July 29 Asian Macro Initial Thoughts. Dow Futures flat expect a weak open in Asia


31 Jul

July 29 Asian Macro Initial Thoughts. Dow Futures flat expect a weak open in Asia

Covid-19 Globally over 16.5m cases, 655k deaths
US Futures flat ahead of FOMC rate decision and the CEO’s of the Amazon, Apple, Facebook and Google-parent Alphabet will testify before the House Antitrust Subcommittee at noon Wednesday following a yearlong probe into their anti-competitive practices.

EARNINGS ahead include Facebook, General Electric, Boston Scientific, Anthem, Sanofi, Barclays. General Dynamics GlaxoSmithkline, Boeing, General Motors, Norfolk Southern, Qualcomm, Yum China, PayPal, Cheesecake Factory, Spotify, Owens Corning, Barclays, Deutsche Bank

DOW -0.77%, NDX -1.27%, S&P -0.65%, Russel 2K -1% Markets opened lower, initial weakness on poor earnings from MacD -2.5% and 3M -4.9% being off-set by hopes for agreement on the new stimulus package as republicans set out their package although the democrats seem to be some distance apart.
Markets then traded sideways with caution as the two day FOMC meeting got underway. The Fed announced it is extending the emergency lending facilities it set up to shore up financial markets during the pandemic until the end of the year.
TECH saw weakness Amazon -1.8% and Netflix -1.4%. Alphabet -1.7%. Facebook -1.5% and Apple -1.6% lower.
Re-opening names United +3.2%, American Airlines +3.3%, Delta advanced 1.7%. Carnival +4% and Norwegian Cruise +6.3%, Simon Property +3.5%, Kohls +2.5%
Marco data was mixed but Home Prices missed as new waves of covid disrupt sales.
Starbucks -2.4% says it’s seeing steady recovery as its stores reopen, but it expects the impact of the new coronavirus to last well into the fall. The coffee giant said Tuesday that revenue in its fiscal third quarter plummeted 38% to $4.2 billion. That was still ahead of Wall Street’s forecast.
Advanced Micro Devices + 9% after the chipmaker posted better-than-expected quarterly earnings and issued an upbeat guidance for the year.
DATA
Redbook 25 Jul -8.7% YoY vs -7.5% prior (+1.1% MoM vs +1.9% prior)
Case-Swiller Home Prices May +3.7% YoY vs +3.9% Apr (revised) (F/cast was +4.1%) [May +0.4% MoM vs +0.8% Apr (revised) (F/cast was +0.8%)]
Consumer Confidence Jul 92.6 vs 98.3 Jun revised (F/cast was 95)
Richmond Fed Manufacturing Index Jul 10 vs 0 Jun (F/cast was 5)
USD was weak vs Yen & flat vs Euro. Bitcoin unch @ 10,995.00, VIX +2.8% @ 25.44,
US T10 0.579% yield fell slightly as FOMC meeting started.
OIL Brent -0.44%, WTI -1.35% rising covid cases sparks demand fears.
Gold Spot +0.3%, Silver -1%, Copper -0.12%. Some profit taking after recent rally.
AHEAD MBA Mortgage Applications & 30 year Mortgage Rate, Wholesale Inventories, Goods Trade Balance, Pending Home Sales, E

DAX -0.03%, CAC -0.22%, FTSE +0.4% Markets opened mixed FTSE higher and initially sold down in the red, rallied and then traded sideways with a small rally ahead of the close. Resources +VE as Gold continues to hit new highs. But Covid cases and new travel restrictions -VE for sentiment.
CAC opened lower sold down in the morning but worked better in the PM. DAX opened higher sold down into the red, then worked slightly better to close flat.
LVMH -4% after disappointing earnings; it seems even the rich are turning cautious about spending.
Ubi Banca +8.3% as shareholders said they would accept a takeover offer from larger domestic rival Intesa Sanpaolo -0.8%
DATA
UK CBI Distributive Trades Jul 4 vs -37 Jun (F/cast was -23)
AHEAD
EUROZONE No data due
GERMANY Import Prices
FRANCE Consumer Confidence
UK Mortgage Lending, Mortgage Approvals, BoE Consumer Credit, Net Lending to Individuals,

JAPAN Expect Nikkei to open lower Yen currently 105.04. There were 266 new covid cases reported in Tokyo Tuesday -VE for sentiment.
No data due

The Osaka prefectural government on Tuesday decided to request its citizens to refrain from drinking in groups of five or more people
Vietnam on Tuesday signed an agreement with the Japan International Cooperation Agency (JICA) to borrow 36.63 billion yen ($348.2 million) to build six patrol vessels, state media reported, amid rising tensions in the South China Sea.
Mitsubishi Motors faced doubts about a quick recovery after posting dismal quarterly sales in its key Southeast Asia market partly due to the coronavirus outbreak, sending its shares down 13% to a record low on Tuesday. -VE
Nissan Motor is forecasting a wider-than-projected operating loss for the current fiscal year and plans not to pay a dividend; as the impact from the coronavirus pandemic forces the automaker to accelerate cost-cutting measures. The operating loss for the year to March will be ¥470 billion ($4.5 billion), compared with analysts’ average prediction for a ¥216 billion loss and a ¥40.5 billion loss in the prior year. The Yokohama-based company also plans to skip its dividend, it said in a statement Tuesday. -VE
Canon on Tuesday reported a group net loss of ¥8.8 billion for April to June due to the fallout from the coronavirus pandemic, suffering the first red figure on a quarterly basis since it started earnings disclosure in 2001. -VE
NEC Corp and travel agency JTB Corp said Tuesday they are launching a new service allowing teleworkers to book empty hotel rooms for use as remote offices, repurposing the spaces left vacant due to the coronavirus' impact on hotel occupancy rates. +VE

SOUTH KOREA Expect markets to open flat premarket data better than expected but traders likely to be cautious. Yesterday saw strong foreign buying helped by a weaker USD but expect some consolidation today.
Data out Consumer Confidence Jul 84.2 vs 81.1 Jun (F/cast was 80)
Samsung Display has recognized an in-house union, ending its long-standing practice of operating without a bargaining unit made up of its employees, industry sources said Tuesday. +VE
Hanwha Energy said Tuesday it has completed the world’s first hydrogen fuel cell power plant that generates electricity using waste hydrogen left over from petrochemical facilities +VE
Hanwha Solutions has submitted a bid for 50 percent stake in the ethane cracking center at Sasol’s Lake Charles complex in Louisiana, according to industry sources Tuesday. +VE
Daewoo Engineering and Construction said Tuesday it is entering the electric vehicle charging infrastructure industry by investing in Humax EV. +VE
Samsung likley to fall behind TSMC in H1 operating profit. Samsung is set to announce its Q2 earnings results on Thursday. Although Samsung outstripped TSMC in terms of sales, raising an estimated 36 trillion won ($30 billion) in the first six months of the year, the Korean chipmaker is expected to achieve a smaller operating profit of 9.3 trillion won than TSMC’s 10.4 trillion won.

TAIWAN Expect market to open flat, TSMC in focus after yesterday’s strong initial performance, yesterday was also the highest turnover in the Taiwan Stock Exchange’s history.
No Data due
After Market Tuesday
Consumer Confidence Jul 69.43 vs 68.77 Jun (F/cast was 71)
Consumer confidence remained virtually flat but people showed more interest in buying real estate and have regained modest confidence in stock investment, a National Central University survey showed yesterday.
Landis Taipei Hotel has reported a significant pickup in room and restaurant revenues, although continuing border controls limited the scale of recovery. +VE
Elan Microelectronics which supplies touch-panel controller chips, yesterday said that revenue this quarter would grow modestly from last quarter, when sales surged to an all-time high of NT$3.54 billion (US$120 million), due to coronavirus-induced telecommuting and remote learning demand. +VE
Win Semiconductors the world’s largest pure-play gallium arsenide foundry, yesterday said that its revenue this quarter would increase from the second quarter as 5G demand remains strong, despite the COVID-19 pandemic and the US-China trade dispute. +VE
TSMC, retained its title as the most prolific applicant for invention patents in Taiwan in the first half of the year, the Ministry of Economic Affairs said yesterday. +VE

CHINA Expect market to open lower following the US sell off but Team China likely to be active in limiting the downside. FT reports a record number of covid cases in Xinjiang adding to fears of a second wave in China -VE for sentiment. Also sentiment weak as the New Third Board Select has seen losses.
No data due
Worldwide investment in 5G network infrastructure will nearly double this year
to US$8.1 billion, accounting for 21.3% of the overall wireless infrastructure, said Gartner in a report.
Huawei has already completed its global 5G deployment, with sector application and unlocking 5G profit as its focuses in the next phase, said Rotating Chairman Guo Ping at the Huawei Better World Summit 2020, cited by Chinese media.
China Southern Airlines yesterday rolled out an “all you can fly” pass, becoming the latest in a fleet of cash-strapped carriers to join a promotional craze that analysts have said has helped revive a COVID-19-ravaged air travel market. At least eight of China’s dozens of airlines have introduced similar deals since last month, often priced at about US$500 for in some cases unlimited flights.
Washington toughened its stance against Beijing’s aggressive territorial claims in the South China Sea last week by signing a memorandum of understanding (MOU) with Vietnam, pledging support for its fishermen against “illegal intimidation”.

HONG KONG ADR’s -174pts to open at 24,598 with broad weakness and likely to prompt some early margin call selling. Rumours that the administration will delay the local elections due for September for 12 months citing the covid pandemic are likely to raise more local concerns.
Data due 
after market GDP Growth Rate

Short Selling HSI Tuesday 23% vs 21.5% Monday 
Top Shorts MTRC (66) 49%, Ping An (2318) 42%, Wharf REIC (1997) 42%, Mengniu Dairy (2319) 41%, China Shenhua (1088) 39%, China Res Land (1109) 38%, Bank of China (3988) 38%, CCB (939) 31%, Sinopec (386) 31%, Hang Seng Bank (11) 30%, HK & China Gas (3) 29%, Galaxy (27) 29%, CK Asset (1113) 29%, Country Garden (2007) 28%, CNOOC (883) 26%, Swire A (19) 25%.

WATCH
Tencent Holdings has offered to buy out and take private search engine Sogou Inc
in a US$2.1 billion deal, adding to a slew of Chinese technology giants seeking to delist from US bourses.
SJM HOLDINGS (880.HK) interim result ended June 2020. Net gaming revenue -74.4% YoY to HK$4.272 bin. The profit swung into loss of HK$1.412 billion. LPS was HK24.9 cents. No dividend was declared, versus HK8 cents over a year ago. For 1H20, adjusted EBITDA loss was HK$984 million, against adjusted EBITDA of HK$2.078 billion over a year ago. Following completion of construction work on the Grand Lisboa Palace in late 2019, the Group began the inspection and application process with the Macau Government. Subject to obtaining the necessary operating permits, the project is expected to open by the end of 2020.
The Hong Kong Housing Authority (HA)'s Subsidised Housing Committee (SHC) Tuesday approved the new arrangements for the sale of recovered Tenants Purchase Scheme (TPS) flats and additional incentives to encourage sitting TPS tenants to purchase the flats in which they reside. Currently, sitting tenants of the 39 TPS estates may still opt to purchase the flats in which they reside and will enjoy a special credit during the first two years of their tenancies. In order to encourage sitting TPS tenants to buy the flats in which they reside, the SHC approved to provide an additional discount of 17.5 per cent for one year starting from September 1, 2020, to sitting TPS tenants who no longer enjoy any special credit.
The Subsidised Housing Committee of Housing Authority approved a two-month rent waiver for public rental housing (PRH) tenants to offset the 9.66% rent hike. Equally, the Committee decided to waive PRH rents in September 2020 and September 2021. Well-off tenants can also enjoy a basic rent waiver.
CATHAY PAC AIR (293.HK) and its airlines will transfer their jetliners this week to Alice Springs, Australia for parking, as Apple Daily learnt from rumours. The Hong Kong flagship airline is set to transfer around a third of its passenger planes outside the city over the coming few months, as it replied to the press. It has decided to park some planes at desert area to minimise the impacts of humidity and storms thereon, said the report, and the decision may involve over 50 planes.
Chinese Foreign Ministry stated that HKSAR Government will suspend extradition and other mutual assistance in criminal matters with Britain, Canada and New Zealand and that these countries have seriously meddled in China's internal affairs by halting their extradition treaty with Hong Kong.

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