July 30 ASIAN MACRO INITIAL THOUGHTS US futures opened flat
Covid-19 Globally over 16.9m cases, 663k deaths
IATA says air travel will take four years for a full recovery as a second wave of pandemic looms large and consumer confidence tumbles, pushing its previous projection back by a year. -VE Airlines and Tourism plays
US Futures opened Flat ahead of big tech earnings today.
EARNINGS include Apple, Amazon, Alphabet, Procter and Gamble, Comcast, Ford, Shake Shack, Dunkin Brands, Cigna, Dupont, Eli Lily, Northrop Grumman, Textron, Valero, ConocoPhillips, Comcast, Kellogg, AstraZeneca, Kraft Heinz, Southern Co., Stryker, Generac, Stanley Black and Decker, Marsh and McLennan, Electronic Arts
DOW +0.6%, NDX +1.35%, S&P +1.24%, Russel 2K +2.1% DOW and S&P opened flat the trended higher all day, NDX opened higher plateaued shortly after the open and then drifted higher through the day. Markets were cautious ahead of the FOMC decision which was unchanged but said economic growth better than in the trough but is well below pre pandemic levels.
CEOs of Amazon +1.1%, Apple +1.9%, Facebook +1.4% and Google-parent Alphabet +1.3% testifyed before the House Antitrust Subcommittee later Wednesday following a yearlong probe into their anti-competitive practices.
GE -4.4% off initial high as revenue beat forecasts says it will sell Baker Hughes stake within 3 yrs to boost balance sheet.
Boeing -2.8% off initial high as loss was greater than expected
AMD 12.5% earnings beat and gave upbeat guidance
Starbucks +3.7% Q3 loss but raised current quarter forecast
L Brands led the S&P 500 gainers after the retailer announced plans to operate its Victoria’s Secret chain as a standalone company in preparation for a break-up.
Results have been good but a number of companies have stressed how Govt support has been key and the need for more of it
Qorvo +7% in extended trading after financial results for Q1 2021 beat Eastman Kodak at one point after hours was up 6%, before reversing course and falling more than 5%. President Donald Trump on Tuesday announced the company had been tapped to produce ingredients for generic drugs in response to the coronavirus crisis. Due to volatility, trading on the stock was halted 15 times Wednesday.
Qualcomm +12% after market Q3 as earnings beat and it announced a patent deal with Huawei.
PayPal +5% in extended trading Q2 earnings beat “In the midst of the COVID-19 pandemic, digital payments have become more important and essential than ever,” PayPal CEO Dan Schulman said of the company’s quarter.
Cognizant Technology +6% in after-hours trading Q2 results beat
ServiceNow -3% Q2 earnings despite beating and also raising its subscription revenue forecast for the year.
At Home +45% after releasing preliminary Q2 results that saw comparable store sales rise by 42% relative to last quarter.
MBA Mortgage Applications -0.8% vs +4.1% prior & 30 year Mortgage Rate +3.2% vs 3.2% prior
Wholesale Inventories Adv Jun -2% vs -1.2% May (F/cast was +0.5%)
Goods Trade Balance
Pending Home Sales Jun +16.6% MoM vs +44.3% May (F/cast was +15%) [Jun +6.3% YoY vs -5.1% May (F/cast was -1%)]
EIA Crude Oil Stocks Change -10.612m vs +4.892m prior (Consensus was +0.357m)
EIA Gasoline Stocks Change +0.654m vs -1.802m prior (Consensus was -0.733m)
FOMC Interest Rate Decision unchanged and Press Conference.
USD was flat vsYen & Euro. Bitcoin +3% @ 11,281.71, VIX -5.3% @ 24.1,
US T10 0.577% flat as Fed keeps rates unchanged.
OIL Brent +0.41%, WTI +0.56% as crude inventories drop but rising covid cases keeps upside limited.
Gold Spot +1%, Silver +0.8%, Copper +0.5% Gold continues to rise as Fed keeps rates unchanged.
AHEAD GDP Growth Rate, GDP Price Index, Initial Claims, Jobless Claims 4 week average, PCE Prices, Core PCE Prices, EIA Natural Gas Report,
DAX -0.1%, CAC +0.61%, FTSE +0.04% Markets traded sideways, CAC opened higher, FTSE and DAX opened around flat. Traders concerned over the differences between the Democrats and Republicans over the next stimulus package. Covid cases still a concern and caution ahead of the FOMC rate decision and press conference.
Deutsche Bank -2.5% reported a smaller Q2 loss that f/cast but increased its credit lass provisions
Barclays -6% 1H net income GBP695m and increased loan loss provisions
Banco Santander posted a Euro 11bn loss after write downs.
Sopra Steria +12.3% after good 1H earnings
Spie as 1H revenue and profit beat
Orion+12% after its new ALS drug failed in phase 3
Network International -10.5% after a GBP205m share placement
Kering rallied after results from the luxury goods maker helped ease worries that Gucci, its key brand, had lost momentum.
Taylor Wimpey led UK housebuilders lower after reporting much weaker than expected first-half margins, because of Covid-19-related costs, and cautioning that completion rates would remain weak for the rest of 2020.
Cineworld retreated on news that AMC, its main rival in the US, had agreed a deal with Universal Pictures to reduce the time before films could be put on premium streaming services to just three weekends.
GERMANY Import Prices Jun +0.6% MoM vs +0.3% May (Consensus was +0.5%)
FRANCE Consumer Confidence Jul 94 vs 96 Jun revised (F/cast was 95)
UK Mortgage Lending Jun GBP +1.9b vs +1.3b May revised (F/cast was +1.6b)
Mortgage Approvals Jun 40k vs 9.27k May revised (F/cast was 33.4k)
BoE Consumer Credit Jun GBP -0.086b vs -4.542b May revised (F/cast was +1.1b
Net Lending to Individuals Jun GBP +1.8b MoM vs -3.38 May (F/cast was -1b)
EUROZONE Economic Bulletin, Unemployment Rate, Consumer Confidence, Sentiment (Economic, Industrial, Services) and Consumer Inflation Expectations
GERMANY Unemployment Rate, GDP Growth Rate, Inflation Rate
UK Nationwide Housing Prices, Car Production
JAPAN Expect Nikkei to open higher following US, Yen remains firm, currently 104.94. Local sentiment weak as Osaka confirmed over 220 new covid cases and total for Japan exceeds 1,000 for the first time. Floods in Northeast Japan also -VE for sentiment.
Data due Retail Sales, Foreign Bond and Stock Investments
The US military will help Japan monitor "unprecedented" Chinese incursions around East China Sea islands controlled by Tokyo but claimed by Beijing as Chinese boats prepare to begin fishing in nearby waters, the commander of U.S. Forces Japan said on Wednesday.
Fitch on Wednesday lowered its outlook on Japan's long-term foreign currency debt rating to negative from stable, citing the heavy blow from the coronavirus crisis and rising public debt as policymakers try to get the economy back on track. "The coronavirus pandemic has caused a sharp economic contraction’.
Japan and Britain are battling over their new bilateral trade agreement, with London seeking zero tariffs on malt grains and other farm products and Tokyo opposing such preferential treatment.
ANA Holdings Inc on Wednesday reported a record net loss of 108.82 billion yen ($1 billion) in the April-June quarter, as the novel coronavirus pandemic sharply reduced demand for air travel.
Takeda Pharmaceutical looking to cut sales jobs in Japan in its latest restructuring effort, as it overhauls domestic business following its $59 billion purchase of Shire Plc, sources familiar with the company's plans said.
SOUTH KOREA Expect markets to open higher local business confidence beat f/casts and good US earnings +VE. KEY today will be the Samsung Q2 Results.
Data out Business Confidence Jul 57 vs 51 Jun (F/cast was 50)
The World Trade Organization’s Dispute Settlement Body has decided to set up a panel to look into South Korea’s complaint over Japan’s trade restrictions, the Ministry of Trade, Industry and Energy said Wednesday.
GREEN CROSS Pharma on Wednesday applied to carry out a phase 2 clinical trial of its plasma-derived COVID-19 treatment with the Drug Ministry. +VE
Korea’s antitrust watchdog has decided to impose a fine of 64.7 billion won ($54.1 million) on food giant SPC for violation of antitrust laws, officials said Wednesday.
South Korea’s exports of kimchi rose sharply in the first half of the year thanks to its growing popularity, data showed.
Woori Financial Group said Wednesday that it plans to collaborate with telecom giant KT to upgrade its contactless retail services. +VE
TAIWAN Expect market to open higher as local earnings continue to be +VE
No Data due
United Microelectronics Corp yesterday reported Q2 results that beat market expectations, driven by robust shipments, a higher factory utilization rate and improved gross margin rising to 23.1% the highest in five years, due to strong demand for 28-nanometer (nm) chips used in mobile phones, the company said. +VE
Macronix Int yesterday reported that gross margin last quarter was 34.98% the highest since the third quarter of 2018, citing robust demand and higher product prices. +VE
Coretronic Corp on Tuesday reported that net income last quarter increased substantially to NT$552 million (US$18.71 million) from NT$5 million in the previous quarter, the company said. +VE
MediaTek has hired a former US Department of Commerce official to help it navigate worsening US-China tensions that have already ensnared its customer Huawei Technologies.
CHINA Expect market to open higher. Sentiment cautious after 101 new covid cases reported Wednesday as the outbreak in Dalian has now spilled over to nine cities across the country, including Beijing.
No data due
Kweichow Moutai sales slow to 5 year low; Revenue was +8.8% in the 3 months to June vs a 12.5% rise in Q1. Profit was +8.9% vs 16.7% prior. Shares are +46% YTD.
Bank of China report says China should prepare for potential US sanctions by increasing use of its own financial messaging network for cross-border transactions in the mainland, Hong Kong and Macau rather than relying on the Belgium based SWIFT system to reduce exposure of China's global payments data to the United States
FT reports that Xu Zhangrun, to sue public security bureau. The former constitutional law professor at Beijing’s elite Tsinghua University, who was detained by police in early July and held for a week on charges of “soliciting prostitution” before being released is to sue the Qingyang district public security bureau in Chengdu who brought the charges. He has focused on trying to hold China’s leaders accountable for “extrajudicial acts that betray the transformation of China into becoming a modern constitutional nation”.
China on Wednesday denied protecting fugitive financier Low Taek Jho, being sought by global investigators over his role in the multi-billion dollar 1MDB scandal.
Australian exports of coking coal to China for steel making surged 67% in the first half, as coronavirus restrictions held back imports from Mongolia. ALSO Australian shipments of thermal coal used in power plants also rose strongly, as rumours of a Chinese ban over diplomatic tensions proved incorrect
TikTok is being reviewed by US national security panel CFIUS, Treasury Secretary Steven Mnuchin says Slight -VE ByteDance
Brazil may face ‘consequences’ if it gives Huawei 5G access, says US ambassador -VE
HONG KONG ADR’s +72pts to open at 24,955 expect market to test 25k in early trades as recent shorts cover. But local sentiment weak as Carrie Lam warns that the latest uptick in cases could overwhelm the hospital system. The arrest of Tony Chung former leader of a student group under the new security law a slight -VE for sentiment.
Data due After market Retail Sales.
Out after market Wednesday:
GDP Growth Rate Q2 Adv -0.1% QoQ vs -5.3% prior (F/cast was -0.5%)
GDP Growth Rate Q2 Adv -9% You vs -9.1% prior (F/cast was -2.2%)
As the coronavirus pandemic was largely under control in Hong Kong in May and June, and the recovery of the Chinese economy also helped partly offset the external headwinds facing Hong Kong's exports of goods, the overall economic situation showed signs of stabilisation during the quarter. However, the COVID-19 pandemic remains a threat to the economy as it constrains exports while the recent surge in cases in Hong Kong impacts local activities.
Short Selling HSI Wednesday 17.9% vs 23% Tuesday
Top Shorts Hang Seng Bank (11) 47%, Mengniu Dairy (2319) 39%, Ping An (2318) 38%, CCB (939) 34%, MTRC (66) 28%, Bank of China (3988) 27%, Henderson Land (12) 25%.
Vanke Property (HK), CNQC Win Residential Land at Ma Wo Rd at $3.7B, In Line The Lands Department announced that the tender for a site, Tai Po Town Lot No. 243 at Ma Wo Road, Tai Po, New Territories, was awarded to the highest tenderer, Wealth Honour Limited (parent companies: Vanke Property (Hong Kong) Company Limited and CNQC International Holdings Limited), on a 50-year land grant at a premium of $3.705 billion. The market valuation ranged $2.7-4.57 billion.
Prada (1913) recorded a net loss of 180 million euros (HK$1.64 billion) during the first half of this year, with Asia-Pacific retail sales falling 18.8% as Hong Kong and Macau markets suffer from the pandemic. Losses per share were 0.70 euros and the company has suspended dividends.
ASM Pacific Technology (0522) said its first-half net profit more than doubled from a year ago to HK$391 million, driven by rising 5G sector demand despite pandemic and political uncertainties.
International Housewares Retail (1373), the parent company of retail chain JHC, said full-year net profit as of the end of April +26.8% to HK$151 mn, with revenue +8.2% to HK$2.54 billion. Earnings per share during the financial year was 21.1 HK cents and it declared a final dividend of 11 HK cents. Revenue from Hong Kong also rose 8.1 percent to HK$2.24 billion during the financial year.
IMAX China (1970) recorded an interim net loss of US$35.25 million (HK$275 million) for this year ended June, with revenue falling 88.8% to US$6.66 million.
Thailand's True and ZTE (763.HK) have recently entered into a commercial 5G contract. Pursuant to which, True will adopt ZTE's 5G RAN products and services to build a commercial 5G network in Thailand.
CITIC BANK (998.HK) announced that its subsidiary CNCB Investment had entered into the limited partnership agreement with Xingcheng Special Steel and other parties through Shenzhen Dingxin and Xinyin Hengtai, establishing Jiaxing Goldstone Pengheng Equity Investment Partnership to make equity investment in the target company Xuzhou Construction Machinery.
CNCB Investment and Xinyin Hengtai will respectively contribute RMB277mn and RMB202mn.
Tencent 'Biped' on PRC 3rd Domestic Online Game Approval List for July China has approved the third batch of 57 domestic game edition numbers for July, including 7 online games, announced by National Press and Publication Administration. Biped, a title developed by TENCENT (700.HK)'s NExT Studios, was on the approval list. +VE
TAO HEUNG HLDGS (573.HK) Profit Warning -VE supplementary announcement, expecting a loss attributable to equity holders of HK$100 mn to HK$110 mn for the six months ended June 2020 as compared to a profit attributable to equity holders of HK$72 million for the corresponding period last year. -VE
Centa-Salesman Index (CSI) last printed at 44.58, -2.62 pts weekly.
CSI busted below 45 on a narrower decline, neutral for market sentiment and a panic-stricken home market slide, reported Centaline Property. They expect the index to struggle at around 45, which is not a signal of a market slump.
Jospeh Yam said that weaponising finance wouldn’t hurt HK unless there was a ban of the HK dollar or banning mainland corporations from investing in America, halting US investments in the mainland or even banning mainland enterprises from raising funds in the United States. He admitted it was a strong weapon and the market shouldn’t underestimate its potential impact. As I have said for sometime this is Trumps intimate weapon.
HENLIUS-B (2696.HK) announced that the first patient was dosed in a Phase 2 clinical trial of Recombinant Humanised Anti-PD-1 Monoclonal Antibody Injection (HLX10) in combination with Recombinant Anti-EGFR Humanised Monoclonal Antibody Injection (HLX07) as therapy for recurrent or metastatic head and neck squamous cell carcinoma (HNSCC) in mainland China.