Nov 5 Asian Macro Initial Thoughts Asian Futures higher US Futures +60pts
Asian Futures Nikkei indicates +285pts, HK ADR’s +548pts and Australia opened higher ahead of Trade data due later.
Apple supply chain +VE after Qualcomm shares surge on 5G smartphone optimism.
US Futures Opened +70pts with S&P and NDX also +VE but have eased back slightly to +60pts, currently Biden still needs 6 Electorial College votes to win with 65 electoral votes still to be announced. Control of the Senate looks to remain Republican which is viewed as +VE for the markets; an almost ‘Goldilocks’ outcome although it may limit a quick new stimulus package.
DOW +1.34%, NDX +3.85%, S&P +2.2%, Russel 2K +0.05% Markets opened strong with the Dow up over 400pts in relief as investors realise it will not be a ‘blue wave’ although the final result was too close to call. Republican’s seem likely to control the Senate seen as +VE and prompted a rotation back into Tech names.
Uber and Lyft jumped after a landmark vote in California mens they would be exempt from a law that would force companies to treat workers as employees. +VE.
Work from home names: Facebook +8.3%, Amazon +6.3% (news that Bezos has sold more than $3bn of stock this week does not seem to have impacted) Apple +4.1%, Alphabet +6.1%, Netflix +2%, Disney +0.7%, Zoom +7.1%.
Nvidia +6%, Micron +1.7%, AMD +6.2%, Skyworks +0.5%
Re-opening stocks Boeing -1.3%, Caterpillar -7.4%, Simon Property -4.2%, Kohls -4.6%, Nordstrom -6.4%, Gap -0.1%, United Airlines -2%, Carnival -2.7%, Wynn Resorts +2.1%
Lock down names Campbell Soup -0.5%, General Mills -0.7%, JM Smucker -2.1%
Qualcomm +13% in after-hours trading as earnings beat and an upbeat forecast; viewed as optimism on 5G phones +VE for Apple supply chain.
Match Group +2.7% as earnings beat
Expedia +5.5% after hours on smaller loss.
MBA Mortgage Applications +3.8% vs +1.7% prior and 30 year Mortgage Rate 3.01% vs 3% prior
ADP Employment Change Oct 365k vs 753k Sept revised (F/cast was 590k)
Balance of Trade Sept $ -63.9bn vs -67bn Aug revised (F/cast was -63.1bn)
Exports Sept $176.4b vs 172bn Aug revised (F/cast was 175.1b)
Imports Sept $240.2bn vs 239bn Aug (F/cast was 238.2b)
Treasury Refunding Announcement
Composite PMI Oct 56.3 vs 54.3 Sept (F/cast was 55.5)
Services PMI Oct 56.9 vs 54.6 Sept (F/cast was 56)
ISM Non Manufacturing Data
Prices Oct 63.9 vs 59 Sept (F/cast was 58)
New Orders Oct 58.8 vs 61.5 Sept (F/cast was 61)
Employment Oct 50.1 vs 51.8 Sept (F/cast was 52)
Business Activity Oct 61.2 vs 63 Sept (F/cast was 60)
PMI Oct 56.6 vs 57.8 Sept (F/cast was 57)
EIA Crude Oil Stock Change -7.998m vs +4.32m (Consensus was +0.89m)
EIA Gasoline Stock Change +1.541m vs -0.892m (Consensus was -0.871m)
USD was slightly stronger vs Yen & Euro. Bitcoin +0.4% @ 14,060, VIX -17% @ 29.57, US T10 0.771%
OIL Brent +3.75%, WTI +3.93% as EIA data shows supply falls significantly
Gold -0.4%, Silver -1.5%, Copper +0.4% as likely Republican Senate dents stimulus hopes
AHEAD Challenger Job Cuts, Initial Claims, 4 wk Ave Claims, Continuing Claims, Unit Labour Costs, Non Farm Productivity, EIA Natural Gas Reports. FOMC Rate Decision.
Earnings Bristol-Myers Squibb, AstraZeneca, Booking Holdings, Square TripAdvisor, Uber. Roku, Electronic Arts, T-Mobile, AIG, Zillow, Live Nation Entertainment, EOG Resources, Tanger Factory Outlet, XPO Logistics, Cigna, Regeneron, Alibaba, General Motors, Cardinal Health, Duke Energy, Papa John’s, ArcelorMittal, Dun and Bradstreet, Murphy Oil, Cardinal Health, Sempra Energy, SeaWorld, AmerisourceBergen
DAX +1.95%, CAC +2.44%, FTSE +1.67% markets opened lower as PMI data down MoM but better than F/casts; suggests the resurgence of covid is having an impact. Focus on US election with early indications giving Biden a lead but not to the extent many had expected. Stocks dipped mid morning (as Trump wrongly claimed victory) before then working higher to day highs in the PM before easing back into the close as a clean result is not expected. Healthcare names lead the gains.
Auto’s +VE as BMW results beat due to the recovery in Asia; with China sales +31% YoY in the quarter. But it remained cautious on its guidance.
HelloFresh gained after announcing that it had more than doubled its quarterly sales as demand from consumers in lockdown continued.
Cellnex, the acquisitive Spanish telecoms infrastructure company, hit an all-time high on hopes for its next deal. Hong Kong’s CK Hutchison said yesterday that it was in talks with Cellnex about a €10bn sale of its large portfolio of mobile towers in Europe.
Ocado strong after the online food retailer raised its full-year profit guidance. +VE for M&S, which owns half of Ocado’s retail business.
Standard Chartered -4.7%
EUROZONE Services PMI Oct 46.9 vs 48 Sept (F/cast was 46.2)
Composite PMI Oct 50 vs 50.4 Sept (F/cast was 49.4)
PPI Sept +0.3% MoM vs +0.1% Aug (F/cast was +0.5%)
PPI Sept -2.4% YOY vs -2.6% Aug revised (F/cast was -2.2%)
GERMANY Services PMI Oct 49.5 vs 50.6 Sept (F/cast was 48.9)
Composite PMI Oct 55 vs 54.7 Sept (F/cast was 54.5)
FRANCE Services PMI Oct 46.5 vs 47.5 Sept (F/cast was 46.5)
Composite PMI Oct47.5 vs 48.5 Sept (F/cast was 47.3)
UK Services PMI Oct 51.4 vs 56.1 Sept (F/cast was 52.3)
Composite PMI Oct 52.1 vs 56.5 Sept (F/cast was 52.9)
EUROZONE Construction PMI, Retail Sales
GERMANY Factory Orders, Construction PMI
FRANCE Construction PMI, Retail Sales
UK Construction PMI New Car Sales, BoE Interest Rate Decision, MPC Meeting Minutes
JAPAN Nikkei Futures Chicago 23,980 +285pts (Osaka 23,940) vs 23,695 Nikkei’s Wednesday close. Yen currently 104.50. Expect a continuation of yesterday’s rally
Data due Oct Services PMI (Sept was 46.9 and F/cast is 46.6) and Composite PMI (Sept was 46.6 and F/cast is 46.7)
Toyota Motor Corp. will raise its production capacity for fuel cell vehicles (FCVs) tenfold to 30,000 a year, press reports. To prepare for the December launch of the fully revamped Mirai, the automaker aims to promote and popularize FCVs by setting up a complete mass-production system. +VE
Marubeni Corp has started talks with Berkshire Hathaway including about business collaborations its CFO said on Wednesday. It does not expect to book an impairment loss on its stake in the U.S. aircraft lessor Aircastle Ltd in the current financial year but it may consider a capital reinforcement in Aircastle depending on the outlook of the airline industry and Aircastle's earnings next year, he added. +VE
Seven & i Holdings Co Ltd, parent of the 7-Eleven convenience store chain, is aiming to sell as many as 300 gas stations following its deal to acquire Marathon Petroleum Corp for $21 billion, according to people familiar with the matter. +VE
SOUTH KOREA Expect markets to open higher following the US election results but investors generally +VE. Good Current Account data also +VE for sentiment.
Data out Current Account Sept $10.21bvs 6.57b Aug (F/cast was 5.5b)
Korea on Tuesday carried out 12,401 tests and confirmed 118 more cases of the novel coronavirus (98 local and 20 imported) according to the Korea Disease Control and Prevention Agency’s updates.
SK hynix, achieved a 175% YoY growth in its operating profit in Q3 2020, despite adverse market conditions including declines in prices and the COVID-19 pandemic.
Nongshim said Wednesday that it expects record-high overseas sales of $990 million this year with its flagship instant noodle brand Shin Ramyun. According to Nongshim, the overseas sales forecast is up about 24% YoY as the demand for instant noodles jumped across the world in the wake of COVID-19.
Hyundai Motor and Kia Motors saw their retail sales rise in the US market last month, according to the automaker’s US units Wednesday. In the performance data released on the website of Hyundai Motor America, total sales in October recorded 57,395 units, +1% YoY Retail sales reached 52,117 units, +10% YoY
Korea Power Corp. said Wednesday that it has become the first South Korean energy company to issue environmental, social and governance bonds worth 200 billion won ($176 million) for two consecutive years.
TAIWAN Expect market to open higher with Tech leading as investors watch the US election results. Qualcomm results also +VE for 5G Smartphone plays
Data due after market Inflation Rate, Wholesale Orders, Foreign Exchange Reserves
Vanguard International Semiconductor yesterday said that it is raising its wafer prices and seeking new acquisition deals to further expand capacity, as there is strong demand from customers for driver ICs used in notebook computers and TV displays, as well as power management chips. It posted its best quarterly net profit in about seven quarters at NT$1.53 billion (US$52.75 million) for the quarter ending Sept. 30, +3% QoQ and +2.1% YoY.
Acer Inc yesterday reported that its net income for last quarter was the highest in nearly 10 years at NT$2.29 billion, +94.2% YoY. The results came as consolidated revenue rose 27.3% to NT$80.06 billion, with gross margin improving to 10.5% and operating margin to 3.64%. The firm attributed the growth to a 94.4% increase in Chromebook sales. +VE but there maybe questions over how long high sales can continue.
Advantech, the world’s largest industrial computer manufacturer, yesterday said that it is expecting to be “a little off” this quarter, as customers are being cautious about placing orders. Using an exchange rate of NT$29 per US dollar, the company forecast that fourth quarter revenue would be US$420 million to US$440 million, -5.4% to 9.7%. -VE
Property transactions last month totaled 21,712 units in the nation’s six special municipalities, -10.9% MoM due to government plans to cool the market and fewer working days. -VE
CHINA Expect market to open higher following the US rally.
No data due
President Xi says China will speed up negotiations of the China-EU investment treaty, and the China-Japan-ROK free trade agreement. He also said “Our aim is to turn the China market into a market for the world, a market shared by all, and a market accessible to all,” With China looking to take an active role in the WTO, UN and G20 and other organisations. Speaking at the China International Expo.
Beijing says it pulled the Ant IPO to protect China’s capital markets and rumoured to have come from President Xi. Concerns about Ant’s business model in consumer loans and tightening regulations are going to make it difficult for Ant to run another IPO anytime soon. It also illustrates why private businessmen will need to keep a low profile rather than seeking to disrupt the establishment.
China said Wednesday that it will make “proper and necessary response'' if the U.S. proceeds with its latest planned arms sale to Taiwan. Foreign ministry spokesperson Wang Wenbin said the sale of US$600 million in armed drones to the island “brutally interferes in China's internal affairs and seriously undermines China's sovereignty and security interests.''
Eight miners are missing after a suspected gas outburst in a coal mine in northwestern Shaanxi province on Wednesday, local authorities said. -VE for the mining standards in China.
HONG KONG ADR’s +548pts to open at 25,435 but expect upside as recent shorts squeezed. ADR’s strong across the board as the ‘blue sweep’ fades.
No data due
SHORT SELLING Wednesday 15% vs 14% Tuesday
Top Shorts Hang Seng Bank (11) 51%, Ping An (2318) 45%, CCB (939) 38%, Bank of China (3988) 33%, Sunny Optical (2382) 32%, AIA (1299) 30%, BOC HK (2388) 30%, ICBC (1398) 28%, Galaxy Ent (27) 27%, CLP (2) 26%.
Freedom. The arrest of RTHK journalist continues to get headlines; it appears journalists used to be able to search the data base giving the reason of ‘media research’ but the government recently altered the declaration removing that option.Which fo many will raise the question of why if not to curb media freedom?
HSBC HOLDINGS (00005.HK) CEO Noel Quinn, at an online forum, said more than 90% of staff have their job contents adjusted to become more digitalized owing to pandemic impediment on the bank's operation. That said, customer relation remains significant to bank whereas digitalization is merely one of the alternative business channels which should not substitute human staff.The Census and Statistics Department (C&SD) announced that the value of total receipts of the restaurants sector in the third quarter of 2020, provisionally estimated at $17.0 billion, -35.3% YoY. Over the same period, the provisional estimate of the value of total purchases by restaurants decreased by 33.4% to $5.7 billion.
CKH HOLDINGS (00001.HK) the Group has reached a substantial agreement with Cellnex Telecom S.A. on the key commercial terms for the disposals of the Group’s interests in its telecommunications infrastructure assets in Europe. Estimated total proceeds on completion of the Transactions are approximately EUR10.0 billion, including minority partners’ share. The company emphasized that no decision has been taken to proceed with any transaction. Agreements in relation to the Transactions remain subject to finalization of definitive documentation.
CATHAY PACIFIC management play hard ball on getting new contracts signed; with a ’take it or leave it attitude’. I think -VE as it will cause staff resentment and damage the company’s reputation; such that when the market improves it may struggle to attract good staff.
Centa-Salesman Index (CSI) last stood at 52.9 this week, down 0.41 pts weekly, said Centaline Property. The index lost a total of 1.35 pts in three straight weeks amid market apprehension about the economic outlook.