Feb 24 Asian Macro Initial Thoughts Japan re-opens higher, China & HK lower, US Futures flat


24 Feb

Asian Futures Nikkei Futures saw a volatile open but now +45pts,  HK ADR’s -73pts and Australia opened flat but sold down in early trades.  
US Futures opened Dow hovering around flat, S&P -0.1% and NDX -0.2%

DOW +0.05%, NDX -0.5%, S&P +0.13%, Russel 2K -0.88%  markets opened lower but worked better and closed just off the day highs as Powells testimony eased inflation concerns.  NDX intraday fell below its 50 day moving average for the first time since Nov 3, but then recovered.  Key was that Powell said inflation was soft and price pressures mostly muted also that the economic outlook was highly uncertain.  Energy and Financials continue to see good interest.  Investors are focusing on cyclicals and still rotating out of Tech and growth.
Earnings 
Home Depot -3.1% despite beating on earnings and revenue it is not providing 2021 guidance, however, due to pandemic-related uncertainty.
Macy’s +3.9% beat on earnings and revenue, SSS -17.1% better than expected.
Palo Alto Networks -1.8% beat but weaker-than-expected current quarter earnings outlook, but did note the opportunities provided by the massive SolarWinds hack.
InterContinental Hotels Group -1.6% said its Holiday Inn Express brand outperformed in key markets and that global travel is beginning to recover. Opened higher but sold down through the day closed near lows.
Occidental Petroleum -1.6% miss despite a rebound in oil and gas prices.
The RealReal -13.2% missed, said 2020 was a challenging year, with the pandemic “temporarily disrupting” its path to profitability.
ZoomInfo +4.1% beat estimates and provided an upbeat outlook for the current quarter and full year.
Other 
Tesla -2.2% but was -13% intraday as Bitcoin pulled back comes after suffering its biggest single-day loss in months on Monday.
Shopify -5.9% priced a 1.18 million share offering at $1,315 per share, with the e-commerce platform provider expecting to raise about $1.55 billion from the sale. Shopify plans to use the proceeds to strengthen its balance sheet. Shares fell 5.5% in premarket action.
Carnival +1.9% priced an offering of about 40.45 million common shares at $25.10 per share, with the cruise line operator seeking to raise about $1 billion to be used for general corporate purposes. The cruise industry has been shut down during the pandemic.Johnson & Johnson -0.9% is setting aside $3.9 billion in connection with talc-related litigation, according to an SEC filing.
AMC Entertainment +17.7% on news that New York City movie theaters will reopen with limited capacity on March 5.
Wells Fargo -0.3% announced a deal to sell its Wells Fargo Asset Management unit to private equity firms GTCR and Reverence Capital for $2.1 billion. Wells Fargo will retain a 9.9% stake in the business.
Dollar General -1.8% taking steps to find a potential successor to CEO Todd Vasos, according to people familiar with the matter who spoke to Reuters. The sources say Vasos had not communicated any intention to leave the discount retailer when his contract expires in June, calling the process “good governance.”
Banks JPMorgan Chase +0.8%, Citigroup +1.9%, Wells Fargo -0.3%, Amex +0.8%
Work from home names: Facebook +2.1% reconnecting Australian users, Apple -0.1%, Amazon +0.4%, Netflix +2.3%, Disney +2.8%,  Zoom Video +4.1%, Alphabet +0.3% and Microsoft -0.5%,
Tech NXP Semi -2.4%, Nvidia -1.5%, Micron +2.3%, AMD -0.7%, Skyworks -0.1%
Re-opening stocks  Boeing -0.3%, Caterpillar +1%, Simon Property +2%, Kohl’s -0.5%, Nordstrom +0.5%, Gap -0.2%, United Airlines +1.8%, Carnival +1.9%, Wynn Resorts +7.7%, Chevron +1.3%, Exxon Mobil +1.4%,  
Lock down names Campbell Soup +0.4% General Mills +1.2%, JM Smucker +0.1%
DATA
Redbook +2.9% YoY vs +4% prior (-0.8% MoM vs -0.9% prior)
Case-Shiller Home Price Dec +0.8% MoM vs -0.9% Nov (F/cast was +0.9%)
Case-Shiller Home Price Dec +10.1% YoY vs +9.2% Nov revised (F/cast was +9%)
House Price Index Dec +1.1% MoM vs 1% Nov (F/cast was +0.8%)
House Price Index Dec +11.4% YoY vs +11.1% Nov revised (F/cast was +10.7%) Consumer Confidence Feb 91.3 vs 89.3 Jan (F/cast was 89.7)
Richmond Fed Manufacturing Index Feb 14 vs 14 Jan (F/cast was 11)
After market API Crude Oil Index +1.026m vs -5.8m prior (consensus was -5.372m)
USD was little change vs Yen & Euro. Bitcoin -10.9% @ 48,245.79, VIX -1.5% @ 23.11, US T10 @ 1.343% as Powell says inflation soft.
OIL Brent -0.3%, WTI -0.8% after market API data showed an unexpected rise in inventory -VE
Gold -0.16%, Silver -1.3%, Copper +1.8%, Platinum -2.6%, Palladium -2.2%. Gold eases after Powell’s testimony.
AHEAD MBA Mortgage Applications and 30 yr Mortgage Rate, New Home Sales, EIA Oil Report Fed Chairman Powell semi-annual economic testimony at House Financial Services Committee
Earnings: Lowe’s, NVIDIA, Viacom, Public Storage, Booking Holdings, TJX, Brookdale, Royal Bank of Canada, Apache, Petrobras, Pure Storage, L Brands, Casper Sleep

DAX -0.61%, CAC +0.22%, FTSE +0.21%  Opened higher but trended lower following the cautious tone from Asia, especially on Tech. But rebounded from late morning and worked higher.  HSBC opened lower after earnings line but with no buybacks in the near future.  FTSE relatively out performing after PM Johnson outlined the plan to exit lockdowns; +VE for Cineworld,  easyJet and Rank Group were among the stocks benefiting in the travel and leisure sectors.
Powell said that inflation was soft and price pressures mostly muted also that the economic outlook was highly uncertain.
Amadeus +5.9% and Unite Grop +5.8% on UK’s exiting from lockdown plan.
Total,+2.2% on news it was selling half of its equity in two portfolios of renewable projects.
Earnings 
Rational -9.6% after issuing a weaker-than-expected forecast.
Manchester United +1.4% and IHG Hotels & Resorts -1.6% after earnings.
Data 
EUROZONE 
Core Inflation Rate Jan +1.4% YoY vs +0.2% Dec (F/cast was +1.4%)
Inflation Rate Jan +0.9% YoY vs -0.3% Dec (F/cast was +0.9%)
Inflation Rate Jan +0.2% MoM vs +0.3% Dec (F/cast was +0.2%)
UK 
Unemployment Rate Dec 5.1% vs 5% Nov (F/cast was 5.2%)
Claimant Count Change Jan -20k vs -20.4k Dec revised (F/cast was +25k)
Average Earnings inc Bonus Dec +4.7% vs 3.6% Nov (F/cast was +4%)
Average Earnings ex Bonus Dec +4.1% vs 3.6% Nov (F/cast was +3.8%)
Employment Change Nov -114k vs -88k Oct (F/cast was -40k)
Labour Productivity prelim Q4 -4.5% QoQ vs +5.6% Q3 (F/cast was -2%)
30 yr Treasury Gilt auction 1.302% vs 0.837%
CBI Distributive Trades Feb -45 vs -50 Jan (F/cast was -44)
AHEAD
EUROZONE No data due
GERMANY GDP Growth Rate
FRANCE Business Confidence, Business Climate Indicator
UK No data due

JAPAN 
Nikkei futures opened +10pts saw initial volatility but now +45pts indicating a higher re-opening. Powells comments on inflation should ease concerns. Expect to see some bargain hunting.  Yen currently 105.25
No data due 
Tokyo reported 275 new covid cases Tuesday lowest since early Nov +VE
Japan is considering lifting the state of emergency declared in six prefectures (Aichi, Gifu, Kyoto, Osaka, Hyogo and Fukuoka ) ahead of its scheduled end date on March 7, and possibly by this weekend, government sources said Tuesday. Tokyo and its three nearby prefectures, however, are set to remain under the virus emergency until the original end date as their situation has not substantially improved. +VE
Britain's trade deal with Japan settled the nerves of a lot of Japanese businesses in the United Kingdom and gives them confidence about their future prospects there, a senior Honda executive said on Tuesday. +VE
Sony insists the company would be able to produce “decent numbers” of its new console in the second half of 2021 despite the chip shortage Slight +VE
Toyota Motor on Tuesday began construction of a smart city at the foot of Mount Fuji in central Japan as a testing ground for new technologies including robotics and artificial intelligence. About 360 people including Toyota employees will initially move to the so-called Woven City to be built at the 70.8-hectare former Toyota factory site in Susono, Shizuoka Prefecture. It will be powered by electricity from fuel cells, which derive power from a hydrogen-oxygen reaction, in addition to solar panels. +VE
JTB Corp will reduce its capital to 100 million yen, making it eligible to gain a tax advantage accorded to small and medium-sized companies amid the coronavirus pandemic, sources close to the matter said Tuesday +VE
The number of marriages in Japan tumbled amid the coronavirus pandemic in 2020, the health ministry said, likely adding to the wealthy nation's low birth rate and ageing population problems. Japan last year saw 537,583 marriages, a 12.7% fall from a year earlier -VE

SOUTH KOREA 
Expect markets to open higher as Powells comments ease inflation concerns.
Data out
Business Confidence Deb 82 vs 85 Jan (F/cast was 83)
KDCA reported 357 new covid cases (vs 332 prior)
The first of three expert panels in South Korea reviewing a COVID-19 vaccine developed by Pfizer Inc and BioNTech gave its recommendation on Tuesday for the government to approve the vaccine.
South Korea’s economy posted negative growth amid the prolonged COVID-19 pandemic last year, but it ranked third in terms of economic growth rate among major economies, data showed Tuesday.   The local economy shrank 1 percent in 2020 from a year earlier, the worst on-year growth estimate since 1998 when the gross domestic product contracted 5.1 percent in the wake of the Asian financial crisis. The latest figure, however, marked the third-highest among 15 major economies, according to data from the Organization for Economic Cooperation and Development. Slight +VE
South Korea's household credit grew at a slightly slower pace in the fourth quarter of last year, as banks tightened rules on unsecured loans, central bank data showed Tuesday.  
Iran expressed hope on Tuesday that South Korea and Japan would agree to release about $1 billion of Iranian funds frozen in the two countries because of U.S. sanctions, but South Korea said it still needed to discuss the matter with the United States.
Samsung Heavy Industries Co. said Tuesday that it has reached a settlement with Brazilian state prosecutors and auditors over a graft probe surrounding drillship orders by the company. The company said in a regulatory filing that it has agreed to pay 812 million reais ($149 million) in a leniency deal accepting the results of an investigation into a criminal case involving a broker. In return, the Brazilian authorities have agreed not to pursue further legal or administrative actions against the company. +VE
Samsung SDI said Tuesday it will inject 1 trillion won ($900 million) into its battery plant in Goed, 30 kilometers north of Budapest, Hungary. +VE
Incheon Airport will roll out speedy coronavirus tests from next month, cutting down the process from seven hours to two or four hours. +VE
Hyundai Motor unveiled the all-electric midsized sport utility vehicle Ioniq 5 on Tuesday. It is the first model to use the automaker’s own electric vehicle platform, the Electric-Global Modular Platform or E-GMP. +VE
SK Innovation said Tuesday that it would sell off 49 percent of its petrochemical subsidiary, SK Global Chemical, as part of a strategy to unload carbon-intensive assets and focus its investments on green businesses. SK Innovation currently controls 100 percent of SK Global Chemical. +VE
Iljin Materials said Tuesday it has shipped the first batch of domestically produced ultrathin copper foils to be used for semiconductor packing to Samsung Electronics.  According to the electronic material producer of Iljin Group, it became the first South Korean company to commercialize the ultrathin copper foils, which had been produced exclusively in Japan. +VE

TAIWAN 
Expect market to open higher 
Data due after market Industrial Production, Retail Sales, Export Orders and M2 Money Supply
The National Development Council (NDC) on Monday unveiled a four-year plan focusing on several goals, including nurturing a digital talent pool. Other goals would involve improving the nation’s bilingual education and expanding the efforts to hire international talent, the council said. The measures would be aimed at promoting Taiwan’s competitiveness and ensuring that it plays a critical role in the dynamic restructuring of the global supply chain, it said.
King’s Town Bank yesterday proposed to distribute a cash dividend of NT$1.8 per share based on last year’s earnings, becoming the nation’s third bank to surpass the regulatory limit of NT$1.5 per share for cash dividends. Article 50 of the Banking Act  demands that a bank set at least 30 percent of its net profit as legal reserve each year.Until a bank’s accumulated legal reserve reaches the level of its paid-in capital, the cash dividend it can distribute would be capped at NT$1.5 per share, according to the act.  +VE
Full Wang International Development  yesterday said its profit last year soared more than 80 percent to a six-year high of NT$363 million (US$12.83 million) and it remains upbeat about business this year, supported by continued capital repatriation and a technology supply chain realignment. +VE

CHINA 
Expect market to open lower with concerns remaining over the PBOC’s policy and increased deterioration in US relations.
No data due
The National Health Commission said No new local coronavirus disease infections reported Monday; it said on Tuesday.  But 10 new confirmed patients  arriving from outside the mainland were reported on the same day, the commission said.  Many are wondering about the accuracy of the reporting as China adopts different reporting standards.  The recent lock down in Cambodia ascribed to originating from Chinese visitors.
U.S. Senate Majority Leader Chuck Schumer said on Tuesday he has directed lawmakers to craft a package of measures to counter China’s rise, capitalizing on bipartisan hardline sentiment on Beijing in Congress to strengthen the U.S. tech sector and counter unfair practices. -VE
Wally Adeyemo, President Joe Biden’s nominee as deputy Treasury secretary, on Tuesday said Washington should work with allies to hold China accountable to international rules to ensure a level playing field for companies in the United States and elsewhere. -VE
China’s farm ministry is touting a complete recovery in pig numbers from the ravages of African swine fever by the middle of this year. Fresh outbreaks of the virus and other lethal pig diseases could pose risks to that outlook. A resurgence of African swine fever cases in colder northern provinces prompted farmers to slaughter more of their breeding sows before the Lunar New Year, said Lin Guofa, a senior analyst at consultancy Bric Agriculture Group. -VE
Senegal began its coronavirus vaccination campaign on Tuesday with 200,000 doses that it purchased from China's Sinopharm, which it received last week. +VE
China has tried to intimidate Hong Kong residents living in Germany since pro-democracy protests broke out in the city two years ago, the German interior ministry said in a letter to a lawmaker published on Tuesday. -VE
Indian drug companies are looking to local makers of so-called active pharmaceutical ingredients (API) or trying to make them in-house in a bid to end their reliance on China as ties between the two countries soured after a deadly border clash last June. -VE
China’s top diplomat holds debt talks with Zambia after appeal for restructure under G20 common framework. Zambia’s request is a test case of how China approaches the common framework, say analysts
Former Google CEO Eric Schmidt called on the US government to fast track development of emerging technology including artificial intelligence (AI) to catch up to China’s lead. The United States is “one or two years ahead of China, not five or 10” and “the Chinese are well ahead in areas like face recognition,” said Schmidt at a Tuesday hearing held by the Senate Armed Services Committee on emerging technologies and their impact on national security.  -VE

HONG KONG  
ADR’s -73pts to open 30,559 with E Commerce under pressure along with Petrochems.  Chinese Financials mixed.   Expect cautious trading as the Budget is announced.  HSBC remains weak after results.
Data due after market GDP Growth Rate
Earnings due Wednesday Bank of East Asia (23), CP Pokphand (43),  HKEX (388), Emperor Culture Group (491), Sunevision (1686), Budweiser Brewing (1876), IMAX (1970), Universal Health (2211), Netease (9999).
SHORT SELLING Tuesday 12.8% vs 12.4% Monday 
Top Shorts:  Bud Apac (1876) 54% ahead of earnings tomorrow,  Ping An (2318) 40%, SHKP (16) 35% (reports Thursday), Hengan (1044) 33%, China Res Land (1109) 28%, Sinopec (386) 25%, Hang Seng Bank (11) 24% reported at lunchtime.
COVID 
HK relaxed the cap on public gathering to 4 people (from 2) +VE for sentiment .
Authorities cordoning off two buildings in San Po Kong last night after a mystery case of Covid-19 there yesterday.
The Government announced that about 70,000 citizens have made online registrations so far as at 4 pm for the COVID-19 Vaccination Program.  All quotas dated between 26 February and 11 March have been booked.
NATIONAL SECURITY 
Lawmakers and district councilors will be suspended if they are suspected of having breached their oaths and barred from standing in elections for five years after they are disqualified, according to the government's latest legislative proposal. -VE
Beijing wants to take action before the situation in Hong Kong deteriorates to a point where one country, two systems cannot be enforced, Chief Executive Carrie Lam Cheng Yuet-ngor said. In response to a speech given by Hong Kong and Macao Affairs Office head Xia Baolong, who said on Monday that there is an urgent need for electoral reform to ensure only "patriots" fill important positions. -VE

WATCH
SMARTONE TELE (00315.HK) interim results ended December 2020. Net profit amounted to HK$267 million, up 0.4% yearly. EPS equaled HK23.8 cents. Interim
DPS was HK14.5 cents, flattish yearly. +VE
SJM HOLDINGS (00880.HK)  annual results ended December 2020. Revenues declined 77.8%  yearly to $7.507 billion. Loss was $3.025 billion, against $3.207 billion in a year ago's profit. LPS equaled 53.3 cents. No final dividend was declared, against 22 cents in 2019. Slight -VE as no divided but Macau opening quarantine free access for China more important.
Trading in shares of CG SERVICES (06098.HK) and LANGUANGJUSTBON (02606.HK) were halted from today (23rd). CG SERVICES plans to acquire stakes in LANGUANGJUSTBON, Chinese media citing sources. In response, CG SERVICES Executive Director Li Changjiang said the trading halt was triggered by a material cooperation project, without revealing further information.
HANG SENG BANK (00011.HK) Louisa Cheang, Vice-Chairman and Chief Executive revealed at the results conference that the 2020’s dividend payout is actually in par with 2019's, subject to a slew of factors, including profitability, regulatory guidance and requirement, the company's future plan and market outlook.  She conceded that 2020 is a weird year when no regular judgement could be made on a lot of matters. Welcoming Hong Kong's regulators have not asked banks to hold off dividend, the CEO said HANG SENG BANK is yet reminded by regulators of retaining capital to cope with deteriorating environment.
WATER OASIS GP (01161.HK) announced that it requires more time to provide additional information requested by the Auditors who also require more time in auditing the contract liabilities and the revenue as affected by the pandemic COVID-19. The Company needs additional time to publish the annual results ended September 2020. At the request of the Company, trading in its shares on the Stock Exchange has been suspended from 9:00
Hong Kong remained the least affordable housing market in the globe for the 11th year, highlighting the financial hub's income disparity, foreign media citing reports from Urban Reform Institute and Frontier Centre for Public Policy.

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