Nov 3 Asian Macro Initial Thoughts
Asian Futures. Japan closed for culture day. HK ADR’s +202pts and Australia opened higher ahead of the RBA rate decision. I would expect muted trading but with lighter volumes. S Korea inflation was weaker than expected a slight -VE no other major data due in Asia.
US Futures Opened +87pts, S&P and NDX +0.2%
US Election Day Biden is said to hold a lead but really it is too close to call especially with 94m votes already cast. Key for the next stimulus package likely to be who has control of the senate. Covid cases continue to rise
DOW +1.6%, NDX +0.42%, S&P +1.23%, Russel 2K +1.96% having opened higher following good PMI data from Asia and Europe. Dow and S&P effectively traded sideways, DNDX traded lower initially but bounced around lunchtime and worked back to close higher. Honeywell and Walgreens Boots Alliance were the best-performing Dow stocks. The S&P 500 was led higher by gains in the energy, materials and industrial sectors. Big Tech struggled. Solar saw gains on hopes of a Biden victory.
Pre market Clorox closed +4.2% was higher in pre market as earnings & revenue beat and it raised its full-year sales guidance. Estee Lauder (EL) closed +1.9% off initial highs as earnings & revenue beat and it announced a 10% dividend increase to 53 cents per share. Marathon Petroleum (MPC) +4.8% having been weak in the pre market; announce a loss that was less than expected Revenue missed too but rallied through the day; +VE cross read to Devon Energy, ConocoPhillips and Occidental Petroleum.
Dunkin’ Brands (DNKN) +6.5% as agreed to be acquired by Arby’s owner Inspire Brands for $8.8 billion in cash, or $106.50 per share,
Two mall owners CBL -41% (runs B & C rated Malls vs Simon Property A rated Malls) and Pennsylvania Real Estate Investment Trust +0.2% filed for Chapter 11 bankruptcy protection.
Work from home names: Facebook -0.7%, Amazon -1% Apple -0.1%, Alphabet +0.5%, Netflix +1.8%, Disney -0.9%, Zoom -1.7%,
Nvidia +0.4%, Micron -1.3%, AMD -0.8%
Re-opening stocks Boeing +2.9%, Simon Property +3%, Kohls -3.3%, Nordstrom +0.6%, Gap +7.2%, United Airlines -0.2%, Carnival -1.2%, Wynn Resorts +4.7%
Lock down names Campbell Soup +2.1%, General Mills +1%, JM Smucker +4%
PayPal -4% ands Mondelez -1% despite reporting better-than-expected earnings along with Skyworks Solutions -2% who also gave strong first quarter and revenue guidance.
Cirrus Logic +7% beat and gave strong next quarter revenue guidance.
Royal Caribbean Cruises -1.2% (was +1.1% in normal hours) cancelled all of its sailing through the end of the year.
Manufacturing PMI Oct 53.4 vs 53.2 Sept (F/cast was 53.3)
ISM Manufacturing Data
New Orders Oct 67.9 vs 60.2 Sept (F/cast was 57)
Prices Oct 65.5 vs 62.8 Sept (F/cast was 63)
Employment Oct 53.2 vs 49.6 Sept (F/cast was 50)
PMI Oct 59.3 vs 55.4 Sept (F/cast was 55.2)
Construction Spending Sept +0.3% vs +0.8% Aug (F/cast was +0.7%)
USD was slightly weaker vs Yen & flat vs Euro. Bitcoin -1.7% @13,586.46 , VIX -2.3% @ 37.13, US T10 0.852%
OIL Brent +3.6%, WTI +3.6%
Gold +0.9%, Silver +2.2%, Copper +1.3% as covid cases rise along with uncertainty over the election
AHEAD Redbook, ISM New York Index, IBD/TIPP Economic Optimism, Factory Orders, Factory Orders Ex Transport, API Crude Oil Stock Change, Presidential Election.
Earnings Humana, Fox Corp, Bayer, Sysco, BNP Paribas, Gartner, Eaton, Thomson Reuters, Exelon, McKesson, Bausch Health, Expeditors International, Progressive, Super Micro, Prudential Financial
DAX +2.01%, CAC +2.11%, FTSE +1.39% Mixed open initially traded lower then worked higher as PMI data was better than F/cast in Europe and Asia off-setting the covid and US election concerns. Banks and insurance stocks leading the gains while the travel and leisure sector weak. Ocado rallied on the news of a new lockdown in the UK.
EUROZONE Manufacturing PMI Oct 54.8 vs 53.7 Sept (F/cast was 54.4)
GERMANY Manufacturing PMI Oct 58.2 vs 56.4 Sept (F/cast was 58)
FRANCE Manufacturing PMI Oct 51.3 vs 51.2 Sept (F/cast was 51)
New Car Registrations Oct -9.5% vs -3% Sept (F/cast was -6.6%)
UK Manufacturing PMI Oct 53.7 vs 54.1 Sept (F/cast was 53.3)
EUROZONE No data due
GERMANY No data due
FRANCE Budget Balance
UK No data due
JAPAN Market closed for Culture Day, re-opens Wednesday. Yen currently 104.76
No data due
Tokyo confirmed 87 new covid cases Monday, (vs 116 Sunday)
Sosei Group Corp said on Monday it is allying with a US biotech run by former Novartis AG executives to commercialise a neurological drug pipeline. Sosei declined to specify the deal size, but Senior Vice President Hironoshin Nomura said it could be similar to previous contracts with AstraZeneca Plc and Teva Pharmaceutical Industries Ltd that were in the $500 million range. +VE
Nidec Corp will spend 200 billion yen ($1.9 billion) on a new plant in Serbia to build motors for electric vehicles as it seeks to win more business from automakers turning away from internal combustion engines, +VE
Last trains to leave earlier in Tokyo as JR East cuts costs to stem red ink. For the first time since it became a private company in 1987, which has enjoyed steady passenger demand in the metropolis, posted operating and net losses in its earnings released last week for the first half of this fiscal year. +VE
SOUTH KOREA Expect markets to open flat with caution over the US election and weak inflation data.
Data out Inflation Oct +0.1% YoY vs 1% Sept (F/cast was +0.8%)
Inflation Oct -0.6% MoM vs 0.7% Sept (F/cast was +0.3%)
Lowest inflation in four months. Compared to the previous year, electricity, water, gas, industrial products, and services declined, but agricultural and livestock products rose 0.1 percent in total. Meanwhile, food products rose 4.7 percent (vs 5.2 percent in August), and non-food products fell 3.9 percent (vs -1.5 percent). On a monthly basis, consumer prices plunged 0.6 percent after rising 0.7 percent in the previous month, also surprising market expectations of a 0.1 percent increase.
President Moon Jae-in predicted Monday that South Korea’s economy will be able to return to a normal track in the first half of next year if the current trend of economic rebound from the new coronavirus pandemic continues in the fourth quarter.
Govt reported 97 new covid cases in the 24 hours ending Sunday (vs 124 Saturday)
Korea Power Corp. said Monday it has launched a special task force dedicated to tackling structural and systemic constraints that keep South Korea’s burgeoning renewable energy industry from growing.
GM Korea Co. said Monday its Oct sales +4.1% YoY; helped by increased sales of its sport utility vehicle models despite the coronavirus pandemic.
SsangYong Motor Co. said Monday its Oct sales +0.6% YoY helped by increased exports.
TAIWAN Expect market to open flat and for turnover to remain light. Market saw buying into the close yesterday but volumes were light.
No data due
The number of furloughed workers last week increased slightly from the previous week, but declined last month for the fifth consecutive month, the Ministry of Labor said yesterday. As of Friday, 685 companies had implemented unpaid leave programs, an increase of 30 from a week ago, with a total of 13,303 workers put on leave, up by 119 from a week earlier, data compiled by the ministry showed.
The sale of four sophisticated U.S.-made aerial drones to Taiwan has crossed a key hurdle in Congress and is at the last stage of approval, sources said on Monday, a deal likely to add to already strained ties with China.
Major life insurers this month continued to cut their declared interest rates for interest-sensitive products, as companies face falling investment returns amid a low-interest rate environment. Life insurers release the rates on a monthly basis, which are based primarily on their investment returns.
United Microelectronics Corp (UMC), announced on its sports and family day on Saturday that it would give a NT$10,000 bonus to each employee as part of the event. UMC has almost 20,000 employees worldwide, so the company is expected to pay about NT$200 million.
CHINA Expect market to open slightly higher following the US
No data due
Kashi county in northwestern Xinjiang reported 13 new virus carriers Monday, and all are currently under quarantine, local official said, state media reports. On Sunday, there there three patients in Xinjiang the National Health Commission said Monday. A total of 30 new asymptomatic cases, including 24 arriving from outside the mainland, were reported, the commission said in its daily report.
China's central bank and three financial regulators held talks with Ant Group's top executives and its founder Jack Ma on Monday as Beijing published new draft rules for online micro-lending. Ant Group is China’s dominant mobile payments firm, offering loans, payments, insurance and asset management.
China's New Energy Vehicle Industry Development Plan (2021-2035) has been approved, announced by the State Council. NEV buildout is the road China must follow in order to evolve from a car superpower to a car hyperpower. Accordingly, the top-four basic principles of the plan are the quality of being market-oriented and innovation-driven, as well as coordination facilitation and open development.
China’s foreign ministry said on Monday it will take all necessary measures to protect Chinese journalists in response to the United States delaying visa renewals for Chinese reporters. China urges the United States to stop its “political crackdown” on Chinese journalists, ministry spokesman Wang Wenbin said at a news briefing.
People's Bank of China (PBoC) announced that it had commenced the one-year Medium-term Lending Facility (MLF) of RMB500 billion in October 2020, with an interest rate of 2.95%.
HONG KONG ADR’s +202pts to open at 24,662 only CCB and ICBC in the red.
No data due but After market Monday
Retail Sales Sept -13.4% YoY vs -13.4% Aug (F/cast was -5%)
20 th month of falling retail activity. Sales declined mostly for food, alcoholic drinks and tobacco (-13.4% vs -19% August); jewellery, watches and clocks, and valuable gifts (-28.9% vs -41.4%); electrical goods and other consumer durable goods (-36.8% vs +14.6%); wearing apparel (-15.3% vs -23.4%); medicines and cosmetics (-45.6% vs -40.6%); clothing, footwear and allied products (-14% vs -25.6%); Chinese drugs and herbs (-5.6% vs -26.1%) and optical shops (-24.7% vs -33.2%). Considering the first nine months of the year, retail sales plummeted 30 percent compared with the same period of 2019.
IPO JW THERAP-B (02126.HK), debut, closed at $24.4 in the grey market, up $0.6 or 2.5% against the listing price of $23.8, on volume of 6.71 million shares, PhillipMart data showed.
SHORT SALES Monday 19.4 vs 18.7% Friday
Top Shorts MTRC (66) 42%, Country Garden (2007) 36%, Bank of China (3988) 36%, PetroChina (857) 35%, Ping An (2318) 33%, Hang Lung Ppty (101) 31%, HSBC (5) 31%, ICBC (1398) 31%, CKI (1038) 30%, CLP (2) 30%, CCB (939) 30%, Hengan (1044) 29%, Hang Seng Bank (11) 28%, AIA (1299) 28%, Wharf REIC (1997) 27%, BoC HK (2388) 26%, CNOOC (883) 26%, HK & China Gas (3) 26%, Henderson (12) 25%, Sunny Optical (2382) 25%.
US Secretary of State Mike Pompeo condemned Hong Kong authorities for arresting eight pan-democratic politicians on Sunday and Monday, including five currently serving legislators, over an incident at a Legislative Council meeting in May where lawmakers allegedly broke into shouting and physical scuffles with each other. “The arrest of these lawmakers six months after the incident in question is a clear abuse of law enforcement for political purposes,” Pompeo said.
ANT GROUP (06688.HK) tracked three transactions from institutional investors on the international grey market Monday at transaction prices of $108, $115 and $120, being 35-50% above the H-share public offering price, as Chinese media cited market sources. The gray market transaction of the H share for retail investors will not begin until after the market close on Wednesday (4 November).
Cathay Pacific will still give a transitional allowance to staffers who sign new contracts by tomorrow, but the amount will be half of that for those who signed before last Wednesday. The flight attendants' union will host an emergency general meeting today, after police rejected its application to hold an assembly at Cathay Pacific City tomorrow to voice discontent over the new contracts.
AAC TECH (02018.HK) starting from 2 November 2020, the current Senior Vice President, Group Finance, Guo Dan, will serve as Chief Financial Officer.
The Hong Kong Mortgage Corporation (HKMC) announced that the application period for the Fixed-rate Mortgage Pilot Scheme will be extended for one year to 30 October 2021. In response to the change in market interest rates, mortgage interest rates will be adjusted to 1.99%, 2.09% and 2.19% for 10-year, 15-year and 20-year period, and the scheme will start receiving applications from today.