July 31 ASIAN MACRO INITIAL THOUGHTS. US Futures open strong +VE
Covid-19 Globally over 17m cases, 669k deaths
DOW Futures opened 237pts higher after good Tech earnings NDX futures +1% S&P +0.8%
Earnings Due include Caterpillar, Merck, Exxon Mobil, Chevron, Illinois Tool Works, Colgate-Palmolive, Lazard, Booz Allen Hamilton, LyondellBasell, Weyerhaeuser, Newell Brands
DOW -0.85%, NDX +0.43%, S&P -0.38%, Russel 2K -0.37% Markets opened lower on record weakness in the GDP data, weak initial claims and ahead of earnings from Apple, Amazon, Alphabet and Facebook all of whom opened lower but worked better. BUT then worked better through the day with markets closing near their highs.
P&G +2.3% after reporting stronger sales of cleaning products.
UPS +14.2% after reporting a Q2 surge in home deliveries.
EARNINGS after market
Apple +6% (+1.2% normal hours) reported a blowout quarter, with overall sales +11% and announced a 4-for-1 stock split.
Amazon +5.5% (+06% normal hours) as sales skyrocket during the coronavirus pandemic. Revenue growth +11% and issued stronger-than-expected sales guidance for the current quarter.
Alphabet +0.4% (+1% normal hours) results beat but overall revenue declined. Revenues for Google Cloud were also just below analyst expectations.
Facebook +6.2% (was +0.5% in normal hours) Q2 earnings and revenue beat.
Gilead Sciences -3.8% (was -0.9% normal hours) Q2 earnings of $1.11 per share excluding some items on revenues of $5.14 billion. This missed estimates who predicted earnings of $1.45 per share on revenues of $5.31 billion. But it did raise FY guidance
Ford +2.7% (was -2.6% in normal hours) Q2 numbers better-than-expected
Shake Shack -4.9% (was +0.7% in normal hours) Q2 loss of 45 cents per share excluding some items on revenues of $92 million, missing analysts’ estimates of a loss per share of 37 cents on revenues of $93 million. The company said Shack sales diminished 39.5%.
GDP Growth Rate Adv Q2 -32.9% QoQ vs -5% prior (F/cast was -33%)
GDP Price Index Adv Q2 -2.1% QoQ vs +1.7% prior revised (consensus was +1.1%)
Initial Claims 1.434m vs 1.422m prior (F/cast was 1.4m)
Jobless Claims 4 week average 1.3685m vs 1.363m prior (F/cast was 1.348m)
PCE Prices Adv Q2 -1.9% vs +1.3% prior
Core PCE Prices Adv Q2 -1.1% vs +1.6% prior revised (Consensus was 1%)
EIA Natural Gas Report 26Bcf vs 37 Bcf prior (Concensus was 26 Bcf)
USD was vs Yen & Euro. Bitcoin -0.1% @ 11120.0, VIX +2.7% @ 24.76,
US T10 0.545% dipped below 0.55% after record GDP contraction.
OIL Brent -1.9%, WTI -3.3% but off lows. Brent futures expire Friday
Gold Futures -0.6%, Silver -4.9%, Copper +0.2%
AHEAD Personal Spending & Income, PCE Price Index, Employment Cost Index, (Benefits and Wages), Core PCE Price Index, Chicago PMI, Michigan Data (Inflation Expectations, Consumer Expectations, 5yr Inflation Expectations, Current Conditions, Consumer Sentiment). Baker Hughes Total Rig Count.
DAX -3.45%, CAC -2.13%, FTSE -2.13% Opened lower as CS, Volkswagen and Renault reported before the open and trended lower throughout the session before a small bounce at the end to close off the lows. Weak US data also hurt sentiment.
Credit Suisse -1.6% Net Income +24% and made additional provisions amid a “challenging economic environment,” along with announcing several structural changes.
Volkswagen -6.1% 1H operating loss 800m Euro and cut its dividend with a deliveries -27% due to the coronavirus pandemic.
Renault -9.3% 1H Net loss slumped to 7.3 billion euro
FDJ +18.8% on good 1H results
Lloyds -7.8% reported a pretax loss on the back of a sharp increase in credit loss provisions due to the pandemic.
BBVA -8.1% reported Net Profit -50%
EUROZONE Economic Bulletin
Unemployment Rate Jun 7.8% vs 7.7% May revised (F/cast was +7.8%)
Consumer Confidence Jul -15 vs -14.7 Jun (F/cast was -15)
Sentiment Economic Jul 82.3 vs 75.8 Jun revised (F/cast was 79.5)
Sentiment Industrial Jul -16.2 vs -21.6 Jun revised (F/cast was -18)
Sentiment Services Jul -26.1 vs -35.5 Jun revised (F/cast was -23)
Consumer Inflation Expectations Jul -17.5 vs +21.6 Jun (F/cast was +19)
GERMANY Unemployment Rate Jul +6.4% VS 6.4% Jun (F/cast was +6.6%)
GDP Growth Rate Flash Q2 -10.1% QoQ vs -2% prior revised (F/cast was -9.2%)
GDP Growth Rate Flash Q2 -11.7% YoY vs -2.3% prior revised (F/cast was -11.4%)
Inflation Rate Prelim Jul -0.1% YoY vs +0.9% Jun (F/cast was +0.3%)
Inflation Rate Prelim Jul -0.5% MoM vs +0.7% Jun (F/cast was +0.1%)
FRANCE PPI Jun +0.7% MoM vs 0% May (F/cast was +0.2%)
UK Car Production Jun -48.2% YoY vs -95.4% May revised (F/cast was -54%)
EUROZONE GDP Growth Rate, Inflation Rate,
GERMANY Retail Sales
FRANCE GDP Growth Rate, Inflation Rate, Household Consumption,
UK No data due
JAPAN Expect Nikkei to open slightly higher with Tech in focus. Yen firm currently 104.79. But general sentiment weak as new covid cases Thursday were 1,304 a new high and exceeding 1,000 for a second day.
Data due Unemployment Rate, Jobs/Applications ratio, Industrial Production.
Toyota Motor Corp group sold 4.16 million vehicles globally in the January to June period, becoming the world's best-selling automaker on a 1H basis for the first time in six years, data released by the company showed Thursday. The figure, including the sales of minivehicle maker Daihatsu Motor +VE
IBM Corp on Thursday launched a research partnership with Japanese industry to accelerate advances in quantum computing, deepening ties between the two countries in an emerging and sensitive field. +VE
Raytheon is lobbying Japanese lawmakers to replace Lockheed Martin Corp as the supplier of powerful radars as Tokyo reconsiders plans for two Aegis Ashore missile defence sites, three sources said. Slight -VE
The Japan Wind Power Association said on Thursday it aims to expand the country's offshore wind power installed capacity to 10 gigawatts(GW) in 2030 and 30-45 GW in 2040. +VE
Panasonic Corp. said Thursday it incurred a net loss of ¥9.83 billion ($93 million) in the April to June quarter, its first red ink in nine years for the period -VE
The trial for a former Nissan Motor Co executive Greg Kelly; accused of being an accomplice in Carlos Ghosn's alleged financial misconduct is set to begin Sept 15, a Japanese court said Thursday. Slight -VE
SOUTH KOREA Expect markets to open higher but may see some consolidation having seen the Kospi touch a six month high Thursday. Foreign buying focused on Tech and Autos. Construction names may see interest after torrential rains hit Central region. Pre market data beat f/cast +VE
Industrial Production Jun -0.5% YoY vs -9.6% May (F/cast was -7.5%)
Industrial Production Jun +7.2% MoM vs -7% May revised (F/cast was -0.8%)
Retail Sales Jun +3.4% MoM vs +4.6% May (F/cast was -0.6%)
Jun +6.3% YoY vs +1.7% May (F/cast was +3.5%)
Manufacturing Production Jun -0.4% YoY vs -9.8% May (F/cast was -7.5%)
Construction Output Jun -2.7% YoY vs -5.4% May (F/cast was -4%)
Also on Saturday Balance of Trade, Exports, Imports due.
South Korea's government is moving to create a special fund to support the New Deal initiative and help funnel investment into cutting-edge 5G technology, autonomous cars and eco-friendly sectors, the country's top economic policymaker said Thursday.
LG Electronics posted an overall slide in its Q2 earnings, but still came out resilient, posting earnings bigger than US’ Whirlpool.
Samsung Electronics expects a global recovery in demand for mobiles and consumer electronics in 2H after an increase in online activity during the pandemic helped boost earnings.
SK Innovation said Thursday it has partnered with professor John B. Goodenough, who was awarded the Nobel Prize in Chemistry last year, to develop a next-generation battery. They will co-develop all-solid lithium-metal batteries, which are potentially more powerful and safer than current lithium-ion batteries.
Mirae Asset Daewoo said Thursday it plans to repurchase 15 million treasury stocks worth 113.4 billion won ($94.84 million) in an effort to boost shareholder value and stabilize its shares.
Booyoung Group said Thursday that it was entering the housing market in Cambodia for the first time and developing Borey Booyoung Sensok in Phnom Penh, the nation’s capital.
TAIWAN Expect market to open higher with Tech names continuing to move higher.
Data due GDP Growth Rate
Lee Teng-hui, who guided Taiwan through a rapid and peaceful transition to democracy while serving as Taiwan's president from 1988 to 2000, has died at the age of 97.
Central bank policymakers are planning to save space for further interest rate cuts should there be a sharper economic downturn because of the COVID-19 pandemic, the minutes of their meeting last month that were released yesterday showed.
Delta Electronics yesterday said that gross margin last quarter hit a record high, as the company benefited from the work from home and remote learning trends. +VE
AU Optronics yesterday reported a narrower net loss for Q2 compared with the previous quarter and gave a cautiously optimistic outlook for this quarter. +VE
CHINA Expect market to open flat with concerns about US/China tensions and rising covid cases. Also key will be the PMI data and likely to limit the downside.
Data due Manufacturing PMI Jun was 50.9 F/cast 51 and Non Manufacturing PMI Jun was 54.4 F/cast 54.1
PRC's Politburo Standing Committee (PSC) convened a meeting, deciding that the 5th Plenary Session of the 19th Central Committee will be hosted in Beijing in October 2020. Hosted by Chinese President Xi Jinping, the meeting will discuss the 14th 5-year Plan and targets for 2035.
FT reports on how China has banned the breeding and consumption of snakes and other land-based wildlife, and promised to compensate breeders and find them new jobs but they say the government keeps delaying -VE
US. Sec of State Mike Pompeo said Thursday to the Senate Foreign Relations Committee that the “tide is turning” in U.S. dealings with China, saying there is international support for American policies even as he said he was dismayed at the number of countries supporting Beijing’s new security law for Hong Kong.
US ‘considering’ measures to let Hongkongers settle in the country in wake of national security law, Mike Pompeo says -VE for sentiment
Australian miners Rio Tinto and Fortescue post record iron ore shipments as China industrial recovery continues +VE Construction names
Anti-China sentiment in US at ‘historic high’, Pew Research survey finds, amid friction over trade, coronavirus and human rights. -VE for sentiment
HONG KONG ADR’s -69pts to open at 24,641 and may see some initial margin call selling but downside limited with E Commerce names and TECH especially the Apply supply chain +VE. Financial ADR’s weak.
No data due
Short Selling HSI Thursday 20.7% vs 17.9% Wednesday
Top Shorts Hang Seng Bank (11) 38%, Ping An (2318) 37%, Bank of China (3988) 36%, CCB (939) 32%, China Shenhua (1088) 30%, MTRC (66) 28%, Mengniu Dairy (2319) 28%, BoC (HK) (2388) 28%, Henderson Land (12) 27%, NWD (17) 26%, Hengan (1044) 25%.
New Security Law Hong Kong on Thursday disqualified a dozen pro-democracy candidates from running in a key election, citing reasons including collusion with foreign forces and opposition to the new China-imposed national security laws. Even the Civic Party candidates were disqualified which signals Beijing is becoming less tolerant of even moderate democrats. The government said there could be more disqualifications. -VE for sentiment. It is also rumoured that the administration in intending to postpone the election for 12 months. Another -VE as it is said Beijing doesn’t mind free elections as long as it knows the result before the first vote is cast.
I.T (999.HK) Profit Warning -VE expects a net loss in Q1ended May 2020 as compared to a net profit in the corresponding period last year. Hong Kong & Macau same store sales -49.1% YoY.
CHINA SHENHUA (1088.HK)'s profit for 1H 2020 is estimated to be RMB20.4 billion, -16%YoY
STANCHART's stock price dived over 4% in London as it warned over HongKong tensions.
SHK PPT (16.HK) said the subscription for Regency Bay closed at 1pm Thursday. The Tuen Mun project is slated for a second sales round tomorrow. 54 Regency Bay units will be sold and 1 unit will be tendered. The project received 1,307 tickets in aggregate, representing an over-subscription of above 23 times based on the 54 units.
As USD/ HKD triggered the Strong-side Convertibility Undertaking, the HKMA undertook a selling order of US$200 million to inject HK$1.55 billion into the market. The balance of the banking system of Hong Kong will increase to HK$184.906 billion next Monday.
Li Ka Shing Foundation Adds $101M Medical Support to 'Love Can Help II’ The coverage will be extended from local medical services to the social welfare sector.
Standard Chartered Bank (Hong Kong) Mary Huen Wai-yi, chief executive officer said the NIM of the bank will still come under downside pressure in 2H20, yet cautious provision was made in 1H20. She hoped that a result turnaround could be manifested upon economic recovery in 2H20. In 1H20, the bank reported a profit before tax decline of 19% YoY to $5.501 billion; and revenue fall of 1% YoY to $14.277 billion.
WHARF REIC (1997.HK) interim results ended 30 June 2020. Underlying net profit -26% annually to HK$3.844 billion. Inclusive of net investment properties revaluation deficit of HK$7.35 billion, the Group swung into loss of HK$4.454 billion from profit of HK$6.989 billion over a year ago. LPS equaled HK$1.47. An interim DPS of HK$0.78 was declared, against HK$1.1 over a year ago. Interim dividend payout ratio stayed unchanged. Chairman Stephen Ng said the top priority is to tap income sources and cut costs amid the current economic landscape, and bend over backwards to scout local market. Ng revealed the company had offered over $1 billion rental concession in 1H20, depicting it is not a minor amount.
Centa Valuation Index (Major Banks) (CVI) last printed at 45.31 this week, -2.86 pts weekly. Centaline Property, said CVI stood firmly around 45 for three weeks with a stabilizing sign. They believe the index will struggle in short run as the epidemic has yet to worsen further.