May 27


Covid-19 Globally over 5.5m cases, 347k deaths

DOW +2.2%, NDX +0.2%, S&P +1.2%, Russel 2K +2.8% Having opened higher with optimism over covid-19 vaccine candidates and further re-opening of the US economy. S&P broke through the recent resistance of 2,950 and its 200 day MA of 3,000 but then eased back into the close along with the Dow. NDX trended lower all day. US/China tensions and tariffs still overhang the market and in the last hour a Bloomberg report warned of more sanctions. Earlier New Home Sales were much better than expected; another +VE for the market sentiment.
Novavax +4.5% but off initial highs; started its first human study of its vaccine. Follows Moderna -16.4% results last week. Carnival +12.6%, MGM Resorts +11%, United Airlines +16.3%, Southwest Airlines +12.6%. Banks also rallied Citi Group +9.2%, Wells Fargo +8.7%, BoA +7.2%, JPM +7%
Merck +1.1% off initial high; CEO says 12 -18 month vaccine timeframe very aggressive, and refused to signup for Trumps timetable; stating that very large clinical trials take months if not years in order to make sure the vaccine is safe. Merck is developing two possible covid vaccines and a drug for infected people. Comes as he announced the acquisition of Themis Bioscience who is working on a covid-19 vaccine.
DATA
Chicago Fed National Activity Index Apr -16.74 vs -4.19 Mar (F/cast was -3)
Case Schiller Home Prices Mar +3.9% YoY vs +3.5% Feb (F/cast was +3%) Mar +1.1% MoM vs +0.5% Feb (F/cast was +0.2%)
Home Price Index Mar +0.1% MoM vs +0.8% Feb (revised from +0.7%) (F/cast was +0.2%)
CB Consumer Confidence May 86.6 vs 85.7 Apr (revised from 86.9) (F/cast was 87.7)
New Home Sales Apr +0.6% MoM vs -13.7% Mar (Revised from -15.4%) (F/cast was -21.1%)
Dallas Fed Manufacturing Index May -49.2 vs -73.7 Apr (F/cast was -57)
USD was weaker vs Yen & Euro. Bitcoin % @ , VIX -0.5% @ 28, US T10 0.695%
OIL Brent +1.8%, WTI +3.3%
Gold -1.1%, Silver -0.5%, Copper +1%
AHEAD MBA 30 yr Mortgage Rate and Mortgage Applications, Redbook, Richmond Fed Manufacturing Index, Beige Book, API Crude Oil Stocks Change.

DAX +1%, CAC +1.5%, FTSE +1.2% Markets opened higher, DAX and CAC traded sideways the FSTE drifted lower. Sentiment +VE on growing optimism that a vaccine will be found as Novavax reported starting human trials; Travel and Leisure Stocks rallied (Tui +52%, SSP Group +24% travel retail, IAG +22.5%) as Spain and Germany said to eased travel restrictions but Healthcare names saw some weakness.
ArgenX +30% on +VE results fro a new treatment for neuromuscular disease.
Cineworld +19.2%
Diasorin -5.9% on broker downgrade.
DATA
EUROZONE ECB Financial Stability Review
GERMANY Consumer Confidence Jun -18.9 vs -23.1 May (F/cast was -18)
UK CBI Distributive Trades May -50 vs -55 Apr (F/cast was -48)
AHEAD
EUROZONE Speeches from Lagarde and Guindos
GERMANY No data due
FRANCE Consumer Confidence. Business Confidence, Business Climate Indicator
UK No data due

JAPAN Expect Nikkei to open higher but upside with be tough having closed at a 3 month high on Tuesday. People still reacting to the lifting of the state of emergency and many firms continue teleworking but sentiment +VE Expect transport stocks +VE and some will be looking at the Tourism names ahead of Govt support for the sector. Yen currently 107.51
No data due
Bank of Japan Gov. Haruhiko Kuroda said Tuesday the central bank may take more steps to cushion the economic impact from the coronavirus pandemic, maintaining his gloomy outlook even as a state of emergency was lifted in the capital Tokyo.
Fujifilm Holdings Corp (4901.T) will continue research on Avigan into June, Japan’s government said on Tuesday, effectively dashing hopes by PM Abe that the drug would be approved as a COVID-19 treatment this month. Slight -VE
Nissan Motor Co (7201.T), Mitsubishi Motors and Renault to announce a new recovery plan today, to salvage profitability.

SOUTH KOREA Expect markets to open higher following the US moves overnight but with some concerns over US sanctions on China and the weak Business Confidence data.
Data out Business Confidence May 49 vs 52 Apr (F/cast was 57)
Coupang said Tuesday it has closed its Bucheon logistics center in Gyeonggi Province and conducted disinfection of the facility after at least 10 COVID-19 cases are confirmed to be linked with its employees there. -VE
Starbucks Korea said Tuesday that it has expanded the number of Reserve stores selling Teavana drinks to 52 from 13 amid the growing popularity of tea. +VE
LG Chem Vice Chairman Shin Hak-cheol said Tuesday he would even consider quitting current businesses if the company can’t secure environmental safety in the aftermath of a recent gas leak at LG Polymers’ plant in India and a fire incident in a catalyst lab in South Korea. +VE
SK Chemicals said Tuesday it is moving to finalize the sale of its cash cow bioenergy business to make new investments in green materials. The company plans to sell its bioenergy business to private equity fund Hahn & Co. for 382.5 billion won ($309.4 million). It had suspended the operation of bioenergy business on Feb. 5, excluding the sector from its first-quarter earnings report. +VEProsecutors summoned Samsung Electronics Vice Chairman Lee Jae-yong as part of a probe into suspicions surrounding a 2015 merger between two key affiliates, which helped the scion secure control of the country’s largest conglomerate. Slight -VE
Shinhan Card and KB Kookmin Card, +VE having distributed almost half of the government’s relief funds between then; according to news reports on Tuesday.

TAIWAN Expect market to open higher and higher after closing above 11k on Tuesday but news that China intends to deploy is two aircraft carriers off the Pratas islands will raise concerns as it follows China dropping the reference to peaceful unification last week.
No data due

Financial Supervisory Commission (FSC) has deferred the implementation of the Basel III standards and capital requirements for “domestic systemically important banks” to ease their capital pressure so they can concentrate on helping businesses affected by the COVID-19 pandemic, FSC Chairman Thomas Huang said yesterday. +VE
Huaku Development Co is looking to increase earnings contributions from commercial properties from 20 percent to 30 percent this year, supported by Taiwanese firms returning from China to diversify their investment risks. +VE
XRSPACE Co Ltd yesterday unveiled its first virtual reality (VR) headset, dubbed the XRSPACE MOVA, three years after former HTC Corp chief executive officer Peter Chou founded the company. It’s equipped with Qualcomm Inc’s Snapdragon 845 processor, is the world’s first VR device to support 5G technology. While similar in design to HTC’s Vivo series, the MOVA is smaller and lighter. +VE

CHINA Expect market to open higher with investors watch the NPC and CPPCC meetings fro new of more stimulus.
Data due
April Industrial Profits due on the open (March was -36.7% YoY and F/Cast is -28%)
PBoC injected 10bn Yuan into money markets yesterday via a seven day reverse bond purchase.
Xi Jinping tells Chinese army to step up preparations for combat as budget rise is blamed on security threats
Chen Daoxiang, Beijing's army chief in Hong Kong, said he and his soldiers were ready as he showed his 'resolute support' for the proposed legislation, which could ban pro-democracy protests in the semi-autonomous city.
Whitehouse economic adviser said on Tuesday that China was making "a big mistake" with planned national security legislation on Hong Kong and pledged Washington would pay expenses of U.S. firms that wanted to shift operations from the territory or China.
US senators vowed on Tuesday to move quickly on a bill that threatens sanctions on Chinese officials seen as undermining Hong Kong’s autonomy and voiced hope the measures would dissuade Beijing.
British broadcast regulators have found that the Chinese broadcaster CGTN was repeatedly in “serious failure of compliance” of impartiality standards in its coverage of the protests in Hong Kong last year, a move that could increase tensions between the two countries.

HONG KONG ADR’s indicate -190pts to open at 23,195 with Police surrounding the legislature building of fears of protests as Legco debates a bill criminalising disrespect of China's national anthem and against plans by Beijing to impose national security laws. Concerns over US sanctions also in play but I don’t expect the downside to be so marked.
No data due

Short Selling HSI Tuesday 21.2% vs 24.9% Monday Top Shorts Wharf REIC (1997) 50%, CLP (2) 41%, MTRC (66) 41%, ICBC (1398) 40%, Want Want (151) 38%, Hang Seng Bank (11) 36%, Geely Auto (175) 34%, CCB (939) 31%, Techtronic (669) 29%, SHKP (16) 29%, Hengan (1044) 27%, NWD (17) 26%, Tencent (700) 26%, HK & China Gas (3) 25%, Sunny Optical (2382) 25%, Hang Lung PPTY (101) 25%, BoC (3988) 25%,

WATCH
KINGSOFT(3888.HK) Q1 ended March 2020 it swung into profit of RMB6.257 million vs the loss of RMB67.764 million in the same period of 2019.
CK Hutchison Holdings Ltd lost the bid to build Irsael’s Sorek 2, a private-public partnership that is to be the world’s largest desalination plant when completed in 2023. Comes after US questioned Chinese related investments -VE
TRULY INT'L (732.HK) Q1 ended March 2020. Net profit amounted to $95.119 million, down 6.4% yearly. EPS equaled 2.9 cents. No dividend was declared.
CATHAY PAC (293 HK) rallied in closing auction after -VE news yesterday that China will oppose its merger plans. Another illustration of China effectively interfering in HK affairs because Cathay allowed its staff freedom of expression agains the extradition law it tried to introduce earlier this year. So despite saying the new security law will not undermine HK’s current freedoms; few believe China. Without the spike Cathay would have closed around the recent lows.
SMARTONE TELE (00315.HK) announced the launch of 5G network services today. The monthly plan, starting from $398, offers 80GB domestic data and 2GB Greater Bay Area data. Clients registered before August are entitled to extra 20GB domestic data each month, upgrades to unlimited data plans and discounts for 5G plans with phones. At this beginning stage, the telecom carrier targets at high-data-usage or data-demanding clients who frequently conduct video conferences or watch videos, CEO Anna Yip disclosed.
XIAOMI-W (1810.HK)'s Redmi today (26th) unveiled its brand-new X-series handsets, namely Redmi 10X, Redmi 10X Pro, and Redmi 10X 4G. This year, all new Redmi cellphones priced above RMB1,500 would be 5G phones, revealed Lu Weibing, General Manager of Redmi brand.
BESUNYEN (926.HK) revenue of the Group for the six months ending 30 June 2020 is expected to reach RMB500 million to RMB600 million, and it is anticipated that the Group will continue to make profits for the six months ending 30 June 2020 and record a profit attributable to the owners of the Company of RMB5 million to RMB15 million.

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