July 2 ASIAN MACRO INITIAL THOUGHTS US Futures flat
Covid-19 Globally over 10.5m cases, 512k deaths
US Futures open flat +27pts S&P showed a slight -VE NDX a slight +VE
DOW -0.3%, NDX +1%, S&P +0.5%, Russel 2K -1% Stocks opened higher on good data but then DOW sold off and traded sideways around flat the S&P trended slightly higher through the day and NDX continued to rise all dipped into the close. Data was broadly +VE
Fed minutes showed the central bank thinks the economy will need monetary policy support “for some time” as the country tries to recover from the pandemic.
Pfizer +3.2% and BioNTech -3.9% off early highs as studies showed the drug created neutralizing antibodies. The results were released online, but have not been reviewed by a medical journal yet. But covid-19 cases continue to rise
Re-opening stocks were initially positive on the Pfizer news but sold down during the day United Airlines -0.5% and Delta -1.2%. Cruise operator Carnival -0.4% and Royal Caribbean +1%. Retailer Kohl’s -3.2%. Apple -0.2% to close stores due to rising covid-19 cases
FedEx +11.7% on good Q4 results
Macy’s -4.4% did not provide forward guidance
BeyondMeat +5.7% said that Alibaba’s Freshippo grocery stores would start selling its meatless burger patties, marking its entry into supermarkets in mainland China. Beyond Burgers will be available at 50 Freshippo locations in Shanghai starting Saturday. By September, the patties will also be available at an additional 48 locations in Beijing and Hangzhou.
Netflix +6.7% named Bozoma Saint John as its new chief marketing officer, adding a high-profile Black executive to its senior management ranks. Netflix also vowed to make a $100 million commitment to support Black communities in the US. Amazon +4.4%, Google +1.7%
Constellation Brands +6.4% reported better-than-expected quarterly results. adjusted quarterly profit of $2.30 per share, vs consensus of $2.01, Also said beer production in Mexico had returned to normal levels after being disrupted by the pandemic.
MBA Mortgage Applications -1.8% vs -8.7% prior and 30 year Mortgage Rate 3.29% vs 3.3% prior
Challenger Job Cuts Jun 170.219k vs 397.016 May
ADP Employment Change Jun 2.369m vs 3.065m May (F/cast was 3m)
Manufacturing PMI Jun 49.8 vs 39.8 May (F/cast was 49.6)
ISM Manufacturing Data
Prices Jun 51.3 vs 40.8 May (F/cast was 43)
New Orders Jun 56.4 vs 31.8 May
Employment Jun 42.1 vs 32.1 May (F/cast was 43)
PMI Jun 52.6 vs 43.1 May (F/cast was 49.5)
Construction Spending May -2.1% vs -3.5% Apr (F/cast was +1%)
EIA Crude Oil Stocks Change -7.195m vs +1.442m prior (F/cast was -0.71m)
EIA Gasoline Stocks Change +1.199m vs -1.673m prior (F/cast was -1.583m)
DUE Total Vehicle Sales Jun vs 12.2m May
USD was slightly weaker vs Yen & Euro. Bitcoin +1% @ 9235.00, VIX -6% @ 28.62,
US T10 0.676% rose slightly after the ADP data
OIL Brent +1.5%, WTI +1.1% on +VE data and a draw down of inventories from record highs. After hours WTI dipped slightly.
Gold -0.6%, Silver -1.1%, Copper +0.8%
AHEAD Non Farm Payrolls, Balance of Trade, Initial Claims, Continuing Claims, Unemployment Rate, Participation Rate, Average Weekly Hours, Average Hourly Earnings, Exports, Imports, ISM New York Index, Factory Orders, Factory Orders Ex Transaport, EIA Natural Gas Stocks, Bakler Hughes Oil Rig Count
DAX -0.4%, CAC -0.2%, FTSE -0.2% Markets opened flat and initial traded sideways but sold off around midday and then worked back to flat but then sold down into the close. German markets initially were subject to a technical hitch at the Xetra causing volumes to lag. Good Chinese PMI data was off-set by unrest in HK as the New Security Law come into effect. But Wall St opened higher on a good ADP jobs number helping sentiment. Covid cases still overhang the market. Pfizer released positive results from its closely-watched human trial of a coronavirus vaccine on Wednesday. The firm is working with Germany’s BioNTech on the vaccine.
Clariant +7% announced the sale of its Masterbatches business.
Hargreaves Landsowne -5%.
EUROZONE Manufacturing PMI
GERMANY Retail Sales May +13.9% MoM vs -6.5% Apr (F/cast was +3.9%) [May +3.8% YoY vs -6.4% Apr (F/cast was -3.5%)
Unemployment Rate Jun 6.4% vs 6.3% May (F/cast was 6.6%)
Unemployment Change Jun 69k vs 237k May (F/cast was 120k)
Manufacturing PMI Jun 45.2 vs 36.6 May (F/cast was 44.6)
FRANCE Manufacturing PMI Jun 52.3 vs 40.6 May (F/cast was 52.1)
New Car Registrations Jun +1.2% YoY vs -50.3% May
UK Manufacturing PMI Jun 50.1 vs 40.7 May (F/cast was 50.1)
Nationwide House Prices Jun -0.1% YoY vs +1.8% May (F/cast was +1%) [Jun -1.4% MoM vs -1.7% May (F/cast was -07%)
EUROZPONE Unemployment, PPI
GERMANY No data due
FRANCE No data due
UK BoE Financial Stability Report,
JAPAN Expect Nikkei to open slightly lower but work higher through the day led by Tech. Covid-19 still an overhang. Yen currently 107.41
Data due Foreigner Bond and Stock Investments
Tokyo confirmed 67 new cases of coronavirus infection on Wednesday, marking the highest daily tally in the Japanese capital since the state of emergency was lifted in late May, public broadcaster NHK reported. -VE
Central Japan Railway Commercial operation of the N700S, the latest series of train cars on the Tokaido Shinkansen line, began Wednesday, with the first train departing from Tokyo Station at 6 a. +VE
Japan Airlines Co said Wednesday it is planning to fully restart its domestic flights as early as October amid signs of a recovery in travel demand, hit hard by the coronavirus pandemic. JAL has already started increasing the number of domestic flights +VE
Japan started Wednesday to require convenience stores, supermarkets, drugstores and other retail outlets to charge for plastic shopping bags, in line with a global trend of reducing plastic waste to combat marine pollution. The initiative is aimed at encouraging shoppers to bring their own bags.
Japan will delay by up to a decade its target to raise the percentage of women in leadership posts to 30% - part of Prime Minister Shinzo Abe's campaign to empower women - after failing to hit the deadline this year, domestic media have reported. -VE
Osaka to take two years to recover according to Tetsuya Kan, head of a major regional bank in Osaka -VE
SOUTH KOREA Expect markets to open higher and continue to work higher.
Data out Inflation Rate Jun 0% YoY vs -0.3% May (F/cast was -0.1%) Jun +0.2% MoM vs -0.2% May (F/cast was 0%)
South Korea has started distributing stocks of the COVID-19 treatment remdesivir that have been donated by Gilead Sciences Inc and plans to begin talks to purchase more supplies in August, its disease control agency said on Wednesday. +VE for sentiment. Also South Korea is taking steps to provide telemedicine services to overseas South Korean construction workers amid heightened health concerns caused by the coronavirus pandemic, the infrastructure ministry said Wednesday. +VE
President Moon said President Donald Trump and North Korean leader Kim Jong Un should meet again before the U.S. presidential election in November, a Seoul official told reporters on Wednesday.
Vehicle sales -22% YoY in the January-June period, as the new coronavirus outbreak continued to affect the automobile industry, industry data showed Wednesday. The five carmakers:- Hyundai Motor Co., Kia Motors Corp., GM Korea Co., Renault Samsung Motors Corp. and SsangYong Motor Co. -- sold a combined 3,033,798 vehicles in the first half, down from 3,866,229 units a year ago, according to data from the companies -VE
Audi Korea said Wednesday the brand’s first electric-powered sport utility vehicle Audi e-tron 55 quattro has been launched in Korea. Slight +VE
Amorepacific Group said Wednesday it has signed a strategic partnership with 11Street, an e-commerce platform, to reinforce its digital sales. +VE
Samsung Display said Wednesday it anticipates to begin mass production of quantum-dot panels from 2021. +VE
Samsung Electronics plans to hire as many as 1,000 specialized experts in chip design and artificial intelligence by the end of this year, the tech giant said Wednesday. +VE
TAIWAN Expect market to open slightly higher with large cap tech still in focus.
No data due; yesterdays Non Manufacturing PMI was 54.4 with service firms optimistic about prospects six months ahead +VE
All Taiwanese must now be on their guard when visiting Hong Kong, whether for business or holiday, DPP Deputy Secretary-General Lin Fei-fan said. The KMT party said the decision by China was ‘regrettable’ and 'Passage of the legislation would inevitably add greater uncertainty to Hong Kong’s future', it added. Slight -VE for sentiment.
Tatung Co shares yesterday plunged by the maximum daily limit of 10 percent to NT$18.90, the lowest in three months, after the Taiwan Stock Exchange (TWSE) on Tuesday evening changed the company’s classification to a full-delivery stock effective tomorrow. The exchange said Tatung had seriously breached shareholders’ rights and failed to give a satisfactory explanation of its board election dispute. The dispute is over whether certain shareholders are backed by Mainland money.
Life insurance market might continue its downturn due to new regulations that took effect yesterday, but the market is expected to stabilize by the end of this year, Cathay Financial Holding president Lee Chang-ken said yesterday in Taipei. “It is foreseeable that sales of life insurance products would continue to fall in the short term as consumers are likely to purchase fewer policies after premiums went up,” Lee said at the Cathay Service Ecosystem Partnership Day.
Gogoro Inc yesterday launched its first electric bicycle, the Gogoro Eeyo 1, in Taiwan, after unveiling the bike in New York in late May and in France on Tuesday. The company said it would also introduce the series in other European countries such as Germany and the Netherlands. +VE
CHINA Expect market to open higher with ’Team China’ supporting the market. Relations with US, India and others remain a concern.
No data due Yesterdays China’s factory activity grew at a faster clip in June after the government lifted coronavirus lockdown measures and ramped up support steps, but the health crisis continues to pressure exports and jobs, a private business survey showed.
US Secretary of State Mike Pompeo said on Wednesday the new security law China has imposed on Hong Kong was an affront to all nations and Washington would continue to implement President Donald Trump’s directive to end the territory’s special status. "Free Hong Kong was one of the world’s most stable, prosperous and dynamic cities. Now, now it will be just another Communist-run city where people will be subject to the party elites’ whims,” Pompeo said. -VE
Democrat Joe Biden on Wednesday threatened new economic sanctions on China if he is elected U.S. president, calling its new security law imposed on Hong Kong a "death blow" to the territory's freedom. -VE
US on Wednesday issued an advisory warning US companies about the risks faced from maintaining supply chains associated with human rights abuses in China’s western Xinjiang province. -VE
Senator Marco Rubio seeks to ban Chinese firms from US capital markets Lawmaker is preparing bill against companies that engage in spying, human rights abuse or support China’s military. The Pentagon recently released list of 20 firms allegedly linked to PLA, and 13 of them have presence in US capital markets -VE
China has asked four US media organisations to submit details about their operations in the country, the foreign ministry said on Wednesday, in what it described as retaliation for US measures against Chinese media outlets. -VE
The United States, Japan and France are prodding their companies to rely less on China to make the world's smartphones, drugs and other products. But even after the coronavirus derailed trade, few want to leave China's skilled workforce and efficient suppliers of raw materials to move to other countries.
HONG KONG ADR’s -73pts to open at 24,354 (Futures were -102pts) expect cautious trading now that the details of the new law are known and seen to be tougher than expected. The fact that thousands of people were prepared to protest against the new law despite the blanket ban I think illustrates that the issue will overhang the market for a while. 9 arrests under the new law and over 300 people detained. Retail weak after the sales data out Tuesday.
No data due but out after market Tuesday
RETAIL SALES May -33.9% YoY vs -37.5% Apr revised (F/cast was -30%)
The revised estimate of the value of total retail sales in April 2020 decreased by 36.1% compared with a year earlier. A government spokesman said that retail sales continued to fall sharply in May from a year earlier, as inbound tourism remained at a standstill and job and income conditions were weak. Nonetheless, the decline narrowed further from that in April thanks to the stabilised local epidemic situation and consequential easing of social distancing measures.
Short Selling HSI Tuesday 17.5% vs 16.5% Monday Top Shorts Wharf REIC (1997) 58%, Hang Seng Bank (11) 43%, CCB (939) 40%, Henderson Land (12) 39%, Hang Lug PPT (101) 32%, HK & China Gas (3) 31%, MTR (66 HK) 29%, CLP (2) 24%.
Canada warned its citizens in Hong Kong on Wednesday that they faced a higher risk of arbitrary detention and extradition to mainland China after Beijing imposed a new security law on the city.
HK saw 28 new covid cases most imported from India.
EVERGRANDE (3333) Aggregate contract sales 1H 2020 Yuan 348.84bn +23.8% YoY. Jun Contract Sales +51.3% YoY to Yuan 76.05bn
Country Garden (2007) June Contracted Sales Yuan 60.96bn +0.93% YoY
ZTE (763) and Huawei designated as national security threats by US Federal Communications Commission Slight -VE
TENCENT (700) duped by people claiming to be from Lao Gan Ma, the loss of 16.24m Yuan Slight -VE along with news that it and Xiaomi (1810) may not meet HK EX new ESG guidelines.
ALIBABA (9988) +VE on new s of partnering with Beyond Meat’s expansion into the Chinese market