Covid-19 Globally over 7m cases, 403k deaths whilst still overhanging the market becoming less important to European and US investors being replaced by the recent racism protests. But in Asia Investors remain concerned about covid-19 and the potential for second waves of infection.
The World Bank said on Monday, the coronavirus will cause global economic output to contract by 5.2% in 2020, warning that its latest forecasts would be revised downward if uncertainty over the pandemic and business lockdowns persist.
DOW Futures opened +20pts suggests a slight decline on the US open.
DOW +1.7%, NDX +1.13%, S&P +1.2%, Russel 2K +1.97% Dow opened strongly after the futures and seen a volatile day. Nasdaq opened flat briefly dipped before working higher. S&P opened slightly up and traded sideways before working higher. Indexes worked higher through the day to close at their highs. S&P now +VE for the year, NDX hit a new high, Dow is just -3.3% for the year.
Back to work stocks continue to rally; Airlines Retail and Cruise Lines
United +14.8%, Delta +8.23%, SouthWest +6.3%, Kohl +8.5%, Nordstrom +4.2% Carnival +15.8% and Royal Caribbean +8.2%, Boeing +12%
Stay at home stocks were weak in early trading but recovered through the day Netflix unch Microsoft +0.6%, Zoom +1%, Facebook +0.3%, Apple +0.6%.
Amazon +1.7% traded in the green all day
OpenTable survey shows restaurant booking are currently 80% BELOW last year levels. But investors are still expecting a swift economic recovery and Covid-19 cases in some US cities are still growing.
People are asking three questions: does the jobs number reflect the state of the real economy, was the jobs data correct and what is the further impact of government policy. Many will be now watching to see what the Fed says on Wednesday and will it add more stimulus to insure the economy.
Consumer Inflation Expectations May 3% vs 2.62% Apr (F/cast was 2.2%)
USD was weaker vs Yen & Euro. Bitcoin -0.3% @ 9722.00, VIX +5.3% @ 25.81,
US T10 0.879%
OIL Brent -3.1%, WTI -3.4% after Saudi Arabia said an extension of output cuts by OPEC+ nations would not include additional voluntary reductions by a trio of Gulf producers.
Gold +0.7%, Silver +1.6%%, Copper +0.6% on dovish signals from the Fed
AHEAD NFIB Business Optimism, Redbook, Wholesale Inventories, JOLTs Job Openings, IBD/TIPP Economic Optimism, API Crude Oil Stock Change
DAX -0.22%, CAC -0.43%, FTSE -0.18% Markets opened lower and worked higher but then sold back down int he last hour and then saw a small uptick into the close. The FTSE spend the most amount of time in the green, the CAC the least. German Industrial Production missed forecasts -VE for sentiment.
Autos and Banks lead the gains as investors watch lockdowns ease. Financial serves weak on concerns of defaults ahead.
UK 14 day quarantine for arrivals starts as other European states ease their border controls
AstraZeneca -2.7% on reports its approached Gilead Sciences +0.3% for potential merger
Sartorius -8.8% as UBS added it to its Sell list
Carnival +10% continues to rebound albeit from a very low base.
GERMANY Industrial Production Apr -17.9% MoM vs -8.9% Mar (F/cast was -16.2%)
EUROZONE Employment Change, GDP Growth Rate, EcoFin meeting
GERMANY Balance of Trade, Imports and Exports, Current Account
FRANCE Balance of Trade, Current Account
UK No data due
JAPAN Expect Nikkei to open higher following the rally in the US and to build on Monday’s gains when it closed at a 3.5 month high. Yen currently 108.38 having closed at 109.50 Monday. Ecowatchers sentiment improved for the first time in four months. News flow light.
Data due April Average Cash Earnings (Mar was +0.1%, F/cast is +0.5%)
Japan hopes to draft a joint statement on China's new security legislation on Hong Kong at the next Group of Seven (G7) foreign ministers' meeting, a Japanese government source familiar with the matter told Reuters on Monday.
Japan’s economy braced for its worst postwar slump even as Q GDP contracted less than initially thought, as the coronavirus crisis slams the brakes on global growth and raises pressure on Tokyo to cushion the blow to business and consumers but with especial emphasis on faltering businesses like the SME’s and Catering sectors.
SOUTH KOREA Expect markets to open higher and continue to work higher building on Monday’s gains.
No data due
Government will toughen probes into large firms infringing on the technologies of small and medium-sized enterprises, officials said the Ministry of SMEs and Startups it will move to revise regulations related to companies’ technology infringements to reinforce the investigative power.
Samsung Group's leader, Jay Y. Lee, appeared before a South Korean court on Monday, awaiting a ruling on whether new allegations including accounting fraud and stock manipulation will send him back to jail after more than two years of freedom.
Hyundai, Kia to extend suspension of S. Korean plants -VE Hyundai also said that the launch of new models and shifting consumer tastes seeking more driving comfort, sales of its sedans recorded a three-year high. It will also provide its sales and auto parts dealerships 55.7 billion won ($46 million) in subsidies to stabilize their operations amid the COVID-19 pandemic. Slight +VE overall.
Hanwha Systems Co., the defense industry unit of Hanwha Group, said Monday it has acquired Phasor Solutions Ltd a British satellite communication antenna company in a move to secure a new growth driver. +VE
BAT Korea said Monday it will kick off a promotional event for its latest product Glo Pro and Glo Series 2 Mini, offering them at discounted prices on its website and at convenience stores. +VE
Posco said Monday its smart factory support program for small and medium-sized enterprises has been seeing positive outcomes, such as in their revenue growth +VE
GS Caltex said Monday it has launched drone delivery services at its gas stations on Jeju Island, utilizing them as logistics hubs. +VE
TAIWAN Expect market to open higher and continue to work cautiously higher; trade data out after market Monday will give further support to the Tech sectors. Banks likely to remain under pressure after CTBC and SinoPac numbers.
No data due.
After Market Monday
Balance of Trade May US$4.72b vs 2.27b Apr (F/cast was 2.2b)
Exports May -2% YoY vs -1.3% Apr (Consensus was -4.73%)
Imports May -3.5% YoY vs +0.5% Apr (Consensus was -2.1%)
Exports dropped last month as cheaper crude oil prices dampened sales of products heavily reliant on raw materials, overshadowing shipments of electronic components, the Ministry of Finance said yesterday and could mean that exports might not recover for the rest of the year. Textiles weak but Electronics continued too gain traction.
IDC wrote in a research report that Taiwan's 1Q20 tablet market was -46.3% yearly to 130,000 units; FY20 market was expected to slide 24% to 760,000 units. During the quarter, Taiwan's smartphone market totaled 1.35 million devices, -18.6% YoY; FY20 market was expected to fall 11.4% to 5.72 million devices.
CTBC Financial Holding yesterday reported that net profit for April fell year-on-year, due to less income from interest and fees. CTBC Financial’s profit -4.5% to NT$3.35 billion (US$112.37 million), as profit at its banking unit, CTBC Bank was -29.6 percent to NT$1.83 billion. There was “less interest income due to the central bank’s rate cut of 25 basis points in March,” and lower fee income because consumers became conservative about wealth management and credit card spending amid the pandemic.”
SinoPac Financial Holdings Co also reported lower profit -9.8% but E Sun Financial saw its net profit +22%
Net foreign fund outflow reached US$3.39 billion last month, increasing from US$427 million a month earlier, as foreign institutional investors sold local shares, despite the local equity market’s recovery, Financial Supervisory Commission data showed. It cited the need for cash to meet redemptions and booking recent gains.
Giant and Merida report sales rebounding +VE
Largan Medical Co Ltd a contact lens subsidiary of handset camera lens manufacturer, yesterday said that it would manufacture contact lenses for Watsons Personal Care Stores (Taiwan) Co on a contract basis. +VE
Global PMX yesterday said that it expects major clients to gradually increase orders back to previous levels this quarter as the COVID-19 situation stabilizes and markets start to reopen. +VE
CHINA Expect market to open higher following the US rally over night but could see caution in the PM ahead of China inflation and PPI data due Wednesday morning.
No data due
China dropped Shanghai as one of the first ports of entry for international flights bound for the capital, Beijing, while four new cities were added to the list and Wuhan, where the coronavirus was first identified, will be a “backup”. Incoming international flights to Beijing have to land at one of 16 designated airports, where passengers are screened. Passengers who test negative for the virus are then permitted to reboard the plane to Beijing. The revised list of airports names Chengdu, Changsha, Hefei, Lanzhou, Tianjin, Shijiazhuang, Taiyuan, Hohhot, Jinan, Qingdao, Nanjing, Shenyang, Dalian, Zhengzhou and Xi’an, with Wuhan as back-up.
Huawei in state of alarm: according to media reports key being that its running out of certain self designed chips that require US technology to make. IT can buy off the shelf chips but there are unlikely to be enough to meet demand and it would mean compromising performance. Likely to heighten tensions with the US.
Two more liquor makers have sought listings in China, riding a wave of investor enthusiasm over spirit makers which has helped push their shares to record highs. Sichuan Langjiu applied to the securities watchdog for a 7.45 bn yuan ($1.05 billion) Shenzhen initial public offering over the weekend, the second liquor company to do so in just weeks. Guizhou Guotai Liquor filed for a 2.5 bn yuan IPO in Shanghai in late May.
HONG KONG ADR’s +180pts at 24,956 but expect an initial short squeeze as shorts rose again Monday and for the market to retest 25,000. Details of the HK$10k govt payout likely to help sentiment. But we may see some caution into the close ahead of China Inflation and PPI data due Wednesday
No data due
Short Selling HSI Monday 18.9% vs 14% Friday
Top Shorts Wharf REIC (1997) 40%, Hang Lung Ppty (101) 38%, Hengan (1044) 38%, Ping An (2318) 36%, Bank of China (3988) 30%, Want Want (151) 29%, CLP (2) 29%, China Res Land (1109) 27%, Hang Seng Bank (11) 27%, ICBC (1398) 26%, Country Garden (2007) 25%.
BUYBACKS/INSIDER DEALING Li Ka-shing, Victor Li continue to buy CKA (1113 HK) adding another 1.6285M CKA (1113 HK) Shrs bought between 2-4 June.
POLICITCS Zhang Yong, vice-chairman of the Basic Law Committee under the National People’s Congress (NPC) Standing Committee gave a 53 minute address saying the new law will only affect a small number of people and it will respect he SARs independent judiciary.
FT article Hedge funds hatch their Hong Kong escape plans suggests that the national security law could prompt hedge funds to leave HK.
REUTERS reports HSBC, Standard Chartered and Citigroup have seen a spike in enquiries (circe +25%) from Hong Kong residents about opening offshore accounts amid concerns stemming from China’s decision to impose a national security law on the city. But they have not seen large outflows. Many people I think have just switched their HKD into USD accounts with the banks but not moved money to off-shore accounts.
KAISA PROSPER (2168.HK) proposed to place 14Mn shares by top-up subscription at $32.5-33.45 per share, representing a discount of 7.5%-10.1% over the closing price on 8 June, and involving $455-468 million, as revealed by the sales document viewed by our reporters. The amount raised will be mobilized in potential M&A, strategic investment and general corporate purposes.
HKD re-hit the Strong-side Convertibility Undertaking, the HKMA injected HKD4.263 billion into the banking system. As such, the balance of the banking system was expected to hike to HKD108.7 billion this Wednesday (10 June).
JD-SW (09618.HK)'s HK IPO, As at 6pm ten brokers granted over $41.7 billion margin for the IPO. Based on the fundraising amount of approximately $1.5694 billion from public offering, the stock was over-subscribed by roughly 25.6 times.
DICKSON CONCEPT (113.HK) annual results ended March 2020. Net profit $646mn, +57% YoY. EPS equaled 162.9 cents. Final DPS was 27 cents, together with special DPS of 20 cents, totaling 47 cents.
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