Asian Futures Nikkei Futures indicate a higher open, HK ADR’s +5pts and Australia higher in early trades. Markets upside likely to be muted and rising covid cases a concern despite vaccine hopes.
US Futures opened lower Dow -81pts, S&P and NDX also slightly lower. ADP Employment data later today will be watched closely.
DOW +0.63%, NDX +1.28%, S&P +1.13%, Russel 2K +0.89% Having opened higher Dow initially traded higher but then drifted lower close at the day lows. NDX worked slightly higher, S&P effectively traded sideways but hit a new high. Communication and Financials lead the market. Manufacturing PMI data was inline and the ISM Manufacturing data was mainly better although the employment element dropped. Helping sentiment along with the OCED raising its global forecast was news that lawmakers were considering a $908bn stimulus package. But later Senator McConnell said he did not endorse the plan and wants a ’targeted relief plan” instead. There was news that Pelosi and Mnuchin had resumed talks. Powell’s continued his testimony and said the outlook was 'extraordinary uncertain’ and that short term the rising covid cases would prove challenging.
Mnuchin came under attack from Democrats who said he was sabotaging the economy; he said he was merely following the law.
Tesla +3% on news it will be included in the S&P in one tranche.
Kohl’s +13.4% announced a new strategic partnership with Sephora, a division of Louis Vuitton Moet Hennessy.
Banks JPMorgan Chase +1.6%, Citigroup +0.7% and Wells Fargo +2.6%, AMEX +1.1%
Work from home names: Facebook +3.5%, Apple +3.1%, Amazon +1.6%, Netflix +2.8%, Zoom Video -15% despite good earnings, Alphabet +2.3% and Microsoft +1%,
Nvidia unch, Micron +4.7%, AMD unch, Skyworks +2%
Re-opening stocks Boeing +1%, Caterpillar -0.2%, Simon Property +2.9%,Nordstrom +5.8%, Gap +3.2%, United Airlines +0.6%, Carnival +0.9%, Wynn Resorts +1.9%, Chevron +0.3%, Exxon Mobil +1%,
Lock down names Campbell Soup +0.4% General Mills +0.8%, JM Smucker -0.2%
Salesforce beat earnings but revenue slowing and gave a weak forecast. Also announced buying Slack for $27.7b
Redbook -9.2% YoY vs +2.8% prior (+1.3% MoM vs -0.5% prior)
Manufacturing PMI Nov 56.7 vs 53.4 Oct (F/cast was 56.7)
Construction Spending Oct MoM vs 67.9 Sept (F/cast was )
Construction Spending Oct YoY vs 67.9 Sept (F/cast was )
ISM Manufacturing Data
New Orders Nov 65.1 vs 67.9 Oct (F/cast was 65)
Employment Nov 48.4 vs 53.2 Oct (F/cast was 51)
PMI Nov 57.5 vs 59.3 Oct (F/cast was 57)
Prices Nov 65.4 vs 65.5 Oct (F/cast was 64)
Fed’s Powell Testimony
API Crude Oil Stock Change +4.1m vs 3.8m prior (Consensus was -2.272m)
Due at 8am HK time Total Vehicle Sales Nov (Oct was 16.2m)
USD closed slightly stronger vs Yen but weaker vs Euro. Bitcoin -3% @ 19,058 but hit a new intraday high but then sold down, VIX +1% @ 20.8, US T10 @ 0.928%
OIL Brent -1.3%, WTI -2.1% as uncertainty over OPEC production cuts remains
Gold +2.2%, Silver +6.8%, Copper +2%
MBA Mortgage Rate & Applications, ADP Employment Change, ISM New York Index, EIA Oil Report, Beige Book, Fed’s Powell’s Testimony continues.
Speeches from Williams, Quarles, Harker and Williams
DAX +0.69%, CAC +1.14%, FTSE +1.89% Markets opened higher following the surge in Asia on good PMI Manufacturing data. European PMI data was generally about 50 (except France). Covid remains a concern but +VE vaccine news is currently outweighing the rising cases. News that the OECD raised its forecast also +VE. FTSE & CAC worked higher from the open, DAX traded sideways.
Basic Resources lead the gains. Healthcare names were down slightly.
Pfizer and BioNTech said they have applied to the European Medicines Agency for the conditional marketing authorisation of their coronavirus vaccine. If approved, immunizations could be available in Europe this month.
IWG +9% (office provider), Taylor Wimpey +8%.
UniCredit -8% for news that CEO Jean Pierre Mustier will step down in April.
Manufacturing PMI Nov 53.8 vs 54.8 (F/cast was 53.6)
Core Inflation Rate Nov +0.2% YoY vs +0.2% Oct (F/cast was +0.2%)
Inflation Rate Nov -0.3% YoY vs -0.3% Oct (F/cast was -0.2%)
Inflation Rate Nov -0.3% MoM vs +0.2% Oct (F/cast was -0.2%)
Unemployment Rate Oct 6.1% vs 6.2% Sept (F/cast was 6.3%)
Manufacturing PMI Nov 57.8 vs 58.2 (F/cast was 57.9)
Manufacturing PMI Nov 49.6 vs 51.3 (F/cast was 49.1)
New Car Registrations Nov -27% vs -9.5% Oct (F/cast was -18%)
Nationwide House Prices Nov +6.5% YoY vs 5.8% Oct (F/cast was +6.2%)
Nationwide House Prices Nov +0.9% MoM vs +0.8% Oct (F/cast was +0.4%)
Manufacturing PMI Nov 57.8 vs 58.2 (F/cast was 57.9)
EUROZONE Unemployment Rate, PPI
GERMANY Retail Sales
FRANCE No data due
UK BoE FPC Meeting
JAPAN Expect Nikkei to open higher; Nikkei futures 26,845 (off earlier highs) vs 26,788 Nikkei’s last close. Yen currently 104.30
Data due at 1pm HK time Consumer Confidence.
Health minister Norihisa Tamura called Tuesday for local authorities to help strengthen regional medical systems by planning for a “worst case scenario” as the number of severely ill patients in the country surges -VE for sentiment. Tokyo reported 372 case Tuesday (+61 from Monday), Nationwide the total hit 2,011. -VE for sentiment. Govt is asking older people not to use the travel campaign. But PM Suga does not want to halt the programme.
Japan is loosening regulations on part-time work for foreigners stuck in the country due to the novel coronavirus and having trouble supporting themselves, the government said on Tuesday. +VE
Japan plans to temporarily cut its aviation fuel tax by 80% at most to help the airline industry, which is struggling with the impact of the coronavirus pandemic, the Kyodo news agency reported on Tuesday. +VE
Japan urged South Korea on Tuesday to immediately remove its anti-dumping tariff on Japan-made stainless steel bars after a World Trade Organization dispute settlement panel decision said an extension of the protections would be a contravention of WTO rules. However S Korea has already lodge an appeal and because the WTO is understaffed because of Trump’s action the appeal is unlikely to be heard any time soon. -VE
Russia said on Tuesday it had deployed a number of its new S-300V4 mobile missile air defence systems for combat duty on Iturup, one of four islands held by Russia that Japan claims and calls the Northern Territories. -VE for sentiment
Government to set up a national council tasked to achieve the goal of net zero greenhouse gas emissions by 2050 Will draw on experts and business
NTT Docomo Inc. plans to follow the other major carriers in reducing some of its cell phone charges. KDDI Corp. and SoftBank Corp. have already announced price cuts in their respective budget brands, but Docomo is the first of the three major companies to start reviewing prices in their main brand covering many users. In addition to targeting large-capacity plans of its main brand, Docomo is also introducing a new budget brand and reviewing its fee structure in general. -VE for investors as it appears a price war is starting.
East Rail set up electronic panels equipped with artificial intelligence on Tuesday at major train stations in the Tokyo area to provide tourist and transfer information for a trial period, the aim is to reduce the need for staff to answer queries. +VE
SOUTH KOREA Expect markets to open higher extending to new highs on vaccine/recovery hopes. Expect market heavyweights to continue to drive the markets higher. KRW strengthened vs the USD. Inflation was weak than expected.
Inflation Rate Nov +0.6% YoY vs +0.1% Oct (F/cast was +1%)
Inflation Rate Nov -0.1% MoM vs -0.6% Oct (F/cast was +0.3%)
Government reported 451 more COVID-19 cases, including 420 local infections, raising the total caseload to 34,652, according to the Korea Disease Control and Prevention Agency (KDCA). The daily virus tally is on a slowing path after peaking at an eight-month high of 581 last Thursday. An average of 480 daily new cases was reported over the past week. They will wait a few days before confirming the downward trend because they worry the cold weather keeping people inside may lead to a resurgence of cases.
Organization for Economic Cooperation and Development (OECD) on Tuesday forecast a sharper-than-expected contraction for the South Korean economy this year, citing the fallout of the new coronavirus outbreak. It expected Asia's fourth-largest economy to retreat 1.1% this year, steeper than its September forecast of a 1% contraction.
Parliament on Tuesday passed a bill to allow globally recognised K-pop artists such as BTS to postpone their mandatory military service to age 30. It actually extends to high-profile classical musicians and athletes who won Olympic medals or a gold at the Asian Games, including Tottenham Hotspur forward Son Heung-min. +VE
Mirae Asset Daewoo Co Ltd and affiliates won a U.S. court case against Anbang Insurance Group, a court document showed, after Mirae scrapped a $5.8 billion deal after the start of the pandemic to buy 15 U.S. hotels from Anbang. +VE
Press reports General Motors; which has long struggled with labour relations in South Korea, will have to renegotiate a preliminary labour deal after a majority of union members voted against it. I think GM will probably now seriously consider exiting the S Korean market its losses have narrowed but it is still loss making. It is constrained from selling its stake until 2013 and is required to keep its stake above 35% until 2028 but as it owns 67% of GM Korea it could just shut it down completely. Such as action would probably be +VE for the sector as it would make the unions appreciate the reality of the situation. Comes as South Korean carmakers' sales fell 5% last month from a year earlier as the coronavirus outbreak continued to sap demand around the globe, industry data showed Tuesday.
A court on Tuesday rejected an injunction request against Korean Air’s plans to take over Asiana Airlines, in the latest step giving a boost to the high-profile acquisition deal involving South Korea’s two national flag carriers.
LG Chem's battery business has been officially launched as the wholly-owned “LG Energy Solution” Tuesday, taking its first independent step as the world‘s leading battery maker and overall energy solution provider. +VE
TAIWAN Expect market to open higher following the US with tech names in focus and worked slowly higher.
No data due
As Australia's relationship with China worsens, Taiwan has called on Canberra to stand up for democracy and help defend the disputed island territory against threats of attack.
New vehicle sales last month grew 16.4% MoM to 46,332 units, the biggest number of units sold for November thanks to strong demand for new models ahead of the expiration of government tax incentives, the Chinese-language auto information Web site U-Car.com reported yesterday.
Powerchip Semiconductor Manufacturing Corp on Monday said that it has hiked chip prices, as demand has significantly surpassed what it can supply, and expects a chip shortage to worsen next year amid rapidly growing adoption of 5G-related applications. Supply of power management ICs, image sensors and display driver ICs has become so tight that the company cannot squeeze out any extra capacity to meet demand, Powerchip Semiconductor said. Those chips are used in mobile phones, tablets and notebook computers.
Walsin Technology Corp moved sharply higher yesterday after its announcement Monday of plans to acquire a stake in Japan-based Soshin Electric Co. Raising expectations that Walsin, a supplier of multi-layer ceramic capacitors, chip resistors and other passive components, is to expand its production with the stake in the Japanese company. +VE
CSBC Corp, yesterday reported net losses of NT$965 million (US$33.46 million) in the first three quarters, 21% larger than net losses last year, due to delays in the delivery of raw materials and the appreciation of the New Taiwan dollar against the US dollar. To avoid delays in raw materials, CSBC has diversified imports of raw materials, as it does not seem like the pandemic will slow down anytime soon, Tseng said. For next year, the company plans to further reduce the number of commercial shipbuilding contracts; which have a low margin to 22% of total revenue that would allow the company to focus on high-margin orders, such as 2,800 twenty-foot equivalent unit container vessels. +VE
Eslite Spectrum Corp which runs the Eslite bookstore chain, department stores and other businesses, yesterday launched a new Web site and mobile app to expand further into the e-commerce market. Chairwoman Wu said they did not set growth targets for the Web site, but voiced confidence that business would pick up by double-digit percentage points each year and grow by many multiples +VE
EVA, CAL push facial recognition for touchless boarding; saying that they are better able to address the COVID-19 risk in airports with a facial recognition system that enables touchless boarding.
Q3 Revenue at hotels decline NT$2.7bn from last year; Hotels in Taipei reported the largest revenue nationwide, but the annual decline in their income was also the highest, the Tourism Bureau said. Hotels near tourism hot spots generated total revenue of NT$1.79 billion, it said.
CHINA Expect market to open higher but sentiment cautious as International relations with a number of countries are under pressure.
No data due.
The US accused China on Tuesday of “flagrant violation” of its obligation to enforce international sanctions on North Korea and offered rewards of up to $5 million for information about sanctions evasions. -VE
India is considering a plan to build a 10 gigawatts (GW) hydropower project in a remote eastern state, an Indian official said on Tuesday, following reports that China could construct dams on a section of the Brahmaputra river. The river, also known as the Yarlung Tsangbo in China, flows from Tibet into India’s Arunachal Pradesh state and down through Assam to Bangladesh. Indian authorities are concerned Chinese projects could trigger flash floods or create water scarcity.
China successfully landed a spacecraft on the moon’s surface on Tuesday in a historic mission to retrieve lunar surface samples, Chinese state media reported. Slight +VE for sentiment
HONG KONG ADR’s +5pts to open at 26,572 weakness in the Petrochems, Chinese Banks and E Commerce names. Increased lockdown measures -VE for sentiment as Goldman Sachs is to return to a full work-from-home approach, except for employees who need to be in the office to perform their roles
No data due but after market Tuesday
Retail Sales Oct -9.3% YoY vs -13.4% Sept (F/cast was -11%)
The Value of Retail Sales Oct -8.8% YoY (F/cast was -10.3%). It is the 21st month of declines.
Annie Yau Tse, Chairman of Hong Kong Retail Management Association (HKRMA), at an online meeting said she expected local retailers to be even more pessimistic about the upcoming traditional peak season in Christmas since the government had unrolled tighter gathering ban in wake of fourth wave of epidemic. -VE RETAIL
IPO EVERG SERVICES (06666.HK), debut opened at $8.81 in grey market, up 1% against the listing price $8.8, and closed at $8.77, down 3 cents or 0.3% against the listing price, on volume of 11.2 million shares and turnoverof $100 million, PhillipMart data showed.
Social Distancing Goldman Sachs is to return to a full work-from-home approach, except for employees who need to be in the office to perform their roles along with a number of other banks. Government will suspend a number of services with court proceedings being limited, Transport driving tests and counter services suspended. Immigration Emergency services only but wedding will continues but with limited attendees.
SHORT SELLING Tuesday 18.2% vs 15.4% Monday
Top Shorts Ping An (2318) 44%, HSBC (5) 38%, Bank of China (3988) 32%, MTRC (66) 31%, Galaxy Ent (27) 31%, Swire Pac (19) 29%, Wharf REIC (1997) 28%, BoC HK (2388) 28%, AIA ((1299) 27%, Sands China (1928) 26%, CLP (2) 26%, NWD (17) 26%.
OECD raised its Global economic outlook on the basis of +VE Vaccine news and it sees China driving the recovery. It now expects the global; economy to contract -4.2% vs -4.5% it estimated in September. +VE
XIAOMI-W (01810.HK) is weighing top-up placing of 1 billion shares at $23.7-24.5 each, representing a 6.3-9.4% discount to the closing price today, to cash in $24.5 billion at most, said market rumours. The lock-up period is 90 days. -VE
BABA-SW (09988.HK)'s Cainiao is teaming up with Ethiopian Airlines to establish an export line designated for temperature-controlled medicines at the Shenzhen Airport, marking the first routine China-Africa cross-border aviation line for temperature-controlled medicines, said Chinese media. +VE
HKEX (00388.HK) announced the official launch of the Sustainable and Green Exchange (STAGE), Asia’s first multi-asset sustainable investment product platform, supporting fast-growing global demand for sustainable finance. At the heart of the STAGE platform is an online product repository, which at launch features 29 sustainable-themed products from leading Asian corporates. These HKEX-listed sustainable products include sustainability, green, and transition bonds from issuers across a variety of sectors including utilities, transportation, property development and financial services as well as ESG-related exchange traded products. Over time, the scope of the product repository will increase across asset class, industry, in Hong Kong and beyond.