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Asia expect consolidation after heavy selling Thursday but could start with margin call selling and Chinese PPI and Inflation data in focus.
G20 meeting this weekend likely to further ratify the Global Tax proposal.
Australia Futures indicate market to open -48pts following the US weakness. Oil names +VE as oil rebounded on weak US inventories and Gold +VE but Iron ore weak ahead of Chinese PPI data.
Japan Nikkei futures opened lower currently -52pts (Chicago futures -5pts) Expect markets to consolidate after yesterday’s selling and ahead of the weekend. Sentiment weak as a new State of Emergency announced and it was announced that the Olympics will be held without spectators. Yen stronger currently 109.75
S Korea Expect markets to open lower as Govt announced social distancing measures now at the highest level in Seoul.
Taiwan Expect market to open lower following the US and ahead of the weekend
China Expect market to open lower but key will be PPI which is expected to have declined after recent Govt action. Outlook weak ahead of the weekend and next weeks data. Wild card remains Team China.
HK Dow ADR’s +5pts at 27,159 with E-commerce still under pressure but Chinese Financials seeing interest. Expect initial weakness with margin call selling and caution as the Chinese inflation and PPI data is released.
New World Development -VE on news of structural problems at Tower 1 and 8 of The Pavilia Farm III
Data light with UK releaseing Balance of Trade, Construction Output, Industrial Production , Manufacturing Production, GDP, GDP 3Mth ave, Goods Trade Balance, NIESR Monthly GDP
Opened Dow -25pts, S&P and NDX -0.1%.
AHEAD Wholesale Inventories, Baker Hughes Oil Rig Count
DOW -0.75%, NDX -0.72%, S&P -0.86%, Russel 2K -0.94%
Markets opened lower as initial claims came in higher than expected, which could be a slowing of the recovery; -VE re-opening names and retail. Tech hardware and Financials also weak. Sentiment also weakened by news that Japan had declared another State of Emergency due to rising covid cases. US Treasuries saw interest as a safe haven.
After the initial fall markets worked better through the day until midday then eased back in the afternoon before seeing a rally into the close.
Banks JPMorgan Chase -1.7%, Citigroup -1.2% Wells Fargo -2.5%, Amex -2%
Work from home names: Facebook -1.4%, Apple -0.9%, Amazon +0.9%, Netflix -1%, Disney flat, Zoom Video -2%, Alphabet -1.1% and Microsoft -0.9%,
Tech NXP Semi -1.2%, Nvidia +2.3%, Micron +1.4%, AMD +0.9%, Skyworks -1%
Re-opening stocks Boeing +2.2% spiked on the close, Caterpillar -1.2%, Simon Property -0.6%, Kohl’s -1%, Nordstrom -3%, Gap -1.6%, United Airlines -1.3%, Carnival -1.5%, Wynn Resorts -1.1%, Chevron -0.3%, Exxon Mobil -0.5%,
Lock down names Campbell Soup -0.5%, General Mills -0.4%, JM Smucker +0.4%
Initial Claims 373k vs 364k prior (F/cast was 320k)
4 Week Average 394.5k vs 392.75k prior (F/cast was 379.25k)
Continuing Claims 3.339m vs 3.469m prior (F/cast was 3.38m)
EIA Natural Gas Stocks Change 16Bcf vs 76Bcf prior (Consensus was 34Bcf)
Gasoline Stocks Change -6.076m vs +1.522m prior (Consensus was -2.167m)
Crude Oil Stocks Change -6.866m vs -6.718m prior (Consensus was -4.033m)
Consumer Credit Change May $+35.28m vs +20.04bMay revised from +18.61B (F/cast was +19B)
USD was weaker vs Yen & Euro. Bitcoin -5% @ 32,878.90, VIX +17.28% @ 19, US T10 @ 1.294%
OIL Brent +1.25%, WTI +1.43%
Gold +0.06%, Silver -0.49%, Copper -1.24% Platinum +0.87%, Palladium -1.52%.
AHEAD Wholesale Inventories, Baker Hughes Oil Rig Count
DAX -1.73%, CAC -2.01%, FTSE -1.68%
Markets opened lower and sold down through the morning and then traded sideways/better in the afternoon on concerns over global sentiment. Basic resources initially leading the declines as German trade data came in weaker than expected but by the end of the day it was retail. But all sectors were weak.
ECB revised its inflation target to 2% and that it would allow consumer prices to overshoot if needed.
Knorr-Bremse +7.3% on news it was abandoning plans to buy a majority stake in automotive lighting company Hella.
Deliveroo initially +5% before dropping 2.3% after it raised guidance for full-year gross transaction value. It also warned its profit margin would come in at the lower end of expectations due to investments in growth opportunities.
TeamViewer -14.3% after announcing a weaker second-quarter billings growth forecast.
ECB Monetary Policy Meeting Accounts
Balance of Trade May €12.3B vs €15.2B Apr revised (F/cast was €17.4B)
Exports sa May +0.3% MoM vs +0.2% Apr revised (Consensus was +0.6%)
Imports sa May +3.4% MoM vs -1.4% Apr revised (Consensus was +0.4%)
Current Account May €13.1B vs €21B Apr revised (F/cast was €19.1B)
EUROZONE No data due
GERMANY No data due
FRANCE No data due
UK Balance of Trade, Construction Output, Industrial Production , Manufacturing Production, GDP, GDP 3Mth ave, Goods Trade Balance, NIESR Monthly GDP
Nikkei futures opened lower currently -52pts (Chicago futures -5pts) Expect markets to consolidate after yesterday’s selling and ahead of the weekend. Sentiment weak as a new State of Emergency announced and it was announced that the Olympics will be held without spectators.
Yen stronger currently 109.75
No data due
Tokyo reported 896 new covid cases on Thursday with the nationwide total being 2,246 with a new State of Emergency rolled out and spectators barred from the Olympics. -VE Leisure, Retail, Corporate Entertaining related etc.
Toyota has reversed itself and now says its political action committee will no longer contribute to the Republican legislators who voted against certifying Joe Biden's presidential election victory. The move by the Japanese automaker comes after a social media backlash over the contributions, including threats to stop buying the company's cars.
Expect markets to open lower as Govt announced social distancing measures now at the highest level in Seoul.
No data due
KDCA reported 1,275 new covid cases Thursday with warnings of increased numbers to come. Seoul likely to move to level 4 social distancing rules -VE Retail and Leisure.
LG Chem Ltd (051910.KS) and its wholly-owned battery subsidiary LG Energy Solution (LGES) plan to invest a combined 15.1 trillion won ($13.17 billion) in South Korea this decade. Across the globe, countries are racing to bolster EV battery supply chains as demand for electric vehicles surges to combat climate change and automakers partner with battery makers to ensure uninterrupted supplies.
Samsung SDI Co (006400.KS) may build a battery cell plant in the United States to support the auto industry's shift to electrification, a company source with close knowledge of the matter told Reuters on Thursday. Samsung SDI, an affiliate of Samsung Electronics (005930.KS), has been in talks with automakers including Stellantis (STLA.MI), Amazon (AMZN.O) and Ford Motor-backed (F.N) electric vehicle startup Rivian to supply batteries manufactured at its potential U.S. factory, the source said.
Hyundai Motor will work with other firms to utilize its car-making expertise and technology for the development of a hydrogen fuel cell system for ships, the Korean automaker said Thursday. +VE
Twenty hydrogen taxis operating in Seoul will offer free ride for three days next week, H2Korea, a private-public think tank for the hydrogen economy, said Thursday. +VE
Posco Chemical will establish a new cathode plant with an annual production of 60,000 metric tons in Pohang, North Gyeongsang Province, the company said Thursday. +VE
Samsung Display Co. on Thursday signed a wage agreement with its labor union as some of its unionized workers have been staging strikes for the first time in the company's history.
Samsung Electronics Co. accounted for nearly half of the global smartphone memory market in the first quarter of the year, a report showed Thursday, as it tries to boost its presence in 5G devices. +VE
Expect market to open lower following the US and ahead of the weekend
No data due
The government’s business climate monitor in May flashed “red” for a fourth straight month, indicating that the nation’s export-focused economy remained robust, despite a local COVID-19 outbreak, the National Development Council said yesterday.
The overall score stayed the same as in April at 41, the historic peak, although the outbreak took a toll on the job market, service sector and overall business sentiment, the council said.
The US Department of State on Wednesday reiterated that the use of force by any party to change the “status quo” across the Taiwan Strait would be a “profound mistake.” At a news briefing, US Department of State spokesman Ned Price quoted US Secretary of State Antony Blinken as saying: “It would be a profound mistake by any party to try and remake that ‘status quo’ with the use of force.” China was not mentioned, but the statement was seen as a veiled message to Beijing.
Largan Precision yesterday reported that its net profit last quarter plunged 44.36 percent sequentially to NT$2.96 billion (US$105.6 million) due to massive foreign-exchange losses. Last quarter’s profit also fell 40.69 percent from a year earlier, marking its worst earnings in eight years. When asked by investors whether Largan should diversify as the handset camera lens market matures, Lin said the company has been working with an automotive customer that might need camera lenses for self-driving vehicles. -VE but little cross read to Sunny Optical as the loss due to FX.
The global semiconductor supply chain is to see a transformation, spearheaded by the US government’s move to tackle chip shortages and safeguard its economy, which would benefit semiconductor foundries, including Taiwan Semiconductor Manufacturing Co (TSMC), Fitch Ratings said yesterday. +VE
Expect market to open lower but key will be PPI which is expected to have declined after recent Govt action. Outlook weak ahead of the weekend and next weeks data. Wild card remains Team China.
Data due on market open
Inflation Rate Jun YoY vs +1.3% May (F/cast is +1.5%)
Inflation Rate Jun MoM vs -0.2% May (F/cast is +0.1%)
PPI Jun YoY vs 9% May (F/cast was +8.9%)
Worth noting next week we are due to get Loans, Trade and GDP data, along with Retail Sales and Unemployment. Talk of a RRR cut suggests that GDP growth may have slowed.
Chinese aviation officials have expressed willingness to conduct flight tests on Boeing Co’s 737 MAX, potentially paving the way for the fastest-selling jet’s return in China, Bloomberg News reported on Thursday.
China’s securities regulator is setting up a team to review plans by Chinese companies for initial public offerings (IPOs) abroad, sources with knowledge of the matter said, including those using a corporate structure which Beijing says has led to abuse. -VE
Tesla Inc (TSLA.O) on Thursday introduced a cheaper version of the Model Y in China, where it faces increased scrutiny from both regulators and the public and growing competition from local rivals.
Tesla's sales of China-made vehicles slipped in June from the previous month, the China Passenger Car Association (CPCA) said on Thursday. Slight -VE for competitors
ADR’s +5pts at 27,159 with E-commerce still under pressure but Chinese Financials seeing interest. Expect initial weakness with margin call selling and caution as the Chinese inflation and PPI data is released.
New World Development -VE on news of structural problems at Tower 1 and 8 of The Pavilia Farm III
No data due
The city's local Covid-free streak may be at stake as a notice at Manhattan Heights in Kennedy Town revealed that a resident there tested positive for Covid-19. It was suspected as a re-positive cases of recovered patient, as sources said the patient once tested positive in other countries.
Short Selling Thursday 14.4% vs 15% Wednesday
Top Shorts Hengan (1044) 62%, Bud Apac (1876) 45%, AIA (1299) 35%, China Life (2628) 35%, Bank of China (3988) 33%, BankComm (3328) 32% Ping An (2318) 32%, Country Garden (2007) 31%, AAC Tech (2018) 29%, Sands China (1928) 27%, HSBC (5) 27%, Henderson Land (12) 26%, ICBC (1398) 25%, AliHealth (241) 25% , Wuxi Bio (2269) 25%, Sunny Optical (2382) 25%.
EU Parliament adopts a resolution on Hong Kong press freedom
Measures are not binding, but are a set of recommendations to the European Commission and the Council of the European Union. The resolution urges the EU to do more to help journalists and pro-democracy camp politicians and activists to settle in the bloc.
Sixty-four district councillors have resigned over the past two days before they have to take an oath to pledge allegiance to the SAR and uphold the Basic Law on July 20. That came as sources said councillors who are disqualified after oath taking could be asked to repay more than HK$1 million in salaries and paid expenses for the past 19 months, while authorities will not pursue the amount from those who resigned earlier.
MACAU People can travel between Macao and Guangdong province with negative virus test results within seven days, instead of the current requirement of 48 hours. The change applies to all individuals regardless of their vaccination status. +VE
Hang Seng Indexes Company Limited announced that XPENG-W (09868.HK) meets the Fast Entry Rule of various indexes and will be added to Hang Seng Composite Index after market close on 20 July 2021. All changes will come into effect on 21 July 2021. XPENG-W will be added to Hang Seng Composite Industry Index – Consumer Discretionary; Hang Seng Composite LargeCap Index; Hang Seng Composite LargeCap & MidCap Index; and Hang Seng Consumer Goods & Services Index. +VE
The African telecom operator Vodacom's subsidiary in South Africa announced to launch the application "VodaPay" which provides services including mobile payment, online purchase and loans, etc.
"VodaPay" will be operated by a financial services company under the Vodacom group with Alipay in charge of the technical support. +VE
FLAT GLASS (06865.HK) announced that it is expected that the net profit attributable to Shareholders for the six months ended 30 June 2021 will range from RMB1.16 billion to RMB1.26 billion, representing an increase in the range of 152.17% to 173.91% as compared to the same period in 2020; and the net profit attributable to Shareholders excluding nonrecurring items will range from RMB1.15 billion to RMB1.25 billion, representing an increase in the range of 155.56% to 177.78% as compared to the same period in 2020. +VE
ANTA SPORTS (02020.HK) announced that for the second quarter of 2021, the retail sales of ANTA branded products recorded 35-40% positive growth compared to the same period of 2020, while that of FILA branded products recorded 30-35% positive growth compared to the same period of 2020. +VE
SOLOMON SYSTECH (02878.HK) announced that the Group is expected to record a consolidated profit of approximately US$10 million for the six months ended 30 June 2021 as compared with that of approximately US$4.4 million for the six months ended 30 June 2020 +VE.Travel Industry Council of Macau expressed that the current booking rate of Macau's hotels is at 40-50%, and expected that as the Guangdong COVID outbreak stabilizes, the hotel occupancy rate could reach 70-80% during the Summer holiday, reported Radio Macau. Slight +VEHKEX (00388.HK) announced the establishment of a Mainland China Advisory Group (Advisory Group). The Advisory Group comprises senior industry experts with deep China market knowledge and experience, who will act as advisors to the Board of HKEX on the development of China’s financial markets and economy. +VE
The sales volume of Tesla (TSLA.US)'s China-made electric vehicle slipped 0.9% month-over-month to 33,155 units, with some of them being export items, according to the data of China Passenger Car Association (CPCA). The EV maker is currently manufacturing its Model 3 and Model Y in Shanghai and has sold a total amount of 28,138 units in China last month, with 5,017 units being exports.360 Jietiao application, a core product of 360 DigiTech, has been removed from the stores, which might be connected to a reform demand issued from PBOC and other financial regulatory departments to 13 Internet financial platforms on 29 April 2021, reported 21st Century Business Herald. 13 internet financial platforms, including TENCENT (00700.HK), JD Finance, ByteDance and 360 DigiTech, were asked to talk with China's regulators, according to the report. -VE
As workers of some carmakers have been granted leaves earlier in the year due to the problem of chip shortage, the companies are forecast to have ample production work force in July and August, China Passenger Car Association (CPCA)'s report suggested. The report predicted the chip shortage to alleviate largely in the third quarter, with the wholesale market projected to skew upwards from August.
After Huawei unveiled the "Seeds of the Future 2.0" program, Chairman Liang Hua said the company will pump US$150 million in the coming five years for fostering digital talents. He expected more than 3 million people can take advantage from the program.TENCENT (00700.HK) and China Media Group (CMG) jointly announced on 6 July that Tencent has become the strategic video partner for broadcasting the Tokyo 2020 Olympics and the Beijing 2022 Winter Olympics. Accordingly, both sides will work comprehensively and profoundly in resources, content, interaction, crossover, products, technology and other fields.China's wholesale volume of new energy passenger vehicles reached 227,000 units in June, up 14.7% monthly and 165.7% yearly, according to data from China Passenger Car Association (CPCA). This denoted strong volume growth amid a favorable trend.
Buildings Department has expressed grave concerns over the issue of foundation defects of the private development project -- Pavilia Farm III atop Tai Wai station, as some of the concrete components in the block one and eight of the project failed to meet the designated strength test requirements, and has launched an investigation into the matter. The department has been notified of the developer's decision to demolish the affected floors of the two towers, and will follow up the details of the demolition and remedial construction with certified persons and registered structural engineers, in order to ensure that the construction process and the buildings themselves to be safe and in compliance with relevant regulation requirements.Centa Valuation Index (Major Banks) (CVI) last printed at 75.75, down 5.45 pts weekly, reported the research department of Centaline Property. In light of ever-rising housing price which was close to the historic high, Wong viewed banks stayed active but rational in valuation.
Wong also assumed the CVI to hover high still in the coming few weeks, hinting at an uninterrupted price uptrend, which underpinned the CCL upswing to the all-time high.