.9%

CPI (YoY) (Q4) increased from 0.7% to 0.9%

CPI Index Number (Q4) increased from 116.20 to 117.20

NAB Business Confidence (Dec) decreased from 12 to 4

NAB Business Survey (Dec) increased from 9 to 14

Trimmed Mean CPI (QoQ) (Q4) remain the same at 0.4%

Trimmed Mean CPI (YoY) (Q4) remain the same at 1.2%

Weighted mean CPI (YoY) (Q4) increased from 1.3% to 1.4%

Weighted mean CPI (QoQ) (Q4) increased from 0.3% to 0.5%

Some economic news from today

Japan:

Coincident Indicator (MoM) (Dec) decreased from 1.0% to -0.4%

Leading Index (MoM) increased from 1.0% to 2.1%

Leading Index increased from 94.3 to 96.4

EUROPE/EMEA

ECB President Christine Lagarde told a news conference that the economy likely contracted in the last three months of 2020 and the outlook going forward faces risks. The economy is being propped up by massive support from the ECB, national governments, and the EU. The ECB’s decision not to adjust its key programs was largely expected because it added a major dose of stimulus only last month, at its Dec. 10 meeting. The governing council added 500 billion euros to its pandemic emergency stimulus bond purchases, bringing the total to 1.85 trillion euros ($2.2 trillion), and extended the regular purchases through at least March 2022. More than half of that total is still waiting to be deployed.

The major Europe stock markets had a negative day:

CAC 40 decreased 63.90 points or -1.16% to 5,459.62

FTSE 100 decreased 86.64 points or -1.30% to 6,567.37

DAX 30 decreased 250.53 points or -1.81% to 13,620.46

The major Europe currency markets had a mixed day today:

EURUSD decreased 0.00673 or -0.55% to 1.20942

GBPUSD decreased 0.00396 or -0.29% to 1.36993

USDCHF increased 0.00251 or 0.28% to 0.88925

Some economic news from Europe today

UK：

BRC Shop Price Index (YoY) decreased from -1.8% to -2.2%

Germany:

GfK German Consumer Climate (Feb) decreased from -7.5 to -15.6

France:

French Consumer Confidence (Jan) decreased from 95 to 92

France Jobseekers Total increased from 3,586.3K to 3,586.8K

Italy:

Italian Trade Balance Non-EU (Dec) increased from 6.68B to 7.91B

Swiss:

ZEW Expectations (Jan) decreased from 46.8 to 43.2

US/AMERICAS

The Federal Reserve voted to maintain interest rates at near zero, as analysts have expected. The Fed noted that the coronavirus pandemic “continues to weigh on economic activity, employment, and inflation, and poses considerable risks to the economic outlook.” The decision-makers for the central bank vowed to keep their policy “accommodative” until economic conditions improve.

Federal Reserve Chairman Jerome Powell said that while the new coronavirus vaccine seems promising to aid in economic recovery, the logistics of vaccinating the population as well as the effectiveness remain unknown. Powell said that he is concerned about the rising number of global COVID cases and foresees the next few months as “challenging.” The chairman reiterated that economic recovery is dependent on the pandemic and corresponding regulations.

Nearly 51% of Americans accumulated more debt since the pandemic began in March 2020, according to CreditCards.com. However, those with higher net worths fared well, indicating what some are calling a K-shaped recovery. While roughly 51 million Americans acquired more debt, overall individual credit card debt declined to $5,315 from $6,194 YoY. Current data now shows nearly 70% of Americans have personal debt—39% hold credit card debt, 25% hold a mortgage, 23% hold a car loan, and 16% have student loan debt.

US capital goods advanced for the eighth consecutive month in December, indicating steady growth in business spending on equipment. Non-defense capital goods rose 0.6% in December, according to the Commerce Department. Core capital goods grew 1% in November, and surged 1.8% YoY in December. Shipments of core capital goods rose by 0.5% in both November and December.

US Market Closings:

Dow declined 633.87 points or -2.05% to 30,303.17.

S&P 500 declined 98.85 points or -2.57% yo 3,750.77.

Nasdaq declined 355.47 points or -2.61% to 13,270.6.

Russell 2000 declined 41.6 points or -1.91% to 2,108.7.

Canada Market Closings:

TSX Composite declined 354.98 points or -2% to 17,424.43.

TSX 60 declined 22.71 points or -2.16% to 1,029.47.

Brazil Market Closing:

Bovespa declined 581.76 points or -0.5% to 115,882.3.

ENERGY

The oil markets had a green day today

• Crude Oil increased 0.47 USD/BBL or 0.89% to 53.0800.

• Brent increased 0.37 USD/BBL or 0.66% to 56.2800.

• Natural gas increased 0.054 USD/MMBtu or 2.03% to 2.7100.

• Gasoline increased 0.0042 USD/GAL or 0.27% to 1.5849.

• Heating oil increased 0.014 USD/GAL or 0.88% to 1.6124.

• Top commodity gainers: Natural Gas (2.03%), Palm Oil (1.81%), Canola (2.71%) and Bitumen (3.19%).

• Top commodity losers: Zinc (-1.77%), Copper (-2.10%), Platinum (-2.62%), and Wheat (-1.35%).

The above data was collected around 11:13 EST on Wednesday.

BONDS

Japan 0.04%(+1bp), US 2’s 0.12%(-0.008%), US 10’s 1.02%(-2bps); US 30’s 1.78%(-0.021%), Bunds -0.53% (+3bp), France -0.30% (+1bp), Italy 0.61% (-0bp), Turkey 12.75% (+0bp), Greece 0.68% (-1bp), Portugal 0.02% (-0bp); Spain 0.08% (+0bp) and UK Gilts 0.27% (+0bp).

• German 10-Year Bund Auction decreased from -0.520% to -0.540%.

• Italian 6-Month BOT Auction increased from -0.520% to -0.448%.