Apr 6 Asian Macro Initial thoughts Markets to open higher HK remains closed


06 Apr

Asia
Australia Market to re-opens, expect a muted start ahead of the RBA rate decision; no change expected, but to move higher following the US strong performance.
Japan 
Nikkei futures opened higher currently +30pts as pre market Household spending data slightly worse than expected but still expect markets to open higher after the strong moves in the US overnight.
S Korea 
Expect markets to open higher following the strong US markets, No data due
Taiwan 
Market re-opens expect market to reopen higher following the rally in US market overnight and in reactions to the strong US jobs data.
China 
Market re-opens expect it to move initially higher but upside limited by Chinese policy to reign in debt and curb lending to property companies. Also caution ahead of the PMI data due out just after the open
HK Market closed re-opens Tuesday
US Futures 
Opened flat Dow and S&P unchanged NDX +0.2%

DOW +1.13%, NDX +1.67%, S&P +1.44%, Russel 2K +0.49% 
Markets opened strongly after the strong jobs data, inoculation roll out and better than expected PMI and ISM Non Manufacturing data.
Treasury Secretary Janet Yellen on Monday urged the adoption of a minimum global corporate income tax, an effort to at least partially offset any disadvantages that might arise from the Biden administration's proposed increase in the US corporate tax rate.
Delta Air Lines +2.9% despite cancelling about 100 flights due to a staffing shortage, and opening up middle seats for booking a month earlier than expected to carry more passengers, it had said on Sunday.
Tesla +4.4% as delivery numbers for the first quarter topped Street expectations with strong demand in China
AMC 13.2% off high as ‘Godzilla vs Kong’ film has a successful launch and destroys lingering concerns around cinemas importance
Carnival +4.7%, Norwegian +7.3% and Royal Caribbean +2.9% after the Centers for Disease Control and Prevention updated its guidance for resuming U.S. cruise ship sailings. Norwegian specifically asked the CDC if it can resume cruises from U.S. ports starting July 4.
Charles Schwab +2.6% to a 52-week high after Goldman Sachs put the stock on its Conviction List ahead of its earnings on April 15.
GameStop -2.4% off initial lows of -14% after GameStop said it may sell up to $1 billion worth of additional shares following a historic Reddit-fueled short squeeze. The company said it intends to use the proceeds to further accelerate its e-commerce transformation and to strengthen its balance sheet.
Trimble +3.7% the digital construction and agriculture company popped after Cathie Wood’s Ark Innovation purchased 453,214 of its shares. Based on Thursday’s closing price of around $83 per share, Ark’s purchase was worth north of $37.6 million.
Pinterest +2.3% The photo-sharing stock rose 1.8% after The New York Times reported that the company was considering purchasing social media company VSCO.
Planet Fitness +1.6% after the Wall Street Journal reported that it plans to open up to 100 new locations in the coming fiscal year, adding to its current total of more than 2,100. Chief finance officer Tom Fitzgerald told the newspaper that Planet Fitness will also invest in its app.
Banks JPMorgan Chase flat, Citigroup -0.6%, Wells Fargo -0.4%, Amex +1%
Work from home names: 
Facebook +3.4%, Apple +2.4%, Amazon +2.1%, Netflix +0.2%, Disney -0.3%,  Zoom Video -0.7%, Alphabet +4.2% and Microsoft +2.8%,
Tech
NXP Semi +3.2%, Nvidia +1.3%, Micron +1.5%, AMD +0.4%, Skyworks +2.1%
Re-opening stocks  
Boeing +2.5%, Caterpillar +0.4%, Simon Property -0.1%, Kohl’s +1.3%, Nordstrom +0.2%, Gap +1%, United Airlines +2.5%, Carnival +4.7%, Wynn Resorts +2.3%, Chevron -1.2%, Exxon Mobil -1.6%,  Lock down names Campbell Soup +0.2% General Mills +1%, JM Smucker +0.7%
DATA
Services PMI Mar 60.4 vs 59.8 Feb (F/cast was 60)
Composite PMI Mar 59.7 vs 59.5 Feb (F/cast was 59.1)
ISM New York Index Mar 37.2 vs 35.5 Feb (F/cast 47)
ISM Non Manufacturing Data
PMI Mar 63.7 vs 55.3 Feb (F/cast was 60)
Business Activity Mar 69.4 vs 55.5 Feb (F/cast was 57)
Prices Mar 74 vs 71.8 Feb (F/cast was 73)
New Orders Mar 67.2 vs 51.9 Feb (F/cast was 53)
Employment Mar 57.2 vs 52.7 Feb (F/cast was 54)
Factory Orders Feb -0.8% vs +2.7% Jan revised (F/cast was -0.7%)
Factory Orders ex transport Feb -0.6% vs +1.8% Jan revised (F/cast was -0.4%)
USD was slightly weaker vs Yen & Euro. Bitcoin +1.5% @ 58,793.44, VIX +3.3% @ 17.9, US T10 @ 1.714% slightly lower as markets set new highs.
OIL Brent -4.8%, WTI -4.56% on rising supply from OPEC+ and higher Iranian output off setting the US recovery. But WTI turned +VE after hours.
Gold -0.1%, Silver -1%, Copper -0.06%, Platinum -0.3% Palladium -0.3% having hit its highest intraday level. But the metals turned slightly +VE in after hours
AHEAD 
Redbook, JOLTs job openings, IBD/TIPP Economic Optimism, Consumer Inflation Expectations, after market API Crude Oil Stock Change

EUROPEAN Markets re-open 
The French government has reached a deal with the European Commission allowing it to inject fresh money into flagship airline Air France, it said on Sunday, as the airline’s finances creak under the effects of COVID-19 restrictions +VE
H&M upsets Vietnam after kowtowing to Beijing over ‘problematic map’.   Twitter users in Vietnam lash out after retailer reportedly agrees to edit map on its website to clarify Beijing’s territorial claims in South China Sea.  Adds to the Swedish firm’s recently issues with China for its views on buying cotton from Xinjiang -VE
Credit Suisse Chief risk officer to leave after Archegos incident.
AHEAD
EUROZONE Unemployment Rate
GERMANY No data due
FRANCE No data due
UK New Car Sales

JAPAN 
Nikkei futures opened higher currently +30pts as pre market Household spending data slightly worse than expected but still expect markets to open higher after the strong moves in the US overnight.Yen currently 110.18 weaker; slight +VE exporters 
Data out 
Household Spending Feb -6.6% YoY vs -6.1% Jan (F/cast was -5%)
Household Spending Feb +2.4% MoM vs -7.3% Jan (F/cast was +3%)
Average Cash Earnings Feb -0.2% YoY vs -0.8% Jan (F/cast was -0.3%)
Later 30 year JGB auction
Tokyo reported 247 new covid cases Monday and Osaka 341 (down from 666 on Sunday); According to the Tokyo metropolitan government, the seven-day moving average of new cases per day was 391.9, an increase of 9.6% from the previous seven-day period of 357.7 cases.   Health authorities are concerned that variants of the coronavirus are driving a nascent fourth wave in the pandemic with just 109 days remaining until the Tokyo Olympics.  The variants appear to be more infectious and may be resistant to vaccines, which are still not widely available in Japan. The situation is worst in Osaka, where infections hit fresh records last week, prompting the regional government to start targeted lockdown measures for one month from Monday.
Foreign Minister Toshimitsu Motegi expressed strong concerns to his Chinese counterpart about Chinese incursions into territorial waters, the situation in Hong Kong and the human rights situation of China’s Uighur minority. Comes as China sent an aircraft carrier group near Okinawa over the weekend which prompted Japan to send a destroyer to the area to shadow the group.
The Bank of Japan (BOJ) began experiments on Monday to study the feasibility of issuing its own digital currency, joining efforts by other central banks that are aiming to match the innovation in the field achieved by the private sector.
Mizuho Financial Group Inc will revise its contingency plan for a system failure by the end of June, the lender said on Monday, after it suffered four system glitches during a two-week period from February to March.
Warren Buffett’s Berkshire Hathaway Inc yesterday started a multi-tranche yen bond deal, several months after announcing investments in Japan’s biggest trading companies. Berkshire Hathaway is offering yen notes for a third straight year, targeting a four-part yen deal that might price on Thursday.

SOUTH KOREA 
Expect markets to open higher following the strong US markets
No data due
KDCA reported 473 new covid cases to midnight Sunday (-70 DoD) but didn’t comment on whether the latest wave was slowing as less tests had been carried out.
South Korea's LG Electronics Inc will wind down its loss-making mobile division after failing to find a buyer, a move that is set to make it the first major smartphone brand to completely withdraw from the market. +VE and likely +VE to Samsung too
POSCO has begun reviewing how it might end a joint venture with a firm controlled by the military in Myanmar in the wake of the coup there in February, two people with first-hand knowledge of the matter told Reuters.
Ship building industry is looking ahead to a prosperous year on the back of a global shipping volume recovery and heightened demands for eco-friendly vessels, industry data showed Monday. Of the 10.25 million compensated gross tonnage in global shipping order quantity from January to March this year, South Korean shipbuilders accounted for 5.32 million or 52 percent of the global volume, the Ministry of Trade, Industry and Energy
Posco Chemical said Monday it would supply anodes to Ultium Cells, a joint venture established by LG Energy Solution and General Motors in 2019.
The Ministry of Food and Drug Safety of South Korea announced Monday that it has minimized the steps required for the import of new biologic agents, such as COVID-19 vaccines.  According to the revised rules, the government will no longer require foreign drug developers wishing to export their products to Korea to present certificates from their respective country. +VE
Kumho Tire announced Monday that the company has launched the new all-season tire model SOLUS TA51 in South Korea.  +VE
Hankook Tire & Technology, said Monday it has been supplying tires for Chinese EV company NIO's models since last year. Slight +VE
Sales at department stores increased 34 percent year-on-year in February in the biggest jump in 25 years since 1996, the latest data from Statistics Korea showed Monday.
The retail sales index, which is designed to reflect consumption trends, appears to have recovered to near pre-pandemic levels during February, as it stood at 115.2 after adjustments for seasonal factors. The figure stood at 116.2 in December 2019. The first case of coronavirus was detected in Korea the following month. +VE

TAIWAN 
Expect market to re open higher after the US markets traded higher; tech expected to be strong.
No data due 
Taiwan's Defence Ministry on Monday reported a new incursion by China's air force into the island's air defence identification zone, made up of eight fighter jets and two other aircraft, one of which flew through the strategic Bashi Channel.
The Ministry of the Interior recorded 9,601 births in January, the first time the nation has produced fewer than 10,000 newborns in a single month, the third month of declines -VE for baby product makers
The housing market last month slowed despite the start of the spring sales season, as presale projects bore the brunt of credit tightening, the Chinese-language Housing Monthly said in a report last week.  An index gauging the property market climate was 37.7 last month, rising 4 points from February to read “yellow-blue” for the 13th consecutive month, the report said, adding that the market failed to benefit from favorable seasonality. -VE developers
Largan Precision Monday reported consolidated revenue of NT$4.01 billion (US$140.54 million) for last month, +24.84% MoM, when working days were reduced due to the Lunar New Year holiday. Revenue -26.33% YoY because of the loss of orders from China’s Huawei Technologiesas a result of sanctions imposed by Washington on Huawei that took effect in September last year. Cumulative revenue for the first three months of the year was NT$11.82 billion, -10.55 % YoY company data showed. +VE
Taipower to phase out coal at Sinda over next five years, as protests mount over air pollution. +VE
EVA Airways Corp reported a profit in Q4 last year thanks to rising cargo revenue, but it remained in the red for the year due to losses in passenger revenue. The airline’s net profit for the fourth quarter was NT$281 million (US$9.85 million), as cargo revenue surged 140 percent to NT$16.58 billion from NT$6.89 billion a year earlier amid rising freight rates, the company said late last month.  Total cargo weight rose 25.86 percent year-on-year to 212,123 tonnes, while its cargo load factor ranged from 90 to 93 percent, compared with an average of 77 percent a year earlier, the company said. Slight +VE

CHINA 
Expect market to re-open higher but upside limited by Chinese policy to reign in debt and curb lending to property companies.  Also caution ahead of the PMI data due out just after the open 
Data due after market opens
Caixin Services PMI Mar (Feb was 51.5 and F/cast is 52.7)
Caixin Composite PMI Mar (Feb was 51.7 and F/cast is 52.8)
China reported 15 new covid cases, its biggest daily jump in new COVID-19 cases in more than two months, as a city on the border with Myanmar in southwestern Yunnan province accounted for all new local cases.  The total number of new COVID-19 infections, including imported infections originating from overseas, stood at 32, marking the highest total since Jan. 31.
Aides of Philippine President Rodrigo Duterte on Monday criticised China for what they called territorial incursions by hundreds of its vessels, which his legal counsel warned could damage ties and lead to “unwanted hostilities”.  “We can negotiate on matters of mutual concern and benefit, but make no mistake about it - our sovereignty is non-negotiable,” Panelo said in a statement. -VE for International relations.China and the US sent warships into disputed waters as tensions rise over Whitsun Reef.  The US aircraft carrier strike group sailed into South China Sea and a destroyer was in East China Sea, while Chinese carrier transited through Miyako Strait near Japan.  It comes amid a deepening dispute between Beijing and Manila over the presence of Chinese boats at a reef in the Spratly Islands.  -VE
China warns Japan to not follow suit after US sanctions over Xinjiang and Hong Kong. Foreign Minister Wang Yi and Japanese counterpart Toshimitsu Motegi had a 90-minute phone conversation and  Wang urged Japan to not get ‘carried away’ by countries the are biased against China -VE
Chinese Foreign Minister Wang Yi warns Asean to be alert to external forces interfering in Myanmar.  Wang accuses unnamed ‘external forces’ of provoking trouble after wrapping up a series of meetings with Southeast Asian counterparts.   Asean chair Brunei backs a meeting of the bloc to discuss the situation as protests calling for a return to civilian rule continue. -VE for international relations
China warned the US against taking a superior position in global affairs. It said cooperation still possible, but Beijing will not accept unilateral demands from Washington, Foreign Minister Wang Yi said,  he also told his counterparts from four Asean countries their concerns over US-China rivalry were ‘reasonable’.  “China will not accept that there is any nation in the world that [can] put itself superior to the others, and that any nation will have a final say on world affairs. If the US continues to confront, China will take it calmly without fear.”  -VE for sentiment.
China believes a stake in huge iron ore mine in Guinea may cut China’s dependence on Australia.  Project will help diversify China’s supply chain but won’t cut out Canberra completely, analysts say.  Australia is the source of about 60 per cent of China’s iron ore imports currently +VE for China resource independence.
Tesla Inc  posted record deliveries on strong demand in China that helped it offset the impact of a global shortage in auto parts.
Billionaire Sun Dawu warn authorities could ‘destroy’ Dawu Group under laws targeting criminal gangs.  The businessman was detained along with family members and senior executives in a case that highlights concerns about legal protections for entrepreneurs. He was detained along with several members of his family and other senior managers from his company last November. on charges of taking illegal deposits and disturbing public order;  over a land dispute and other disagreements between Dawu Agricultural and Animal Husbandry Group and a local state farm. His legal term has warned that the authorities could “destroy and take over” the business using laws targeting “criminal gangs” as a result of the dispute.  His family has assembled a high-powered defence team, which warned that a business which had contributed much to society was now at risk of collapse.  The case raises worries about the legal implications for Hong Kong -VE

HONG KONG  Market closed 
ADR’s closed  +30pts @ 28,969 in US with weakness in Ecommerce and Petro names.
No data due
Govt reported 16 new covid cases Monday vs 7 on Sunday Govt warns of rising cases after the holiday.
WATCH
Five of the 12 Hong Kong people appeared in court today after completing quarantine following their return two weeks before.

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