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A global energy crunch is expected to boost oil demand by half a million barrels per day, and could stoke inflation and slow the world’s recovery from the COVID-19 pandemic, the International Energy Agency (IEA) said yesterday. “Record coal and gas prices as well as rolling blackouts are prompting the power sector and energy-intensive industries to turn to oil to keep the lights on and operations humming,” the Paris-based agency said in its monthly oil report. “Higher energy prices are also adding to inflationary pressures that, along with power outages, could lead to lower industrial activity and a slowdown in the economic recovery,” it said.
Airlines +VE news as Thailand announces new travel arrangements, Indonesia to open to foreign travelers and SIA says will increase capacity on London route in response to rising demand. Still -VE for Cathay Pac as Hong Kong maintains its closed border.
Australia Market to opened higher following the gains seen in the US overnight. Rio Tinto in focus as it is due to releases its Q3 update. Energy names +VE as oil continue to moves higher, Gold and Iron ore +VE. Qantas moving higher as travel restrictions are being lifted in Australia and other countries too. The Harvey Norman Holdings Limited (ASX: HVN) share price is trading ex-dividend for its fully franked 15 cents per share final dividend this morning and could trade lower. Elsewhere, shareholders of Eagers Automotive Ltd (ASX: APE) and HUB24 Ltd (ASX: HUB) can look forward to being paid their latest dividends later today.
Japan Nikkei futures opened +0.9% vs cash, broadly +VE especially following the good performance in the US overnight. Japanese earnings still in focus.
S Korea Expect markets to open higher following the US and the good results published overnight.
Taiwan Expect market to open higher but with resistance as it approaches 16,500
China Expect market to open to have a muted open with reports that on-line brokers coming under regulatory scrutiny
HK ADR’s +68pts at 25,030 with weakness in Chinese Banks, Energy and Utilities. Market to resume after a two day break; regional markets have performed well and the good start to US earnings likley to be +VE
But the weak new loans data and rising inflation expectations a -VE on sentiment in the longer term.
Opened Dow +36 points. S&P 500 futures +0.11%, while Nasdaq 100 futures +0.12%.
DOW +1.56%, NDX +1.73%, S&P +1.71%, Russel 2K +1.44%
US markets opened higher and worked better through the day on good earnings from Walgreens Boots Alliance, UnitedHealth, Bank of America and other major companies. Key being the profitability despite rising labour costs because of the demand. Initial Claims were better than f/cast.
Walgreens Boots Alliance +7.4% as earngings beat and it announced it would become majority owner of primary-care company VillageMD with a $5.2 billion investment and make health care its growth engine.
UnitedHealth +4.2% after the company’s quarterly results topped estimates.
Bank of America +4.5%, Morgan Stanley +2.5% and Citigroup +3%; all beat earnings expectations. Wells Fargo -1.6% despite earnings beating.
Tech firm as the T10 dipped
Banks JPMorgan Chase +1.5%, Citigroup +0.8% Wells Fargo -1.6%, Amex +1.7%
Work from home names: Facebook +1.2%, Apple %, Amazon +0.47%, Netflix +0.64%, Disney +0.84%, Zoom Video +0.3%, Alphabet 2.59% and Microsoft +2.2%,
Tech NXP Semi +3.3%, Nvidia +3.9%, Micron 2.1%, AMD +2.6%, Skyworks +3.2%
Re-opening stocks Boeing -2%, Caterpillar +2.9%, Simon Property +1.6%, Kohl’s +2.2%, Nordstrom +0.6%, Gap +0.9%, United Airlines +0.1%, Carnival +0.3%, Wynn Resorts -0.9%, Chevron +1%, Exxon Mobil +1.5%,
Lock down names Campbell Soup unch General Mills +0.8%, JM Smucker +0.8%
PPI Sept +0.5% MoM vs +0.7% Aug (F/cast was +0.5%)
PPI Sept +8.6% MoM vs +8.3% Aug (F/cast was +8.5%)
Core PPI Sept +0.2% MoM vs +0.6% Aug (F/cast was +0.4%)
Core PPI Sept +6.8% MoM vs +6.7% Aug (F/cast was +6.7%)
Initial Claims 293k vs 329k prior revised (F/cast was 315k)
4 week ave claims 334.25k vs 322.75k revised
Continueing Claims 2.593m vs 2.727m previous revised (F/cast was 2.649m)
EIA Natuaral Gas Stocks change 81Bcf vs 118 Bcf prior (Consensuswas 94 Bcf)
USD dipped. Bitcoin +1.1% @ 57,712.50, VIX -9.6% @ 16.86, US T10 @ 1.516% eased after the lower producer infaltion data.
OIL Brent +1.23%, WTI +1.23% on bigger than exepcted draw down on US stock piles
Gold +0.14%, Silver +1.68%, Copper +2.1% Platinum +3.3%, Palladium +1%.
AHEAD Retail Sales, Import & Export Prices, NY State Empire State Manufacturing Index, Michigan Prelim Data, Baker Hughes Rig Numbers, Monthly Budget Statement.
DAX +1.4%, CAC +1.33%, FTSE +0.92%
Markets opened higher and worked higher to close at day highs despite US inflation coming in higher than expected increasing the pressure on the Fed to tighten policy. Basic Resources lead but all sectors closed in the green. Strong earnings from the Banks supported the confidence.
THG +10.6%, rebounding from a sharp slump after a capital markets day went badly.
Danish bioscience company Chr Hansen -6.7% after missing Q3 profit expectations.
Danish health care company Demant -4.9% after a voluntary recall by its Cochlear implants business.
EUROZONE Balance of Trade
GERMANY No data due
FRANCE Inflation Rate
UK No data due
Nikkei futures opened +0.9% vs cash, broadly +VE especially following the good performance in the US overnight. Japanese earnings still in focus.
Yen currently 113.66
Data due Tertiary Index at noon
Japan dissolved its parliament on Thursday, setting the stage for an election at the end of the month that will pit new Prime Minister Fumio Kishida against unpopular opposition in a battle over who can better fix the pandemic-battered economy.
Japanese firms overwhelmingly want the government to draw up an extra budget of ¥10 trillion or more to ease the pain caused by COVID-19, a Reuters poll showed, indicating support for new Prime Minister Fumio Kishida’s additional stimulus plans.
The monthly Corporate Survey results come as Kishida, who took over from Yoshihide Suga as premier last week, ordered his cabinet to compile an economic package targeting households and businesses hit hard by the pandemic.
Nippon Steel Corp (5401.T) said on Thursday it had filed patent infringement lawsuits against Toyota Motor Corp (7203.T) and China's Baoshan Iron & Steel Co Ltd (Baosteel) (600019.SS) with a Tokyo district court. Nippon Steel is seeking 20 billion yen ($176 million) in damages from each company, alleging the two firms have infringed on its patents on non-oriented magnetic steel sheets that are used in electric vehicles, it said in a statement. Toyota said in a statement to Reuters the suit was "very regrettable" and that it had found no patent infringement issues before it signed a supply deal with the steelmaker. -VE
TSMC announced on Thursday plans to build a new factory in Japan to meet long-term appetite for chips and said, near-term, tight supplies will likely continue into 2022 amid booming demand during the COVID-19 pandemic. +VE
Uniqlo reported a record annual net profit on Thursday and predicted an even better performance this year as pandemic-related restrictions ease further worldwide. Fast Retailing said business had "recovered markedly" as infections were contained around the world, including a sharp recovery in sales in Europe and North America after virus lockdowns were lifted. In the 12 months to August 2021, the firm posted a better-than-expected net profit of 169.8 billion yen ($1.5 billion), up 88 percent on-year. +VE
Japanese retail group Aeon Co announced on Thursday a takeover bid for Can Do Co, a popular chain offering household goods for 2700 yen per share. +VE
Nintendo Co.’s pricier new Switch console made a weak debut at home in Japan despite pre-orders selling out in a matter of minutes everywhere in the nation, a surprising result likely due to low-level supply stemming from component shortages. Slight -VE
Honda Motor Co. said Wednesday that it will launch two Honda-brand electric vehicle models in China next spring and add eight more within five years. The two models — the e:NS1 and e:NP1 SUVs — will be the first Honda-brand electric vehicles introduced in China, the world’s largest vehicle market. All new models Honda will launch in China in 2030 and later will be electrified vehicles, also including hybrid vehicles. +VE
Aidma Holdings Inc. (7373 JP)
Bronco Billy Co. (3091 JP) 3 p.m.
BayCurrent Consulting Inc. (6532 JP)
Coconala Inc. (4176 JP)
Daiwa House REIT Investment Co. (8984 JP)
Doutor Nichires Holdings Co. Lt (3087 JP)
Fukuoka REIT Corp. (8968 JP)
Hioki Ee Corp. (6866 JP) 3 p.m.
JDC Corp. (1887 JP)
Japan Metropolitan Fund Invest (8953 JP)
Kitanotatsujin Corp. (2930 JP)
LaSalle Logiport REIT (3466 JP)
Mitsubishi Estate Logistics Re (3481 JP)
Money Forward Inc. (3994 JP)
One REIT Inc. (3290 JP)
Pasona Group Inc. (2168 JP)
RPA Holdings Inc. (6572 JP)
Sankei Real Estate Inc. (2972 JP)
Vector Inc. (6058 JP)
VisasQ Inc. (4490 JP)
West Holdings Corp. (1407 JP)
Expect markets to open higher following the US and the good results published overnight.
No data due but Finance ministry releases monthly economic assessment report at 10am
The United Arab Emirates and South Korea on Thursday agreed to start negotiations on a bilateral trade deal targeting a broad expansion of economic ties.
Samsung: Vietnam to Help Samsung’s Suppliers Keep Operating, Boost Output +VE
Hyundai Motor's (005380.KS) global chief operating officer said on Wednesday the South Korean automaker wants to develop its own chips to reduce reliance on chipmakers. A global shortage of semiconductors, triggered partly by surging demand for laptops and other electronic products during the pandemic, has shuttered some auto production lines globally this year. Slight +VE depending on the costs.
Travel and leisure platform operator Yanolja said on Thursday that it will acquire a 70 percent stake in Interpark, one of South Korea’s first e-commerce platforms, for 294 billion won ($248 million).
Following the announcement of the deal, Yanolja said it would enter the global tourism market with the new “growth engine.” +VE
Five in-house startups that have built business models upon the COVID-19 pandemic will spin out from Samsung Electronics, said the tech giant Thursday.
Samsung said the five new spin-outs are the outcome of Samsung employees’ efforts to develop solutions for the post-pandemic era, raising growth prospects of the startups. Slight +VE
South Korea’s gasoline prices climbed to the highest in almost seven years, in line with a spike in international crude prices over the past month amid steeply rising demand for petroleum worldwide. The situation, which could worsen further, is expected to pose a tough burden to some manufacturers and households, as long as oil producers choose not to increase output. -VE
Expect market to open higher but with resistance as it approaches 16,500
No data due
The Ministry of Foreign Affairs yesterday thanked France over its concern about security in the Taiwan Strait, after the French Ministry of Armed Forces confirmed its naval presence in the area. French Minister of Armed Forces Florence Parly on Tuesday told the French Senate that Paris would use its navy to demonstrate its adherence to international law and freedom of navigation, mentioning maneuvers by the signals intelligence vessel Dupuy-de-Lome in the Taiwan Strait as an example.
A senior European Union trade official said Thursday that Taiwan is crucial to the EU in its new Indo-Pacific strategy, and she called for more investments by Taiwanese companies in the union, the world's largest trade bloc. The world is now facing "unprecedented challenges" due to climate change and digital transformation, Sabine Weyand, director general of the European Council's Directorate General of Trade, said in a virtual keynote address at the annual EU Investment Forum. +VE
Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chipmaker, announced on Thursday that it will build a 12-inch wafer fab in Japan with mass production set to start in 2024. At an investor conference, TSMC CEO C.C. Wei said construction of the wafer plant is scheduled to begin in 2022, and based on the chipmaker's initial planning, the new factory will roll out specialty chips using the company's mature processes for 22 nanometer and 28nm technologies. The plan to set up a production site in Japan is expected to help the company recruit talent worldwide, further extend its reach in the global market and ultimately satisfy demand from clients, Wei said. TSMC expects the investment in Japan to reap reasonable returns, strengthen the company's bottom line and create benefits for shareholders in a longer term, he added. +VE
Plans to develop a central bank digital currency are to go ahead, with the possibility that it might one day replace cash, central bank Governor Yang Chin-long said yesterday, adding that the process would not interfere with the bank’s core roles of maintaining financial stability and supporting the economy. Taiwan is in phase 2 of developing its own digital currency, which is the process of certification and conducting trial runs, after wrapping up a feasibility study in June last year, Yang told a forum in Taipei on the development of digital currencies and the future of Taiwan’s financial industry. +VE
Taiwan Mobile Co yesterday said that it has clinched a deal to become the exclusive telecom to distribute Walt Disney Co’s Disney+ streaming service in Taiwan for one-and-a-half years. Starting on Nov. 12, Taiwan Mobile’s subscribers would be able to stream more than 1,200 films and 16,000 episodes from Disney, Pixar, Marvel, Star Wars, National Geographic and Star. +VE
An overnight fire tore through a building in the southern Taiwanese city of Kaohsiung on Thursday, killing 46 people and injuring dozens of others in the island's deadliest blaze in decades. The fire broke out in the 13-story, mixed-use building in the small hours of Thursday morning, according to officials, raging through multiple floors before firefighters finally got it under control.
Expect market to open to have a muted open with reports that on-line brokers coming under regulatory scrutiny
No data due but could get FDI (YTD)
Thursday’s inflation data as surprisingly better than forecast
Inflation Rate Sept 0.7% MoM vs +0.8% Aug (F/cast was +0.8%)
Inflation Rate Sept 0.0 YoY vs +0.1% Aug (F/cast was +0.1%)
PPI Sept 10.7% YoY vs +9.5% Aug (F/cast was +9.8%)
Wednesday’s Loans data
New Loans Sept CNY 1,660b vs 1,220 Aug (F/cast was 1,790b)
Outstanding Loan Growth Sept +11.9% YoY vs 12.1% Aug (F/cast was 12%)
Total Social Financing Sept CNY 2900b vs 2960b Aug (F/cast was 3200b)
M2 Money Supply Sept 8.3% YoY vs 8.2% Aug (F/cast was 8.2%)
Weaker than expected but reflects President Xi’s commitment to re-orientated the economy and not wanting money to go into the property sector or bail out the sector. It also reflects a slowing of the Chinese economy but it does show some fiscal discipline which is likely to be seen as a long term positive for the economy.
Premier Li Govt reassures that power supplies will be in place for ample supply over the winter.
China coal prices held near record highs on Thursday as cold weather swept into the country's north and power plants stocked up on the fuel to ease an energy crunch that is fuelling unprecedented factory gate inflation. A widening power crisis in China, affecting at least 17 regions - caused by shortages of coal, record high fuel prices and booming post-pandemic industrial demand as it shifts to greener fuels - has led to production disruption at numerous factories. Soaring energy prices sent producer prices to their highest in at least 25 years in September, rising 10.7 percent from a year earlier, data showed on Thursday. Cold winter weather is likely to worsen the situation. -VE
Chinese housing regulators are telling home buyers to exercise caution when making payments on purchases, amid concerns that funds are illegally siphoned away by developers in a sector that is facing a severe liquidity crunch. Chinese developers are allowed to sell residential projects before construction, but are required to put the funds acquired from sales in escrow bank accounts monitored by local governments. Concerned that funds might be illegally diverted, a housing regulator in the eastern city of Hangzhou recently launched an online system that allows home buyers to confirm if their deposits have really been placed in government escrow accounts. -VE
China's antitrust bureau will become the National Antimonopoly Bureau and be elevated to deputy-ministerial status, while remaining within the State Administration for Market Regulation.
In other news, a group of private sector employees in China have begun an online campaign to gather working hours information in a protest against the excessive work culture in the country. The so-called Worker Lives Matter campaign is asking employees in various industries, like technology and finance, to share what time they start and end their workday, as well as how many days they work per week.
As of yesterday, the spreadsheet had more than 4,000 entries, including contributions from within tech giants like Tencent (0700), Alibaba (9988) and ByteDance.
ADR’s +68pts at 25,030 with weakness in Chinese Banks, Energy and Utilities. Market to resume after a two day break; regional markets have performed well and the good start to US earnings likley to be +VE
But the weak new loans data and rising inflation expectations a -VE on sentiment in the longer term.
No data due
SHORT SELLING HSI Tuesday 23.6% vs 21.9% Monday
Top shorts Wharf REIC (1997) 48%, HK & China Gas (3) 41%, Sunny Optical (2382) 40%, Ali Health (241) 40%, Country Garden (2007) 39%, Hang Seng Bank (11) 37%, Hengan (1044) 36%, Henderson Land (12) 35%, CM Bank (3968) 35%, Sinopec (386) 35%, China Res Land (1109) 33%, Baba-SW (9988) 33%, Shenzhou (2313) 32%, Xiaomi (1810) 32%, HK Ex (388) 31%, China Life (2628) 30%, Geely (175) 29%, Li Ning (2331) 28%, AAC Tech (2018) 27%, CCB (939) 26%.