July 28 Asian Macro Initial Thoughts Dow futures flat


30 Jul

July 28 Asian Macro Initial Thoughts Dow futures flat

Covid-19 Globally over 16.3m cases, 649k deaths
DOW Futures opened +40pts S&P and NDX slight +VE too.
Gold continues to rise as covid, geopolitical tensions and inflation worry investors. CNBC Cramer says golds move higher is a sign that a vaccine will fail

DOW +0.43%, NDX +1.67%, S&P +0.74%, Russel 2K +1.16% Markets opened higher with strength in Tech; Apple +2.4%, Facebook +1.2%, Amazon +1.5%, Netflix +3.2% and Alphabet +1.1%. Durable good numbers were weak. Earnings in focus in what will be busy weak for results.
After the administration said Senate Republicans had reached an agreement in principle on a new relief package.
Under Armour +2.7% off initial lows as it disclosed it received a ‘Wells notice’ regarding sales booked between Q3 2015 and Q4 2016.
Hasbro led the S&P 500 fallers on much weaker than expected second-quarter earnings, which were in contrast to a strong update last week from closest peer Mattel.
Earnings Albertson’s, F5 Networks, Hasbro, NXP Semiconductor, LVMH, Avery Dennison, Legg Mason, SAP, TrueBlue, National Oilwell Varco
DATA
Durable Goods Orders Jun +7.3% MoM vs +15.1% May revised from +15.8% (F/cast was +5%)
Durable Goods Orders Ex Transport Jun +3.3% MoM vs +3.6% revised from +4% May (F/cast was +3%)
Durable Goods Orders Ex Defence Jun +9.2% vs +15.2% May revised from 15.5% (F/cast was +4%)
Dallas Fed Manufacturing Index Jul -3 vs -6.1 Jun (F/cast was -16)
USD was weaker vs Yen & Euro. Bitcoin +12.8% @ 11,185.96, VIX -4.3% @ 24.74, US T10 0.615% on concerns over the recovery
OIL Brent +0.2%, WTI +0.75% on a weak USD and more US stimulus but upside capped by US/China tensions
Gold +0.5%, Silver +2.3%, Copper +0.6% Gold continues o mover higher
AHEAD Redbook, Case-Swiller Home Prices, Consumer Confidence, Richmond Fed Manufacturing Index, API Crude Oil Stock Change.FOMC meeting starts.

Earnings Amgen, Visa, 3M, Pfizer, McDonald’s, Starbucks, Mondelez, Chubb, Aflac, DR Horton, Raytheon, Invesco, MSCI, Rockwell Automation, Altria, Laboratory Corp, Martin Marietta, Roper Tech, Harley-Davidson, Canon, Nissan, Centene, Polaris, Sherwin-Williams, Corning, Boyd Gaming, Akamai, Lattice Semiconductor, Advanced Micro Devices, Visa, Juniper Networks

DAX unch, CAC -0.34%, FTSE -0.31% after trading sideways for the day. Covid in focus as UK imposes a two week quarantine period on holiday makers returning from Spain -VE for Travel Stocks and Tui -11.4% but off initial lows as it cancelled all holidays from the UK to Spain until Aug 9. Spain insists the outbreak in under control. Ryanair -3.9% off initial lows; as it reported a net loss of 185m Euro’s for Q1. (IAG -7.9% EasyJet -8% Lufthansa -5%
Basic Resources continued to climb. German Ifo data was slightly better than forecast.
Gold’s record high buoyed the bullion miners, with Polymetal and Centamin both setting new records. Antofagasta led the wider mining sector higher as dollar weakness helped lift copper prices.
Sentiment slightly +VE after the good Chinese Industrial Profits number but that was before the most recent rise in covid cases. US/China tensions remain high after the ’tit for tat’ consular closures.
DATA
EUROZONE Loans to Households Jun +3% YoY vs +3% May (F/cast was +2.3%)
Loans to Companies Jun +7.1% YoY vs +7.3% May (F/cast was +7.6%)
M3 Money Supply Jun +9.2% YoY vs 8.9% May (F/cast was 9%)
GERMANY Ifo Business Climate Jul 90.5 vs 86.3 May revised (F/cast was 88.5)
Ifo Current Conditions Jul 84.5 vs 81.3 May revised (Consensus was 85)
Ifo Expectations Jul 97 vs 91.6 May revised (F/cast was 93.7)
Bundesbank Monthly Report
FRANCE Unemployment Benefit claims Jun -202.7k vs -148.3k (F/cast was -42k)
Jobseekers Total Jun 3.964m vs 4.1674k May (F/cast was 4.1254k)
AHEAD
EUROZONE No data due
GERMANY No data due
FRANCE No data due
UK CBI Distributive Trades

JAPAN Expect Nikkei to open higher but upside limited by the number fo covid cases with 131 new cases Monday. Yen strengthened currently 105.30
No data due
Japan's economy minister urged on Monday for businesses to aim for 70% telecommuting
and enhance other social distancing measures amid a rise in coronavirus cases among workers, some infected during after-work socialising.
Government stirs controversy with huge COVID aid contract for ad giant Dentsu raising questions about how public money is being spent during the crisis. Dentsu is known as a company with close ties to the ruling LDP. -VE
AstraZeneca will pay up to $6 billion to Japan's Daiichi Sankyo under the drugmakers' second multi-billion dollar oncology collaboration to develop and market a new type of targeted cancer treatment. +VE
Mitsubishi Motors Corp reported Monday a 176 billion yen ($1.7 billion) loss for April-June, and forecast more red ink for the fiscal year, as the coronavirus pandemic slammed auto demand around the world. The Japanese automaker had posted a profit of 9.3 billion yen for the fiscal first quarter the previous year. Quarterly sales shrank 57% to 229.5 billion yen ($2.2 billion). -VE and expect other makers tone suffering too.

SOUTH KOREA Expect markets to open higher and work higher sentiment remains +VE as trader watch for the next US stimulus package. Banks may see weakness after Worri and Industrial Bankod Korea results but other sectors +VE
No data due
Celltrion’s anti-inflammatory biosimilar Remsima SC, which is injected under the skin, gained approval 
from the European Medicines Agency as a treatment for inflammatory bowel disease.
Woori Bank and Industrial Bank of Korea reported on Monday that their Q2 net profit plummeted by 45 percent and 25 percent, respectively, weighed down by risks stemming from the coronavirus and hedge fund misselling.
Taihan Electric Wire said Monday it has signed a 92.5 billion won ($77.3 million) contract with the UK’s National Grid to supply underground cables and accessories for the London Power Tunnel 2.
SK Telecom on Monday unveiled an augmented reality-powered application designed to let visitors experience life in Seoul’s Changdeokgung 600 years ago. +VE. It also said Monday it has permanently ended its 25-year-old 2G mobile service. +VE
LG Electronics said Monday it won’t quit its solar module business, denying rumors that it has been searching for a financial advisor since last year to sell off the business.
Samsung Electronics said Monday it has clinched multiple supply deals in the UK, in an apparent move to push harder into the home interior and housing market. +VE

TAIWAN Expect market to open. Watch TSMC after two strong days we may see some locking in of profits. Results in focus
No data due
Consumer confidence remained virtually flat this month, 
but people showed more interest in buying real estate and have regained modest confidence in stock investment, a National Central University survey showed yesterday. Slight +VE
The government’s business climate monitor last month remained “yellow-blue” for a fourth month, indicating economic softness, as the COVID-19 pandemic continued to weigh on major economic barometers, except imports of capital equipment and cash supply, the National Development Council said yesterday.
The government’s NT$210 billion (US$7.12 billion) Stimulus 3.0 program is to provide more relief to Taiwanese businesses affected by the COVID-19 pandemic, Minister of Economic Affairs Wang Mei-hua told a news conference yesterday. While the service industry has recovered, non-semiconductor-related manufacturing industries are still hurting badly, Wang said.
Faraday Technology Corp gave a cautiously optimistic outlook for this quarter as more new projects focused on application-specific integrated circuit (ASIC) solutions are likely to offset weakness in its non-recurring engineering services (NRE) and silicon intellectual property (IP) business. +VE
Young Optics Inc yesterday posted an operating loss of NT$37 million (US$1.25 million) and a net loss of NT$36 million for last quarter, or losses per share of NT$0.31. Gross margin rose to 19.1 percent last quarter from 15.9 percent in the first quarter, but down from 22.8 percent in the same period last year. It was the third consecutive quarterly loss, pushing its cumulative net loss to NT$121 million for the first half of the year, or losses per share of NT$1.06. The company predicted shipments of optical components this quarter would grow at the same pace as the second quarter, but that shipments of micro-projectors, TV walls and 3D printers would likely decline quarter-on-quarter. -VE
China Steel Corp yesterday posted a pretax loss of NT$225 million for last month, or losses per share of NT$0.01, 58 percent less than May’s pretax loss of NT$535 million, the company said in a statement. That brought the company’s cumulative pretax loss for last quarter to NT$1.253 billion, or losses per share of NT$0.08, down more than 50 percent from the first quarter. As steel prices in this quarter are likely to rise month-on-month while end-market demand warms up, the company’s operations are expected to improve and it could turn a profit, analysts said. +VE

CHINA Expect market to open higher following the US but expect choppy trading
No data due
Huawei has axed its India revenue target for 2020 by up to a half 
to US$350-500 million, the Indian Economic Times reported. The Chinese tech giant is sinking 60-70% of its Indian workforce, which does not involve the R&D and global service centre.
Smartphone sales in China -17% YoY but +9% QoQ in the second quarter of 2020, as Counterpoint wrote in a report. During the period, 5G devices accounted for a third of the smartphone sales.
China took over the premises of the U.S. consulate in Chengdu on Monday, after ordering the facility to be vacated in retaliation for China’s ouster last week from its consulate in Houston, Texas.
China will sell 10,000 tonnes of frozen pork from state reserves on July 30, the China Merchandise Reserve Management Center said on its website on Monday.
China’s newly-created mini-IPO market kicked off trading on Monday in a frenzy as circuit breakers were triggered for both surging and slumping stocks on their debuts.
China opens first large-scale helium plant as it tries to reduce reliance on US imports.
China's foreign ministry said today that China's territorial sovereignty and maritime rights and interests in the South China Sea would not be altered by unjustified accusations from any country, state media reports. The spokesperson made the remarks at a daily press conference in response to Australia's accusations against China over the South China Sea. China's territorial sovereignty and maritime rights and interests in the South China Sea were established throughout a long course of history and have been upheld by successive Chinese governments, Wang said "They are consistent with international law including the United Nations Convention on the Law of the Sea (UNCLOS) and cannot be altered by the unwarranted allegations of any country," he noted. UNCLOS has not yet been ratified despite being around since 1994. Also China lost the case brought by the Philippines against it over its claims to the South China Sea after which China called the rolling ill-founded.

HONG KONG ADR’s +115pts to open at 24,718 and expect further initial upside as recent shorts are squeezed. Trading volumes likely to remain light as we enter earnings season. Sentiment cautious as Hong Kong increases lockdown measures to trying contain the virus.
No data due


Short Selling HSI Monday 21.5 vs 18.4% Friday 

Top Shorts Hang Seng Bank (11) 49%, China Res Land (1109) 46%, Ping An (2318) 39%, Bank of China (3988) 39%, Sands China (1928) 37%, Swire A (19) 36%, China Shenhua (1088) 34%, HK & China Gas (3) 34%, CKH (1) 34%, Petrochina (857) 33%, CCB (939) 32%, HSBC (5) 32%, Sinopec (386) 31%, MTRC (66) 30%, Galaxy (27) 29%, AAC Tech (2018) 28%, BoC HK (2388) 27%, Citic (267) 26%, Henderson Land (12) 26%, Country Garden (2007) 25%.

NEW SECURITY LAW Bernard Chan, convener of the Executive Council, the de facto cabinet that advises Carrie Lam, Hong Kong’s chief executive, said a US bank recently informed him it was closing his account and refunding his money. He declined to name the bank but said other senior officials were facing a similar issue.

WATCH
EVERGRANDE (3333.HK) said it will toughen up the footfall control at its exhibition hall 
at 16/F, Billion Plaza II, Cheung Sha Wan for its projects EMERALD BAY and THE VERTEX from 29 July, in a bid to work with the government's anti-epidemic policy.
PROPERTY INVESTORS Weak as press reports Street shop landlords in core business areas are slashing asking rents amid unprecedented social distancing measures, with the asking rent for a street shop in Causeway Bay plunging by about 80% from its peak in 2016.
The Education Bureau (EDB) announced today (July 27) that all schools would continue to suspend all on-campus activities from July 29 (Wednesday) to August 16 (Sunday). Schools may consider conducting make-up classes or other learning activities online.
Wheelock Properties announced that KOKO HILLS' exhibition halls are suspended today and tomorrow for thorough cleansing as part of reinforced precautionary measures.
SINGAMAS CONT (716.HK) announced that it has delivered a mobile Polymerase Chain Reaction (PCR) laboratory for COVID-19 testing to the Shanghai Pudong Airport on 8 July.
XIAOMI-W (1810.HK)'s Mi TV announced that its shipment topped China's TV sales chart for the first half of year, ranking no. 1 for the 6th straight quarter.

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