Asian Futures Nikkei Chicago Futures -95pts, HK ADR’s +30pts and Australia opened flat but trading higher in early trades. Expect consolidation.
US Futures opened Dow Flat (+16pts) , S&P and NDX slightly +VE too
DOW -0.56%, NDX -0.21%, S&P -0.48%, Russel 2K +0.37% Markets opened lower after Monday’s record close. NDX traded sideways around flat, Dow and S&P saw a weak open but worked back towards flat. Weak Retail Sales a concern, which impacted share price of Home Depot and Walmart even after their good results. The surge in covid cases still overhangs the market along with the election result.
CVS Health -8.6% and Walgreens Boots Alliance -9.6% after Amazon +0.2% launched a pharmacy business, which allows free delivery of medications for Prime members.
Tesla +8.2% on news it will join the S&P 500 index, effective Dec. 21.
Home Depot -2.5% despite Q3 earnings beat and sales surged.
Walmart -2% despite good earnings as SSS slowed.
Kohl’s +11.5% sales dropped but CEO said results beat expectatkonsand was entering the holiday season well prepared. Nordstrom +6.2%,
Banks JPMorgan Chase -1.1%, Citigroup +0.7% and Wells Fargo +0.5%, AMEX -1.8%
Work from home names: Facebook -1.4%, Apple -0.8%, Netflix +0.3%, Zoom Video +0.6%, Alphabet -0.7% and Microsoft -1.3%,
Nvidia -0.7%, Micron +0.2%, AMD -0.4%, Skyworks -1.8%
Re-opening stocks Boeing +3.8%, Caterpillar -0.7%, Simon Property unch, Gap +1.7%, United Airlines -1%, Carnival +2.7%, Wynn Resorts -0.5%, Chevron -2.2%, Exxon Mobil +1.3%,
Lock down names Campbell Soup -1% General Mills +0.1%, JM Smucker -1.4%Reuters reports that US farmers sold freshly harvested soybeans directly off their combines for a profit as prices rose to a four-year high this autumn, a welcome change from the losses suffered during the U.S.-China trade war on the basis of strong exports to China
Retail Sales Oct +0.3% MoM vs +1.6% Sept (revised) (F/cast was +0.4%)
Retail Sales Oct ++5.7% YoY vs +5.9% Sept (revised) (F/cast was +5.7%)
Retail Sales Ex Auto Oct +0.2% MoM vs +1.2% Sept (revised) (F/cast was +0.5%)
Export Prices Oct -1.6% YoY vs -1.8% Sept (F/cast was -1.5%)
Import Prices Oct -1% YoY vs -1.4% Sept revised (F/cast was -0.4%)
Export Prices Oct +0.2% MoM vs +0.6% Sept (F/cast was +0.3%)
Import Prices Oct -0.1% MoM vs +0.2% Sept revised (F/cast was +0.3%)
Redbook 14 Nov +1.7% YoY vs +1.1% prior (-1% MoM vs -1.2% prior)
Industrial Production Oct +1.1% MoM vs -0.4% Sept revised (F/cast was +0.8%)
Industrial Production Oct -5.3% YoY vs -6.7% Sept revised (F/cast was -6.6%)
Manufacturing Production Oct +1% MoM vs +0.1% Sept revised (F/cast was +0.7%)
Manufacturing Production Oct -3.9% YoY vs -5.4% Sept revised (F/cast was -5.2%)
Capacity Utilisation Oct 72.8% vs 72% Sept revised (F/cast was 72%)
Business Inventories Sept +0.7% MoM vs +0.3% Aug (F/cast was +0.4%)
NAHB Housing Market Index Nov 90 vs 85 Oct (F/cat was 84)
Foreign Bond Investment Sept $+22.5b vs -33.1b Aug
Overall Net Capital Flows Sept $-79.9 vs 85b Aug (revised from 86.3b) (F/cast was -85b)
Net Long Term TIC flows Sept $108.9 vs 27.8b Aug
API Crude Oil Stock Change +4.174m vs -5.147m (Consensus was +1.95m)
USD was flat vs Yen & Euro, but Yuan continues to rise. Bitcoin +4.6% @ 17,537.75, VIX +1% @ 22.71, US T10 @ 0.862%
OIL Brent +0.2%, WTI +0.2% rising covid cases -VE but possibility of more OPEC cuts +VE
Gold -0.4%, Silver -1%, Copper -0.5%
MBA Mortgage Applications and 30 yr Mortgage Rate, Housing Starts, Building Permits, EIA Oil Stocks Change Report.
Speeches from Fed’s Evans, Williams, Bullard and Bostic
Earnings: NVIDIA, Target, Lowe’s, TJX, L Brands, Copa Holdings, Shoe Carnival, Jack in the Box
DAX -0.04%, CAC +0.21%, FTSE -0.87% Markets open flat, initially dipped but CAC and DAX came back to trade flat but the UK trended lower with covid a concern. Travel stocks giving up Monday’s gains.
EU recovery under pressure as Hungary and Poland block the adoption of the budget and the recovery fund in rebellion to the clauses that access to recovery money is on the basis of respecting the rule of law.
EasyJet -1.9% initially sold down but then rebounded off early lows; after reported revenue fell more than 50%
Imperial Brands +7.3% gave a strong 2021 profit outlook
Intermediate Capital +7.9% rallied as 1H pre tax profit +29%
BBVA -4.4% after Monday’s rally on the sale of its U.S. business, with speculation lingering as to a potential tie-up with compatriot Banco de Sabadell +6.8%
EUROZONE New Car Registrations, Core Inflation Rate, Inflation Rate
GERMANY No data due Speech from Bundesbank’s Balz.
FRANCE No data due
UK Inflation Rate, Core Inflation Rate, Retail Price Index, PPI Output, PPI Core Output, PPI Input. Speech from BoE’s Haldane
JAPAN Chicago Futures 25,930 vs 26,015 Nikkei last close (first time above 26,000 in 29 years; Market to open -85pts Yen currently 104.20. Upside muted by a lack of new drivers and weak US data; expect consolidation.
Data due Balance of Trade Oct (Sept was Yen 675b F/cast is 210b), Exports Oct (Sept was -4.9% Consensus is -4.5%), Imports Oct (Sept was -17.2% Consensus is -9%)
Tokyo reports 298 new civid cases with 1,686 nation-wide (vs 180 Tokyo Monday and 923 nationwide) with 3,647 tests conducted.
Japan and Australia agreed on a breakthrough defence pact on Tuesday allowing reciprocal visits for training and operations, and voiced concern over the disputed South China Sea, where China is extending its military influence.
Japan’s yen is attracting fresh interest as the highest yielder among the three major currencies. For two main reasons say analysts. As a net creditor nation in a world of fiscal profligacy, the yen has retained some of its safe-haven credentials. In addition, as interest rates in Europe and the United States plunge, Japanese government bonds (JGBs) offer comparatively higher returns, in particular, on an inflation-adjusted basis.
The Japanese unit of Malaysia's budget airline AirAsia Group said Tuesday it has filed for bankruptcy due to the impact of the coronavirus pandemic on travel demand, with a lawyer saying the unit is unable to refund around 23,000 air tickets.
SoftBank CEO Masayoshi Son says he’s hoarding cash to prepare for ‘worst case scenario’. Mr Son said he aggressively sold assets this year to prepare for a “worst case scenario” that could take place if the world shuts down in a second wave of coronavirus outbreaks. CNBC reported
Fujitsu Semiconductor Ltd president arrested on suspicion of negligent driving resulting in death after he fatally struck an 83-year-old man while exiting a parking lot. -VE
SOUTH KOREA Expect markets to open lower on US weakness overnight and as social distancing rules are tightened. Tuesday saw foreigners net buyers and institutions net sellers; trading volumes remained high.
No data due but as the daily tally of covid cases was reported at 230 above 200 for a fourth consecutive day, with a series of cluster outbreaks emerging from offices, medical facilities and small gatherings in Seoul -VE
Amorepacific said Tuesday it would invest 3 billion won ($2.7 million) in Dmil, a multi-channel network company. Its aim is to establish a close partnership with beauty influencer made contents and in commerce. +VE
Hanjin KAL, the parent company of Korean Air Lines, on Tuesday signed an agreement with Asiana Airlines Inc.'s main creditor Korea Development Bank for its acquisition of the smaller carrier. The investment agreement calls for the KDB to inject 800 billion won ($723 million) into Hanjin KAL through a rights offering and convertible bonds. Stock traded lower and KCGI criticised the plan but if economies of scale can be achieved then there is potential for successful airline.
Samsung Biologics said Tuesday that it had successfully delivered the first batch of Eli Lilly’s COVID-19 antibody treatment, just five months after the two forged a contract manufacturing deal. +VE
The Seoul government and telecommunications firms held a meeting to negotiate the pricing of frequency reallocation costs for 3G and Long-Term Evolution networks in Seoul on Tuesday, but failed to reach a compromise. -VE
GM Korea’s labor union, which is in a tug-of-war with the management over wage and collective bargaining negotiations, is set to stage another four-day partial strike starting Tuesday, adding to the uncertainties facing the automaker as it struggles with weak performance. Comes as rumours circulate of GM pulling out of S Korea -VE.
South Korea’s mobile-only commercial lender Kakao Bank said Tuesday that it plans to raise 250 billion won ($226 million) from Hong Kong-based private equity firm Anchor Equity Partners. Under the plan approved by the board the same day, Anchor Equity Partners will complete the payment by Dec. 7 to buy 1 million new ordinary shares of Kakao Bank, as the lender plans to fetch a combined 1 trillion won by year-end before its initial public offering next year.
TAIWAN Expect market to open lower following the weakness in the US markets. Taiex failed to break above 13,700 so consolidation expected , 20 day moving average is 13,000, so watch for bargain hunting is index slips significantly.
No data due
The Taiwan Stock Exchange (TWSE) yesterday said that 853 domestic listed companies and 76 primary listed firms together reported pretax profits of NT$1.64 trillion in the first three quarters of this year, an increase of 10.05% from the same period last year, while their combined revenue over the period decreased 2.13% to NT$21.56 trillion. The semiconductor, computer and peripheral equipment, and electronic components industries served as major drivers for listed firms’ profit growth in the first three quarters, the exchange said.
United Integrated Services, which helps clients build manufacturing facilities and install clean rooms, yesterday said that it plans to set up a subsidiary in the US next year, following in the steps of its top client, Taiwan Semiconductor Manufacturing Co. By managing costs well, UIS expects its US subsidiary to turn a profit in the first year of operation, company president Benny Chen told an investors’ conference in Taipei. UIS is still in talks with TSMC about proceeding with its US fab construction project, Chen said.+VE
Quang Viet Enterprise yesterday said it expects revenue to return to growth next year due to recovering customer demand following promising developments of a COVID-19 vaccine. Factory utilization is picking up and could reach 100% next month from an average of 80% as customers have restarted orders withheld earlier this year due to the pandemic and started placing orders for next year, the company said. +VE
Taiwan Cement Corp yesterday said that it is positive about the company’s business outlook on the back of recovering market demand, rising cement prices and falling coal costs. The company said that its operations returned to normal in the second quarter, after a dip in sales in the first quarter, and grew steadily in the third quarter, resulting in net profit increasing 3.9 percent to NT$18.4 billion in the first three quarters. Earnings per share were NT$3.15 and gross margin was 33 percent during the nine-month period, the company told an investors’ conference in Taipei.
Trend Micro Inc has overtaken Asustek Computer as Taiwan’s most valuable brand, according to the Best Taiwan Global Brands survey released by the Ministry of Economic Affairs yesterday. The ministry credited Trend Micro’s rise with the increasing importance of data safety as the COVID-19 pandemic gave rise to the work-from-home trend and worsening US-China trade ties.
CHINA Expect market to open lower following the US and with concerns over exports after weak US Retail Sales and rising covid cases globally.
No data due
China's yuan climbed to the strongest level vs USD in more than two years -VE Exporters.
China food prices -VE as Soybean contracts rise 12.3% between Aug 1 to Mid Sept. The rising price could see a number of Brazilian contracts fail as the contracts were agreed at levels less than 50% of current prices.
China continues to focus on the covid threat from cold chain goods to prevent any outbreaks of Covid-19 after packaging of frozen Argentine beef, German pork and Indian cuttlefish tested positive for the virus. Cities across China, the world’s largest importer of beef and pork, have pledged to strengthen screening and sterilisation of imports.
State Council has asked government departments to conduct a risk assessment, over the recent bond defaults. The aim is to ensure stability in financial markets and to prevent any spillover effects from the credit sphere that could cause systemic risks, said the people. If there is a risk of contagion, the regulator will have a response plan, although the people said that the initiative doesn't mean that there will be bailouts. -VE for credit markets.
FT reports that 'At least 20 Chinese companies have suspended planned bond sales worth Rmb15.5bn ($2.4bn) over the past week, as the high-profile defaults of three state-owned enterprises and questions about the solvency of a fourth unnerved investors in the world’s second-largest bond market.'
Germany accused China and Russia on Tuesday of preventing a United Nations Security Council committee from determining whether North Korea has breached a U.N. cap on refined petroleum imports by the isolated Asian state. China and Russia are the only countries to have notified the Security Council’s North Korea sanctions committee of refined petroleum exports to Pyongyang, but they did so in tonnes instead of barrels and the committee has been unable to agree on a conversion rate so it can determine when the cap was reached.
Brazil’s Butantan Institute biomedical center will receive the first doses of China’s Sinovac vaccine against COVID-19 this week, institute director Dimas Covas said on Tuesday.
Daimler will cooperate with China's Geely to build a next-generation combustion engine for use in hybrid vehicles, it said on Tuesday.
Shanghai to launch a new futures contract for copper The Shanghai International Energy Exchange (INE) will start trading monthly copper futures denominated in renminbi from tomorrow, in contracts based on metal to be delivered into warehouses in China. Will be in competition with the London copper contract in the hope that it will help Beijing increase its influence over the pricing of copper and increase the used of the RMB in the global financial system.
Beijing blames Canberra for trade spat, saying it has ‘no responsibility’ for the collapse in relations and cites grievances from Huawei to Taiwan. China’s foreign ministry claims Canberra’s stance on issues ranging from criticisms over Hong Kong, Xinjiang to 5G networks is to blame for dispute. The tone is not conducive to a resolution; -VE.
The US Securities and Exchange Commission intends to propose a regulation that would lead to the delisting of companies for not complying with US auditing rules. It is likely to be published for public comment in December and it is believed that the regulation will depend on the exchanges to execute it by delisting companies that fail to maintain compliance with the rules.
China’s Moon Mission. Yesterday it moved a massive rocket into place in preparation for launching a mission from Hainan to bring back materials from the moon for the first time in four decades. The Chang'e 5 mission aboard a Long March-5 is scheduled to launch early next week, placing a lander on the moon that will drill two meters beneath the surface and scoop up rocks and other debris. +VE for national senitment
FT Reports Pinduoduo seeks $5.6bn of funding to take on China’s supermarkets Money required to invest in staff, warehouses, cold chain logistics and transport in order to resolve “fundamental roadblocks” to one-day delivery of farm goods across the country.
HONG KONG ADR’s +30pts to open at 26,445 with weakness in Chinese Financials, Ecommerce, HSBC and China Unicom. I would expect the market to initially trade lower.
No data due but after market Tuesday
Unemployment Oct +6.4% vs 6.4% Sept (F/cast was 6.3%)
TRULY INT'L (00732.HK has issued a positive profit alert, expecting the net profit for the nine months ended 30 September 2020 would be significantly increased by approximately 1.4 times to HK$400 million as compared to that for the nine months ended 30 September 2019.
EASYKNIT INT'L (01218.HK) issued a profit warning. The Group is expecting to report a net loss of approximately not less than HK$70 million for the six months ended 30 September 2020, down 59% from the same period of last year.
SHORT SELLING Tuesday vs 17% Monday
Top Shorts Ping An (2318) 40%, Galaxy Ent (27) 37%, Sands China (1928) 33%, CLP (2) 32%, BoC (3988) 32%, CITIC (267) 30%, CNOOC (883) 30%, Country Garden (2007) 30%, HK & China Gas (3) 28%, Wharf REIC (1997) 27%, Sunny Optical (2382) 27%, CCB (939) 27%, BoC HK (2388) 25%, HSBC (5) 25%, BankComm (3328) 25%.
TCL ELECTRONICS (01070.HK) 3Q20 results. The CFO Hu Lihua revealed that the company maintained the target of double-digit yearly growth in revenue and profit growth this year. The global sales of TV sets were also forecast to exceed 23 million units for the year, before zooming past 30 million units in 2023 leveraging cooperation with Google and Netflix etc..
There is currently no timetable over what countries are in line to set up new travel bubbles with Hong Kong said Secretary for Commerce & Economic Development Edward Yau Tang-wah said Hong Kong’s travel bubble arrangement with Singapore is set to commence on November 22, lawmakers doubt such arrangements would fit in Hong Kong’s disease prevention measures. -VE Cathay Pac and other travel related names.
CKH HOLDINGS (00001.HK)-held Hutchison China MediTech Limited (Chi-Med) (HCM.US) announced that it entered into a definitive agreement for the sale of US$100 million of shares at a price equivalent to US$30 per American Depositary Share via a private placement to Canada Pension Plan Investment Board (CPP Investments). Chi-Med will receive all proceeds from this private placement of the equivalent of 3.333 million ADSs, which will fund ongoing research and clinical development and support the further growth of its commercialization capabilities both in China and globally.
SF Holding (002352.SZ) was quoted as saying by Chinese media that the company did not plan for stock issuance and listing on the Stock Exchange, amid rumor about its planned secondary listing in Hong Kong.