Oct 23 Asian Macro Initial Thoughts Futures point to a higher open

27 Oct

Oct 23 Asian Macro Initial Thoughts Futures point to a higher open

Last Presidential Debate starts at 9am HK time
US Futures opened Dow +44pts but eased back to +22pts, S&P and NDX slight +VE
ASIAN Futures point to a higher open Nikkei futures +106pts, HK ADR’s +118pts but Australia has opened flat.  Tech in focus as Intel traded lower after results but vaccine names +VE as Gilead gets approval for its remdesivir drug.

DOW +0.54%, NDX +0.19%, S&P +0.52%, Russel 2K +1.65% Initial claims drop to the lowest since Marchalong with positive pre market earnings from Tesla +0.8% but off initial high, Coca-Cola +1.4% as the decline in sales slowed, Dow Inc +0.5%, AT&T +5.8% and CSX +3.8% helped the markets open higher. Southwest +5.2% as loss was less than market was expecting, American started weak on news revenues were -73% but turned positive on news fissuring new shares. But Chipotle Mexican Grill -4.5% as delivery costs hurt Q3 earnings.
Stock late rallied after Pelosi indicated that a deal was close. She cautioned there were still differences on some key issues and that it could take “a while” for lawmakers to actually write and vote on any aid bill; but he tone was +VE
Work from home names. Facebook -0.2%, Amazon -0.3%, Apple -1%, Microsoft flat, Netflix -0.8%, Disney +0.7%, Zoom +1.4%.
Nvidia -1.2%, Micron +2%, Skyworks -0.4%, AMD -0.4%.
Re-opening stocks Boeing +3.2%, Caterpillar +1.3%, Simon Property +3.3%, Kohls +4.8%, Nordstrom +9%, Gap +13.7%, United Airlines +4.8%, Carnival +5%
Lock down names Campbell Soup +0.3%, General Mills +0.6% and JM Smucker +1.1%
Intel -9.5% on mixed Q3 results; adjusted earnings in line, revenue slightly above but sales were below (was +0.8% in normal hours)
Mattel +6.4% on much better-than-expected results driven in part by strong sales from its Dolls division (was +3.8% in normal hours)
Gilead Sciences +4.6% after the Food and Drug Administration approved the use of the company’s remdesivir drug as a treatment against the coronavirus (was +0.8% in normal hours)
Seagate -4.5% as revenue of $2.31 billion was just shy of analyst expectations (was +0.2% in normal hours
Initial Claims 17 Oct 787k vs 842k prior revised (F/cast was 915k)
Initial Claims 4 week Average 17 Oct 811.25k vs 832.75k prior (F/cast was 877k)
Continuing Claims 10 Oct 8.373m vs 9.397m prior revised (F/cast was 9.750k)
Existing Home Sales Sept +9.4% MoM vs +2.4% Aug (F/cast was 3%) tight supply means that prices are rising too; Median price of a house was +14.8% YoY
CB Leading Index Sept +0.7% MoM vs +1.4% Aug (revised from 1.2%) (F/cast was +0.6%)
EIA Natural Gas Report 49Bcf vs 46Bcf (consensus was 52Bcf)
Kansas Fed Manufacturing Index Oct 23 vs 18 Sept (F/cast was 12)
5 yr TIPS Auction vs -0.951% prior
USD was stronger vs Yen & Euro. Bitcoin +2% @ 13,138.00, VIX -1.9% @ 22.11, US T10 +0.865%
OIL Brent +2.2%, WTI +1.4%
Gold -1.1%, Silver -2.1%, Copper +0.2%
AHEAD Services, Manufacturing and Composite PMI (Flash), Baker Hughes Total Oil Rig Count.

DAX -0.12%, CAC -0.05%, FTSE +0.16% markets opened lower following Asia and disappointment that a US stimulus plan had not yet been agreed. Rising covid cases a concern and earnings in focus along with US initial and continuing claims. But after a weak open markets climb back to flat helped by good Initial Claims data from the US and a small uptick into the close. Tech was weak but Travel and Leisure was +VE. Property weak as Shaftesbury announced plans to raise GBP300m in an equity issue. Capital & Counties weak as it said it would buy GBP65m of the issue.
Earnings IAG +4.4% having opened -5% as it posted a Q3 loss.
Dassault Systemes -2.1% despite the a slight annual rise Q3 net profit
Moneysupermarket.com -9.9% reported a sharp drop in revenues in Q3
Varta -7.8% announced extending its CEO’s contract to 2026.
Kone -3.7% despite reporting good demand in China but warned intense competition was putting pressure on prices.
Lifco +12% after good Q3 earnings
GERMANY GfK Consumer Confidence Nov -3.1% vs -1.7% Oct revised (F/cast was -3)
FRANCE Business Confidence Oct 93 vs 94 Sept Revised (F/cast was 95),
Business Climate Indicator Oct 90 vs 92 Sept (F/cast was 88)
EUROZONE Consumer Confidence Flash Oct -15.5 vs -13.9 Sept (F/cast was -14.6)
CBI Industrial Trends Orders Oct -34 vs -48 Sept (F/cast was -42)
CBI Business Optimism Index Q4 0 vs -1 Q3 (F/cast was -14)
After market
GfK Consumer Confidence Oct -31 vs -25 Sept (F/cast was -26)
EUROZONE Services, Manufacturing and Composite PMI (Flash).
GERMANY Services, Manufacturing and Composite PMI (Flash).
FRANCE Services, Manufacturing and Composite PMI (Flash).
UK Retail Sales, Services, Manufacturing and Composite PMI (Flash).

JAPAN Expect Nikkei to open higher Chicago Futures at 23,580 (Osaka at 23,590) vs  23,474 Thursdays close.  Yen currently 104.83 Inflation rate out pre market slightly weaker than F/cast, small negative.  PMI out at 8:30am. Tech may see selective weakness after the Intel numbers
Data out
Pre Market Inflation Rate Sept 0.0% YoY vs +0.2% Aug (F/cast was +0.1%)
Inflation Rate Sept -0.1% MoM vs -0.1% Aug (F/cast was +0.2%)
Inflation Rate Ex Food & Energy Sept 0.0% YoY vs -0.1% Aug (F/cast was +0.0%)
Core Inflation Rate Sept -0.3% YoY vs -0.4% Aug (F/cast was -0.3%)
Due at 8:30am, Services, Manufacturing and Composite PMI (Flash).
Fujifilm Holdings Corp 4901.T said on Thursday it has partnered with Shanghai-based Carelink Pharmaceutical Co to seek approval in China for Avigan to treat COVID-19 and influenza. +VE
Thousands of Chinese fishing boats have ignored demands that they leave the rich fishing grounds within Japan’s exclusive economic zone off the northwest coast, with the Fisheries Agency in Tokyo forced to recommend that Japanese trawlers operate elsewhere to avoid clashes. A sign of the growing tension and likely to spark increase anti Chinese sentiment.
Japanese oil refiners may accelerate efforts to make cleaner fuels such as hydrogen if the government sets a more ambitious goal to achieve zero emissions by 2050, the head of the Petroleum Association of Japan (PAJ) said on Thursday.
Basing Japan’s missile defence systems at sea may cost at least twice as much to complete as its now-abandoned plans for Aegis Ashore ground-based sites and delay it to 2028, a person with knowledge of the plans told Reuters.
FT reports that Japan Post plans to break up and sell parts of Toll Group, the Australian logistics business it bought for $5bn in 2015. -VE
BoJ warns of rising defaults if virus downturn is lengthy (ie to 2021/22) which could put downward pressure on the economy.

SOUTH KOREA Expect markets to open higher, Expect to see bargain hunting on news that a US stimulus deal is close.  Good local results also to give +VE support to the market.  SK Hynix may see weakness after the Intel numbers
No data due
Concerns remain over the flu jabs with more deaths
but officials say no link to the vaccines -VE for sentiment. At least 25 people have now died after being vaccinated.
Government reported 121 new coronavirus cases (104 locally transmitted and 17 imported) in the 24 hours ending midnight on Wednesday vs 91 for the previous period. -VE
LG Display on Thursday posted third-quarter revenue of 6.7 trillion won ($5.9 billion) and an operating profit of 164.4 billion won, marking the company’s first profit in seven quarters. Revenue was +27% QoQ, Net profit was 11.1 billion won.
LG Household & Health Care posted 2.7 trillion won ($2.38 billion) in Q3 revenue, its best-ever earnings for the period. Revenue +5.4% YoY, the company also posted a net profit of 231.7 billion won, +6.7% YoY and an operating profit of 327.6 billion won, +5.1% YoY.
Samsung SDS announced Thursday that the company had won both foreign and local competitions designed to test natural language processing capabilities. Its artificial intelligence model won a competition associated with HotpotQA -- a dataset developed by researchers from Carnegie Mellon University, Stanford University, the Montreal Institute for Learning Algorithms, and Google AI.+VE
LG Electronics on Thursday announced a new lineup of tailorable home appliances under the brand Objet, joining the growing market for customizable consumer electronics. It unveiled 11 new products, including a convertible refrigerator, dishwasher, lightwave oven, water purifier, washing machine and clothes care machine.
Big Hit Ent An instant 425.8 billion-won ($375.1 million) selloff by major shareholders appears to have caused a sharp decline of the Big Hit stock price in the days after its listing, market watchers said Thursday.
South Korea's antitrust chief said on Thursday the agency believes U.S. search engine giant Google has undermined competition, adding that the agency plans to present a case to its review committee this year. Slight -VE coming as the US DoJ launches as case too.
Korea Shipbuilding & Offshore Engineering Co. said Thursday that it and its unit Hyundai Mipo Dockyard Co. have won approval for the design of a commercial hydrogen carrier for the first time in the world.

TAIWAN Expect market to open higher following the US and likely to test the 12,900 in early trades.
Data due after market
Retail Sales, Industrial Production and M2 Money Supply
From Thursday Unemployment Sept 3.78% vs 3.83% Aug (F/cast was 3.8%)
Government reported 4 new covid cases all imported
Asia Pacific Telecom yesterday said it aims to turn a profit in the next three to five years by boosting revenue contribution from enterprise customers, which deliver better margins and are keen to adopt ultrahigh-speed and low-latency 5G services.
The Financial Supervisory Commission (FSC) is to conduct a full inspection of the 22 securities firms that offer high-speed trading services to see if they treat clients fairly, FSC Chairman Thomas Huang said yesterday. -VE Brokers
Powertech Technology yesterday said that net profit -7.1% sequentially last quarter due to sluggish demand for system-in-package (SiP) modules and mobile DRAM chips. Net income fell to NT$1.62 billion (US$56.05 million), compared with NT$1.75 billion in the second quarter. Earnings per share declined to NT$2.10 from NT$2.26. It was hurt by the US ban in Huawei but believes Q3 will be the low point.
Acer must “think outside of the PC,” said the chairman as it unveiled a new array of products from air purifiers to an artificial intelligence (AI) translator for gamers, yesterday.
Tatung Co +10% Thursday, the maximum daily limit, after the company’s extraordinary shareholders’ meeting Wednesday to elect a new board of directors. Activist investors led by Shanyuan Group chairman Wang Kuang-hsiang won seven seats on Tatung’s nine-member board, ending the founding Lin family’s 102-year control of the company.
Feng Hsin Steel yesterday reported Q3 net profit +19% QoQ and 111% YoY to NT$764 million, or earnings per share (EPS) of NT$1.31, the highest this year. It said that it is positive on steel demand for this quarter on the back of government infrastructure programs and the return of overseas Taiwanese businesses.

CHINA Expect market to open higher but upside limited with caution ahead of the China’s Fifth Plenum of the Nineteenth Communist Party Congress which kicks off next week (Oct 26 to 29).
No data due
China threatened on Thursday to retaliate against the latest U.S. arms sale to Taiwan
, as the island welcomed the weapons package but said it was not looking to get into an arms race with Beijing.
Beijing must dismantle capital controls to create a more globally accessible yuan as strict foreign exchange controls not conducive to internationalising the yuan, according to former central bank governor Zhou Xiaochuan. BUT Zhou’s “reformist” take on the yuan runs contrary to some influential voices within China saying Beijing should not rush to open up capital account
China on Thursday signed an agreement with the Mekong River Commission (MRC) to share year-round data on the flow of its portion of the vital waterway amid concern that Chinese dams may be causing drought downstream in Southeast Asia.
SCMP report China’s retail sales rebound, but a shift in consumer habits makes the economic outlook fuzzy. Notes the recovery in Chinese consumer spending remains weak and has been led mainly by high-end consumption, leading analysts to wonder if the momentum is sustainable in the fourth quarter. Uneven purchasing patterns and a drop in spending compared with income levels in the third quarter show China ‘has a ways to go to return to normalcy’. I still think the majority of Chinese consumers are concerned about the recovery and job security.

HONG KONG ADR’s +118pts to open at 24,904 and expect a small short squeeze on the open. Earnings still in focus but the final presidential debate likely to be a distraction for some US investors at the start of trading.
Data Due after hours
Business Confidence
After market Thursday Inflation Rate Sept -2.2% YoY vs -0.4% Aug (F/cast was +0.1%)
The decrease was larger than in August 2020, mainly due to the waiver of public housing rentals by Hong Kong Housing Authority in September 2020. Netting out the effects of all Government's one-off relief measures, the year-on-year rate of increase in the Composite CPI (i.e. the underlying inflation rate) in September 2020 was 0.5%, larger than that in August 2020 (0.1%). The larger increase in September was mainly due to the increases in the costs for meals bought away from home and the upward adjustment in public housing rentals.

SHORT SALES Thursday 16.8% vs 16.4% Wednesday
Top Shorts
Country Garden (2007) 40%, Mengniu Dairy (2319) 37%, Ping An (2318) 33%, ICBC (1398) 27%, MTRC (66) 25%, Hengan (1044) 25%, HSBC (5) 25%, Hang Seng Bank (11) 25%.

Canalys, in its report, said the smartphone shipments in India displayed recovery in 3Q20, up 8% YoY 
to 50 million units, notching an all-time high for smartphone shipments in a single quarter in India. Among which, XIAOMI-W (01810.HK) continued to lead the market shares with shipment growth of 9% YoY to 13.1 million units and market share rising to 26.1% from 3Q19's 25.9%.
LEE & MAN PAPER (02314.HK) announced that substantial shareholder Lee Wan Keung transferred 96.0581 million shares to Lee Man Bun, son of the former and CEO of the Company, for no consideration as a gift. After the transfer, Lee Wan Keung holds 411 million shares (9.5% of company) and Lee Man Bun holds 1.359 billion shares, (31.3% of the Company).
CNOOC (00883.HK) announced that the unaudited oil and gas sales revenue reached approximately RMB35.55 billion for the third quarter of 2020, -26.8% YoY. During the quarter, total net production was 131 million barrels of oil equivalent, + 5.1% YoY.
SUNAC (01918.HK) announced that during the period from 21 October to 11 November, nearly 100 projects from 51 cities will gradually come available at BABA-SW (09988.HK)'s TMall Haofang.
Ant Chain officially announced the launch of its digital copyright service platform to the whole society, Shanghai Securities News reported. Harnessing the blockchain and AI technology of Ant Chain, the platform is capable of rendering one-stop services - from registration to copyright protection - for original works.
CK ASSET (01113.HK) released the first price list for El Futuro, involving 54 flats with saleable area of 484-1,226 sq.ft. Prices on the list range $9.78-32.415 million. Deducting a maximum discount of 22%, the selling prices range $7.6284-25.2837 million, i.e. $17,730 per sq.ft. on average.
HSBC +VE as feng shui master predict that the banks luck will change for the better now that the Lions are back and have been awakened in the unveiling ceremony.

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