Sept 16 ASIAN MACRO INITIAL THOUGHTS US Futures flat Expected a muted open.
Covid-19 Globally over 29.4m cases, 931k deaths
Coronavirus-ravaged economies across the Asia Pacific will make a "swoosh-shaped" recovery next year, the Asian Development Bank forecast Tuesday, but it warned that further restrictions to combat the contagion could derail the region's return to growth.
US Futures open flat Dow futures +12pts S&P and NDX also flat.
ASIAN Futures indicate a muted open
DOW +0.01%, NDX +1.21%, S&P +0.52%, Russel 2K +0.1% Markets opened higher with the Dow drifting lower but but the NDX and S&P trading sideways. Markets drifted lower into the close with caution ahead of the Retail Sales data and FOMC announcement on Wednesday which will update its estimates for GDP, unemployment and inflation.
Apple +0.2% but off initial highs after its new product launch. Apple One Bundles announce along with iOS14, Apple Watch series 6, and AE, 8th Gen iPad, iPad Air, Fitness and workout services.
Microsoft +1.6%, Amazon +1.7% announced new luxury on line store, Alphabet +1.7%, Netflix +4.1%, Facebook +2.4%, Tesla +7.2% following the Monday rally
Nvidia +0.9%, AMD +1.3%, Micron unch and Skyworks +2.3%.
Re-opening stocks Boeing -1.1%, Caterpillar -3.2%, Simon Property +4.8%, Gap -2.4%, United Airlines +0.2%, Carnival -10.8% sash ti expected a $2.9bn loss for Q3
Kraft Heinz +0.3% having opened +1.5% on news its planning to cut $2 billion in costs over the next five years and sell its natural cheese business to Groupe Lactalis for $3.2 billion.
Sony -1.6% said it was cutting production targets for its upcoming PlayStation5 by 20%, due to issues with the consoles’ chips.
VF Corp +2.1% broker upgrade.
FedEX +9% as earnings beat expectations
Adobe +2% better than expected
Export Prices Aug -2.8% YoY vs -3.8% Jul revised from -4.4% (F/cast was -3%)
Export Prices Aug +0.5% MoM vs +0.9% Jul revised from +0.8% (F/cast was +0.6%)
Import Prices Aug -1.4% YoY vs -2.8% Jul revised from -3.3% (F/cast was -2%)
Import Prices Aug +0.9% MoM vs +1.2% Jul revised from +0.7% (F/cast was +0.6%)
NY Empire State Manufacturing Sept 17 vs 3.7 Aug (F/cast was 5)
Redbook -1.6% MoM vs -1% prior ( -1.2% YoY vs -0.1% prior)
Industrial Production Aug +0.4% MoM vs +3.5% Jul revised from +3% (F/cast was +1%)
Industrial Production Aug -7.7% YoY vs -7.4% Jul revised from -8.2%l (F/cast was -6.1%)
Manufacturing Production Aug +1% MoM vs +3.9% Jul revised from +3.4% (F/cast was +0.9%)
Manufacturing Production Aug -6.9% YoY vs -7.3% Jul revised from -7.7% (F/cast was -5%)
Capacity Utilisation Aug 71.4% YoY vs 71.1% Jul revised from 70.6% (F/cast was 72%)
API Crude Oil Stock Change 11/Sept -9.517m vs +2.97m prior (Consensus was +2.3m)
USD was weaker vs Yen & Euro. Bitcoin +1.7% @ 10,845.21, VIX -1% @ 25.59, US T10 @ 0.681%
OIL Brent +0.6%, WTI +2.7% as Gulf storm forces output cuts
Gold -0.2%, Silver -0.38%, Copper -0.21%
MBA Mortgage Applications, 30 year Mortgage Rate, Retail Sales, Business Inventories, NAHB Housing Market, EIA Oil Report, FOMC Interest Rate Decision & Press Conference, Foreign Bond Investment, Overall Net Capital Flows, Net Long-Term Tic Flows.
DAX +0.18%, CAC +0.32%, FTSE +1.32% with investors and traders focused on the Central Bank meetings with the FOMC, the BoJ, the BoE and the CBRC (Taiwan) all meeting over the next few days. Banks were in the red whilst other sectors were +VE. Europe opened higher following Asia with the DAX and CAC trading sideways and the FTSE working higher. Data was positive.
Hiscox +17%, after the company estimated that the fallout from a court decision over small business claims would be limited. I think it will also mean that insurers can raise premiums.
H&M +10.79% after beating Q3 profit expectations also announced ceasing to use cotton from Xinjiang.
Ocado 10.74% after reporting a surge in sales.
Fiat Chrysler also added 9% after a revision of its planned merger with Peugeot maker PSA.
Grenke plunged 18.84% after short-seller Viceroy Research, which issued early warnings over insolvent German payments company Wirecard, published a series of misconduct and fraud allegations against against the German business bank.
ZEW Economic Sentiment Index Sept 73.9 vs 64.0 Aug (F/cast was 51.5)
Labour Cost Index Q2 +4.2% YoY vs 3.7% prior revised (F/cast was -1.2%)
Wage Growth Q2 +5.2% YoY vs 3.9% prior revised (F/cast was -1%)
ZEW Economic Sentiment Index Sept 77.4 vs 71.5 Aug (F/cast was 69)
Current Conditions Sept -66.2 vs -81.3 Aug (F/cast was -76)
Inflation Rate Aug +0.2% YoY vs +0.8% Jul (F/cast was+0.2%)
Inflation Rate Aug -0.1% MoM vs +0.4% Jul (F/cast was -0.1%)
IEA Oil Market Report
Claimant Count Change Aug 73.7k vs 69.9k Jul revised (F/cast was 51k)
Employment Change Jun -12k vs -220k May (F/cast was -120k)
Ave Earnings ex bonus Jul +0.2% vs -0.2% Jun (F/cast was -0.8%)
Ave Earnings incl bonus Jul -1% vs -1.2% Jun (F/cast was -1.1%)
Unemployment Rate Jul 4.1% vs 3.9% Jun (F/cast was 4.1%)
EUROZONE Balance of Trade
GERMANY No data due
FRANCE No data due
UK Inflation Rate, Core Inflation Rate, Retail Price Index, PPI Input, PPI Output
JAPAN Expect Nikkei to open lower with cautious trading ahead of the FOMC announcement later and the BoJ meeting Thursday. Per market Trade data will also influence trading, with Exports and Imports expected to have improved MoM. Yen strengthened, currently 105.40
Data due Balance of Trade, Exports, Imports.
Tokyo reports 191 new Covid cases, up from 111 on Monday; nationwide the number was 44.
Suga appeared set on Tuesday to continue his predecessor’s policies by keeping key cabinet ministers and party officials in their posts, as he had promised.
Finance Minister Taro Aso said on Tuesday that thought should be given to an early dissolution of parliament given that the Olympic Games will be held in Japan next year.
JFE Holdings Inc said on Tuesday it would aim to cut CO2 emissions from its mainstay steel unit, JFE Steel, by more than 20% by the 2030 financial year that ends March 2031 from the 2013 level in a bid to tackle climate change. +VE
Hitachi Ltd. is considering withdrawing its ¥3 trillion yen plan to build a nuclear power plant in the U.K., sources familiar with the matter said Tuesday, with additional support from the British government to continue the project looking unlikely. The project to construct two nuclear reactors on the island of Anglesey in north Wales was suspended in January 2019 due to difficulty in securing funds. -VE
SOUTH KOREA Expect markets to open lower with cautious trading have hit a two year high on Tuesday as trading volumes remind moderate. Tech still the main focus.
No data due
Government said on Tuesday it plans to spend $146 million to procure coronavirus vaccines, initially aiming to secure a supply for 30 million people, or 60% of its population, as it battles persistent outbreaks of new cases.
South Korea‘s exports of information and communication technology products continued to increase for the third consecutive month in August, according to a government report released Tuesday. +VE
Hyundai Motor said Wednesday that it had exported hydrogen fuel cell systems to Swiss firm GRZ Technologies and an unnamed European energy solution start-up, in line with its efforts to expand its hydrogen business to the non-automotive sector. +VE
Hyundai Motor announced the launch of the overhauled version of its bestselling sport utility vehicle Tucson in a world premiere online event Tuesday. It is the fourth generation of the vehicle, released five years after the third generation. +VE
LG Chem will supply batteries to Amazon’s warehouse robots, according to industry sources Tuesday. It will supply the same cylindrical batteries that power Tesla electric vehicles to Amazon’s automated robots in operation within the retail giant’s warehouses starting from 2023, they said. +VE
TAIWAN Expect market to open flat and for turnover to remain light with caution ahead of the FOMC meeting announcement. The New Taiwan dollar rallied as new funds enter Taiwan, hitting its highest level since April 2018.
No data due
Local bicycle makers expect demand to continue outpacing supply due to orders triggered by the COVID-19 pandemic, with some companies seeing orders back up through next year. “Next year is all full in terms of orders. Our lead time on components is one year,” Giant Manufacturing chairwoman Bonnie Tu told a news conference in Taipei organized by the Taiwan External Trade Development Council (TAITRA) to announce next year’s Taipei Cycle Show. +VE
Presale and new housing projects in the nation’s major municipalities have reached NT$542.89 billion (US$18.48 billion) in the autumn sales season, as real demand is supporting the property market despite the COVID-19 pandemic, the online housing unit of Addcn Technology Co Ltd said in a report. The volume represents a minor drop of 4% YoY for the post-Ghost Month sales season, when developers and builders seek to reboot sales after lying low, the newhouse.591.com unit said in the report. +VE
Sharp Corp is to restart production of mid to low-range display panels to take advantage of demand generated by the COVID-19 pandemic, Sharp president Tai Jeng-wu said yesterday; he expects another strong year for notebook computer sales thanks to demand generated by distance learning. +VE
Tong Yang Industry, a supplier of automotive metal sheets and bumpers, yesterday reported that pretax profit +32% MoM to NT$135.29 million (US$4.6 million) from July thanks to recovering demand in the Chinese market. It's still -36% YoY but shows an improving trend. “Promotions by the Chinese government for new-energy vehicles in rural areas have boosted new vehicle sales, helping to prop up revenue growth for Tong Yang’s Chinese operations,” the company said in a statement. +VE
Fewer companies in Taiwan are willing to pay their employees mid-autumn bonuses this year, because of the economic effects of the COVID-19 pandemic, a survey released yesterday showed. Only 55.5% of employers said that they would distribute bonuses, compared with 60.2% last year, the online job bank yes123 said, citing its online polls. -VE
CHINA Expect market to open flat. Investors will remain cautious as the economy continues to expand with additional stimulus from the government. Exporters may see weakness as the Yuan continues to strengthen but that is +VE for companies with USD debt or exposure like Airlines.
No data due
President Xi Jinping on Monday pledged to expand agri-food imports from the European Union and cooperate on climate change – but he stopped short of making key concessions on the thorny issue of market access and hit back hard at EU criticism of human rights in China. WIth the EU saying “With market access, it is not a question of meeting halfway, it is a question of rebalancing the asymmetry and a question of openness of our respective markets,” she said. “China has to convince us that it is worth having an investment agreement.” -VE for Chinese Exporters
The PBOC announced that the bank owned RMB21.168491 trillion of foreign exchange at end-August, down RMB3.825 billion monthly.
The World Trade Organization found on Tuesday that the United States breached global trading rules by imposing multibillion-dollar tariffs in President Donald Trump’s trade war with China, a ruling that drew anger from Washington. The WTO’s three-member panel said the U.S. duties broke trading rules because they applied only to China and were above maximum rates agreed to by the United States. Washington had not then adequately explained why its measures were a justified exception, the panel concluded. China’s Commerce Ministry said Beijing supported the multilateral trading system and respected WTO rules and rulings, and hoped Washington would do the same. It will have little impact as this is just a first stage of legal actions
President Donald Trump said on Tuesday he had heard Oracle Corp was very close to a deal over ByteDance's TikTok, even as sources said the Chinese company was seeking to keep majority ownership of the popular short video app.
H&M cuts ties with Chinese supplier over Xinjiang forced labour accusations. It is ending its relationship with yarn producer Huafu Fashion. The company says it does not work with any garment factories in Xinjiang and will no longer source cotton from region
HONG KONG ADR’s +110pts to open at 24,841 but with cautious trading ahead of the FOMC and US retail sales data. Local sentiment +VE on the easing of social distancing rules and zero local covid cases. Chinese financials remain under pressure
No data due
SHORT SALES Tuesday 18.4% vs 22.3% Monday
Top Shorts Ping An (2318) 47%, BABA (9988) 39%, Mengnui Dairy (2319) 36%, Bank of China (3988) 29%, Sunny Optical (2382) 27%, Hang Seng Bank (11) 26%, ICBC (1398) 24%.
Semiconductor Manufacturing International Corp 0981.HK (SMIC) has asked for approval from the United States to continue supplying Huawei Technologies state media outlet Beijing News reported on Tuesday, citing the company.
MIDLAND IC&I Estimates Over 4,000 Idle Shops in HK; Vacancy Rate at 4 Key Districts Hits 12.6% Record-high. The number of idle shops in four key core districts (Tsim Sha Tsui, Mong Kok, Causeway Bay and Central) hiked to 945 between July and August, up 37% from 1Q20 or 96% yearly, MIDLAND IC&I (00459.HK)'s data showed. The shop vacancy rate of these districts hit 12.6%, setting an all-time high. The vacancy rate of Causeway Bay even peaked at 18%, being the highest among districts. The property agency forecast that there may be more than 4,000 vacant shops now in Hong Kong. As there are so many idle shops that take time to digest, paired with structural change of shops, the vacancy rate was expected to linger at high level looking forward.
In Hong Kong a lot of these are owned by individual landlords, many have held them for a long and only have small mortgages others have leveraged them and are now facing a very difficult time with a number looking to sell.
BABA-SW (09988.HK)'s "Xunxi" (Chinese name: 迅犀) is going to hit the market. It is a smart manufacturing platform that has been internally sneaking for three years, as Chinese media learnt from inside sources.
Alibaba.com hosted a month-long procurement event in September. During the first week of launch, the number of online transaction orders soared 125% yearly with transaction amount rallying 160% yearly.