Sept 2 ASIAN MACRO INITIAL THOUGHTS ASIAN futures mixed
Covid-19 Globally over 25.6m cases, 853k deaths
US Futures opened slightly higher
Asian Futures mixed with Japan higher but HK lower
DOW +0.76%, NDX +1.39%, S&P +0.75%, Russel 2K +1.07% markets opened around flat and worked slowly higher all day, closing at record highs.
ISM Manufacturing Data was stronger than F/cast giving the market +VE sentiment on the recovery and whilst some are expecting a possible correction it is expected to be only around 10% if it comes. Normal concerns about this week’s US Jobs report have been reduced after the new Fed policy was announced last week.
Apple +4% leading Tech after share split and on news iits producing 75m new iPhones.
Walmart +6.3% to launch its own membership programme to compete with Amazon Prime
Zoom +41% continued to rise after strong earnings
Tesla -4.7% regulatory filing shows the company would sell up to $5 billion of its own stock.
Re-opening stocks which were strong in August opened weak but recovered Royal Caribbean -0.5%, MGM Resorts +1.2% FedEx +2.6%, Gap +2.2%, Delta Air Lines +0.5% and Norwegian Cruise Line -1%
Redbook 5.8% MoM vs +4.1% prior ( +4.6% YoY vs +0.6% prior)
Manufacturing PMI Aug 53.1 vs 50.9 Jul (F/cast was 53.6)
ISM Manufacturing Data
New Orders Aug 67.6 vs 61.5 Jul (F/cast was 57.6)
Prices Aug 59.5 vs 53.2 Jul (F/cast was 52.8)
Employment Aug 46.4 vs 44.3 Jul (F/cast was 44)
PMI Aug 56.0 vs 54.2 Jul (F/cast was 54)
Construction Spending Jul +0.1% MoM vs +1% Jun (F/cast +0.5%)
API Crude Oil Stock Change -6.36m vs -4.5m prior. (Consensus was -1.95m)
Total Vehicle Sales for Aug due at 7am (Jul was 14.5m)
USD was unchanged vs Yen & Euro. Bitcoin +3% @12,033.29, VIX -1.1% @ 26.12, US T10 0.672%
OIL Brent +0.7%, WTI +0.4% on good manufacturing data. API stock change at the end of the day also +VE for oil
Gold -0.2%, Silver -1.2%, Copper -0.2% It initially rose but came off on the good manufacturing data.
AHEAD MBA Mortgage Applications and 30 year Mortgage Rate, ADP Employment Change, ISM New York, Factory Orders, EIA Oil Report, Feds Beige Book
DAX +0.22%, CAC -0.18%, FTSE -1.7% UK opened lower and trended lower all day with accelerated selling around 2pm but these a small bounced. DAX & CAC opened higher and initially tested higher, then traded sideways again saw selling around 2pm, bounced back and traded sideways into the close.
Eurozone data missed badly raising expectations that the ECB may have to act sooner. China’s PMI data a +VE,
Chip makers +VE on news that Apple is to make 75m new iPhones +VE for s Dialog Semiconductor +3.9%, Infineon +1.5%, STMicro +0.83% and ASML +2.8%
AstraZeneca -1.7% giving up early gains, despite news that it had expanded an agreement with Oxford Biomedica to produce its potential Covid-19 vaccine.
Manufacturing PMI Aug 51.7 vs 51.8 Jul (F/cast was 51.7)
Core Inflation Rate Flash Aug +0.4% YoY vs +1.2% Jul (F/cast was +0.9%)
Inflation Rate Flash Aug -0.2% YoY vs +0.4% Jul (F/cast was +0.0%)
Inflation Rate Flash Aug -0.4% MoM vs -0.4% Jul (F/cast was -0.2%)
Unemployment Rate Jul 7.9% vs 7.7% Jun revised (F/cast was 8%)
Unemployment Rate Aug 6.4% vs 6.4% Jul (F/cast was 6.4%)
Unemployment Change Aug -9k vs -17k Jul revised (F/cast was -10k)
Manufacturing PMI Aug 52.2 vs 51.0 Jul (F/cast was 53.0)
Manufacturing PMI Aug 49.8 vs 52.4 Jul (F/cast was 49)
New Car Registrations Aug -19.8% YoY vs +3.9% Jul
Manufacturing PMI Aug 55.2 vs 53.3 Jul (F/cast was 55.3)
BoE Consumer Credit Jul GBP 1.2b vs -0.382b Jun revised (F/cast was +0.6b)
Mortgage Approvals Jul 66.3k vs 39.9k Jun revised (F/cast was 51k)
Mortgage Lending Jul GBP 2.7b vs 2.4b Jun revised (F/cast was 2.5b)
Net Lending to Individuals Jul GBP 3.9b vs 2b Jun revised (F/cast was 2.1b)
GERMANY Retail Sales
FRANCE No data due
UK No data due but a number of BoE speakers
JAPAN Expect Nikkei to open higher following the US. Yen currently 105.96
The Nikkei futures contract in Chicago was at 23,260 while its counterpart in Osaka was at 23,180. That compared against the Nikkei 225′s last close at 23,138.07.
No data due
LDP decides on slimmed down voting. Move thought to benefit Yoshihide Suga, who will hold a press conference on Wednesday when he is expected to announce his candidacy. Also declared are former Defence Minister Shigeru Ishiba who said he regretted that ordinary party members will be unable to vote. Fumio Kishida declared, and said he can show strength in the economic and foreign policy fields and he wants to be a leader who listens to the people.
Health ministry said on Tuesday it planned to participate in the World Health Organization's COVID-19 vaccine programme known as COVAX.
Government is considering tax reform to attract foreign financial firms and skilled workers in an effort to improve the country's standing as a global financial center, the Financial Services Agency said in annual policy guidelines.
Nippon Steel Corp is seeking overseas mergers and acquisitions (M&As) but not for further M&A deals at home, its president, Eiji Hashimoto, said on Tuesday.
Nippon Yusen K.K. said Tuesday that it will conduct a trial to put high-power fuel cell commercial ships into practical use with Kawasaki Heavy Industries Ltd., Toshiba Energy Systems & Solutions Corp. and others.
Pasona to move core functions and 1,200 staff from Tokyo to Awaji Island. The move is aimed at reducing impact from futures disasters Slight +VE as should also reduce costs.
Wholesale prices of rice likely to fall for the first time in six years, +VE consumers -VE farmers. Reflects lower demand for dining out because of the novel coronavirus epidemic, on top of a population decline and a continued shift in consumer preference away from the traditional staple food.
SOUTH KOREA Expect markets to open higher following the US; Inflation data realised pre market rose more than expected +VE
Data out Inflation Aug +0.7% YoY vs +0.3% Jul (F/cast was +0.4%)
Inflation Aug +0.6% MoM vs +0.0% Jul (F/cast was +0.2%)
South Korean prosecutors indicted Samsung Group's Jay Lee on Tuesday on suspicion of accounting fraud and stock price manipulation in connection with a 2015 merger. -VE
Samsung’s Galaxy Z Fold2, and the 5G version of the Galaxy Z Flip were fully unveiled through a livestream event on Tuesday. It’s the third foldable device after the Galaxy Z Flip -- features a larger and fuller bendable display that aims to offer users greater immersion and the convenience of having a large-size screen. +VE
KEPCO said South Korea’s electricity sales are projected to shrink 3.3% YoY; signalling the worst retreat in demand since 1998, according to a research body under Korea Electric Power Corp. on Tuesday. -VE
LG U+ announced Tuesday that the company has forged an alliance to create augmented reality and virtual reality content. Joining the Global XR Content Telco Alliance are: LG+U, KDDI in Japan, Bell in Canada and China Telecom. Award-winning entertainment studios Felix & Paul Studios and Atlas V are also joining the alliance as partner companies. +VE
TAIWAN Expect market to open higher with Tech in focus.
No data due but PMI yesterday hit the highest levels this year. It climbed to 56 after expanding for the second consecutive month, as most firms reported a business upturn ahead of the high season for technology products, the Chung-Hua Institution for Economic Research said yesterday. BUT they cautioned against interpreting the latest PMI as a sign of a recovery, saying it only indicates that the operating conditions improved from one month earlier.
EVA Airways has canceled orders with Boeing Co for seven 787-10 Dreamliner passenger jets, replacing them with orders for three 777F cargo aircraft and four smaller 787-9 jets, as the airline looks to grow its cargo business and optimize its network. +VE
New vehicle sales last month slumped 20.7% MoM to 34,846 units as consumers took to the sidelines as Ghost Month began, online market researcher U-Car said in a report on its Web site yesterday -VE
CHINA Expect market to open higher following the US. Yuan strengthening slight -VE for Exporters but +VE for those with USD debt or liabilities like Airlines.
No data due but on Thursday we get Caixin Services and Composite PMI's
China accused the United States on Tuesday of using “national security” concerns as an excuse to act against Chinese firms, in a response that followed days after the Pentagon listed 11 more Chinese firms as being owned or controlled by the military.
China is expected to at least double the number of its nuclear warheads over the next decade from the low 200s now and is nearing the ability to launch nuclear strikes by land, air and sea, a capacity known as a triad, the Pentagon said on Tuesday.
China tells US to stop building relationship with Taiwan after economic dialogue announcement. It has told Washington to stop ‘official interaction in all forms’ and accuses it of violating the one-China principle. The likely US response it to point out that China has violated its agreement to settle its Taiwan issue peacefully. YEsterday’s declassification of the Taiwan Assurances in the US will put further pressure on China to stand down over Taiwan which would be politically difficult for President Xi. FT Editorial says more nations should be supporting Taiwan and the approach should be a united one. But it says full recognition of Taiwanese statehood is not on the card because of the threat that would trigger a Chinese attack; which sounds at odds with itself.
Germany urges China to withdraw the Hong Kong national security law and seeks access to Uygurs in Xinjiang. German Foreign Minister also criticised Wang Yi’s ‘threats’ against the Czech senate president’s trip to Taiwan. So far four of the five European countries Wang visited raised concerns publicly with him over Hong Kong -VE
HONG KONG ADR’s -122pts to open at 25,062 with broad weakness desire the US markets closing higher. Holding 25k will be key psychologically for the market. Earnings revisions still impacting trading.
No data due After Market Tuesday
Retail Sales Jul -23.9% YoY vs -25.3% Jun revised down (F/cast was -18%)
The 18th successive decrease in retail trade, driven mainly for food, alcoholic drinks and tobacco (-12.9%); other consumer goods, not elsewhere classified (-7.2%); jewellery, watches and clocks, and valuable gifts (-53.7%); electrical goods and other consumer durable goods, not elsewhere classified (-5.6%); and commodities in department stores (-28.8%). Also, wearing apparel (-42.5%); medicines and cosmetics (-50.9%); motor vehicles and parts (-13.1%); books, newspapers, stationery and gifts (-41%); Chinese drugs and herbs (-26.5%); footwear, allied products and other clothing accessories (-53.6%); and optical shops (-37%).
SHORT SALES Tuesday 20.2% vs 14.6% Monday
Top Shorts MTRC (66) 50%, Hang Seng Bank (11) 44%, HK & China Gas (3) 41%, BoC HK (2388) 39%, BankComm (3328) 38%, Want Want (151) 34%, AIA (1299) 33%, CITIC (267) 30%, Sino BioPharm (1177) 28%, CLP (2) 27%, China Res Land (1109) 27%, Petrochina (857) 26%, Sino Land (83) 26%, Mengniu Dairy (2319) 26%, Ping An (2318 25%, HSBC (5) 25%.
As USD/ HKD triggered the Strong-side Convertibility Undertaking, HKMA undertook US$1.25 billion selling orders to inject HK$9.688 billion into the market. The balance of the banking system of Hong Kong will increase to HK$203.879 billion on 3 September. The The large number of IPO’s is rising the demand for HK Dollars. It's also interesting to see local brokers offering significant margin financing for investors to utilise.
YUM CHINA-S (9987.HK) (YUMC.US), on the first day of IPO, reported $4.08 billion margin granted by six brokers in aggregate at around 5:30 pm. Based on the fundraising amount of $785 million from the public offering, HK IPO was over-subscribed by 4.2 times. Many see this as underwhelming but there is still retail money tied up in the Nongfu Spring IPO that will not be released until after the Yum Brand IPO closes. The surge in listings is also putting pressure on the HK$.
GEELY AUTO (175.HK)'s Sci-Tech Innovation Board IPO. review status has been updated to "Application Accepted", according to the Shanghai Stock Exchange website. The Chinese automaker purportedly seeks to raise RMB20 billion. +VE
HSBC's PayMe team announced that, starting from October 1st 2020, the monthly credit card top-up limit will be cut to HK$1,000 from HK$2,000. Although it might bring inconvenience to customers who use credit cards as the major way of top-up, they could choose to use their bank account as a new way of top-up in order to enjoy higher monthly top-up limit of up to HK$50,000, according to the PayMe team.
Penguin ("企鵝號"), TENCENT (700.HK)'s content open platform, launched a 60-day special rectification program during the summer vacation, reported Chinese media. Data showed the platform had uncovered and blocked 2.831 million feeds of violating contents, involving 266,000 feeds of indecent contents jeopardizing adolescents.
TIMES CHINA (1233.HK) announced that aggregated contracted sales for the eight months ended 31 August 2020 amounted to RMB49.366 billion, +14.4% YoY with contracted gross floor area of 3.529 million square meters. In August 2020, contracted sales amounted to RMB8.92 billion, +41% YoY with contracted gross floor area of 622,000 square meters.
R&F PROPERTIES (2777.HK) announced that the Group’s attributable contracted sales for the month of August 2020 amounted to RMB10.86 billion, +3.13% yearly.
BYD COMPANY (1211.HK) announced that its third plant in Brazil had started operation and this plant is the first to produce LiFePO4 batteries in the Manaus industrial region of South America. The plant is located in the north of Amazonas, specialised in producing LiFePO4 batteries.