Asian Futures Nikkei Futures now -22pts having opened +20pts, HK ADR’s -129pts and Australia lower in early trades. Expect initial weakness but then for markets to work back to flat with Tech and Pharma names in focus. Sentiment in China remains weak on Trump threats but likely to see Team China supporting the markets
US Futures opened flat Dow +12pts , S&P +0.1% and NDX +0.2%
DOW +0.12%, NDX -0.1%, S&P -0.39%, Russel 2K +0.02% Markets opened lower and initially sold down on concerns over the new covid strain that is 70% more transmissible than previous variants. But then worked better through the day with investors encouraged by the stimulus agreement, Moderna’s vaccine getting FDA approval and news banks would resume share buybacks. Also a number of experts saying that the new strain would still be controlled by the currently approved vaccines; although they expected the vaccines would have be updated.
Tesla -6.5% after its rally on Friday ahead of its entry into the S&P 500 and on news that Apple is moving forward with its plan to build electric vehicles.
Nike +3.4% after earnings beat and it raised its full year guidance. Moderna -1.4% having initially rallied on gaining FDA approval for its vaccine’s use, sold down through the day.
Walmart flat having sold down initially on broker upgraded but still a +VE cross read to Techtronics (669 HK)
Pelotron +3.3% to buy Precor for $420m
Banks JPMorgan Chase +4.2% announced a $30bn stock buyback plan Citigroup +3.7% and Wells Fargo +1.8% agreed to sell its $10bn student loan portfolio to a private equity firms Blackstone and Apollo Global, AMEX -0.8%
Work from home: Facebook -1.3%, Apple +1.2% off initial weakness on news it would close all its Californian stores due to covid outbreak, Amazon +0.1%, Netflix -1%, Zoom Video +0.7%, Alphabet +0.5% and Microsoft +1.8%,
Tech NXP +1%, Nvidia +0.5%, Micron unch, AMD -2.8%, Skyworks -0.3%
Re-opening stocks Boeing -0.2%, Caterpillar -0.4%, Simon Property -2.1%, Kohl’s -2.3%, Nordstrom -0.6%, Gap +1%, United Airlines -1.5%, Carnival -1.9%, Wynn Resorts -2.9%, Chevron -1.3%, Exxon Mobil -1.8%,
Lock down names Campbell Soup +1.6%, General Mills -0.7%, JM Smucker -1.3%
Chicago Fed National Activity Index Nov 0.27 vs 1.01 Oct revised (F/cast was 0.4)
USD was stronger vs Yen & Euro. Bitcoin -1.9% @ 23,113.64, VIX +16.6% @ 25.16, US T10 @ 0.936%
OIL Brent -2.72%, WTI -2.67% on worries the new covid strain will hit demand
Gold +0.1%, Silver +0.46%, Copper +0.21%
GDP Price Index, Corporate Profits, PCE Prices, Core PCE Prices, Redbook, Existing Home Sales, Consumer Confidence, Richmond Fed Manufacturing Index, 5 Yr TIPS Auction, API Crude Oil Stock Change.
DAX -2.82%, CAC -2.43%, FTSE -1.73% Stocks sold off initially as UK identified a new 70% more transmissible covid strain. Markets then traded sideways for much of the day but worked slightly higher into the close.
Travel stocks hit IAG -8%, Ryanair -5.3%, Lufthansa -4.3%, Carnival -5.6%, Trainline -10.5% and URW -3.2% on news it was selling some French Offices.
Fiat Chrysler -1.8% and PSA -1.9% gained EU antitrust approval on Monday for their $38 billion merger to create the world’s No.4 carmaker after PSA pledged to boost its small van agreement with rival Toyota Motor by increasing capacity for Toyota and cutting transfer prices for the vehicles, spare parts and accessories to address EU competition concerns
Consumer Confidence Flash Dec -13.9 vs -17.6 Nov (F/cast was -18)
CDI Distributive Trades Dec -3 vs -25 Nov (F/cast was -4)
EUROZONE No data due
GERMANY Consumer Confidence
FRANCE No data due
UK Business Investment, Current Account, GDP Growth Rate, Public Sector Borrowing.
JAPAN Nikkei futures opened +20pts but now -22pts expect a flat open . Yen slightly weaker currently 103.33. With more assurances over the new covid strain. Convenience stores weak on poor Nov numbers and retail general likely to remain weak. Defence related names +VE
No data due
Tokyo reported 392 cases a new Monday high, nation-wide the country saw nearly 2,500 cases on Sunday
National associations of doctors, nurses and seven other medical groups in Japan declared a state of medical emergency on Monday, urging the government to support the nation’s medical system creaking under the strain of the coronavirus pandemic. But PM Suga denies need for State of Emergency but may ask restaurants and bars to further shorten business hours in a bid to curb the spread of the virus.
Assets held by Japanese households hit a record 1,901 trillion yen ($18 trillion) at the end of September, +2.7% YoY, as the coronavirus pandemic weakened consumption and left people with more cash and deposits, the Bank of Japan said Monday. The issue Japan has though is getting people to spend rather than save.
Government approved a ninth consecutive rise in military spending on Monday, funding the development of an advanced stealth fighter and longer-range anti-ship missile to counter China's growing military power.
Japanese convenience store sales in November fell 2.2% YoY to ¥850.077 billion on a same-store basis, down for the ninth straight month, -VE Lawson, Seven & I etc.
Sumitomo Mitsui Financial Group Inc is eager to buy a commercial bank in Indonesia, its chief executive said, after a “painful” defeat last year in vying for mid-sized lender PT Bank Permata. Key will be not overpaying
Toyota slight +VE as PSA to extend its small van agreement in Europe as part of its merger with Fiat Chrysler.
Japanese firms explore quantum cryptography to make stock trading secure; Toshiba Corp., NEC Corp. and Nomura Holdings, among others, expect to put the technology into use in stock trading within several years. +VE
SoftBank has filed to raise up to $604m for a special purpose acquisition company, saying the vehicle could acquire a business the Japanese conglomerate has previously invested in via its $100bn Vision Fund; the FT reports
Softbank’s US unit robotics startup CloudMinds changed its name to Wright Robotics in August, in order to distance itself from the blacklisted China-based firm, two people with knowledge of the matter said, and is selling face-scanning temperature monitors through T-Mobile US.
SOUTH KOREA Expect markets to open flat. Market hit a new high Monday with increased T/O, Pharma names still +VE as covid cases rise but Monday saw some rotation out of Tech. Auto’s likely to see weakness on the SsangYong Motor news.
PPI Nov 0.0% MoM vs -0.5% Oct (F/cast was +0.1%)
PPI Nov -0.3% YoY vs -0.6% Oct (F/cast was -0.8%)
Government to to ban gatherings larger than four as coronavirus deaths rise but resists calls for a strict national lockdown.
Korea Disease Control and Prevention Agency said there were 926 new covid cases as of midnight on Sunday, down from a record high 1,097 as of midnight Saturday.
SsangYong Motor on Monday filed for court receivership, after failing to pay back about 165 billion won ($149.5 million) worth of debts to its creditor banks. -VE for sentiment.
Ministry of Economy and Finance said Monday it will establish 110 hydrogen charging stations by the first half of next year, as part of its plan to nurture three target industries -- non-system semiconductor, future mobility and bio-health.
South Korea has the fastest 5G download speed in the world, reaching over 350 megabits per second (Mbps), a report showed Monday. The result marks an improvement for South Korea from a previous report by Opensignal in October, which had found the country's 5G download speed as the world's second fastest after Saudi Arabia. Slight +VE as commercialisation of 5G continues.
T’way Air has signed a letter of intent to lease three Airbus A330-300 jets late next year to introduce new medium and long-haul flights, the South Korean low-cost carrier said Monday. The move comes as part of the budget airline’s efforts to prepare for a rebound in air travel demand after the pandemic that has dealt a severe blow to the aviation industry is over.
TAIWAN Expect market to open higher on good Export Order data.
No data due after Market Monday
Export Orders Nov +29.7% vs +9.1% Oct (F/cast was +12.5%)
9th consecutive rise and the biggest gain since May of 2010, strong global demand for technology and new smartphones as Apple launched a new iPhone.
Luxury Consumption continues; press reports about 3,000 luxury vehicles, including BMW, Mercedes-Benz and Mini Cooper cars, were shipped to Taiwan over the weekend due to increased domestic consumption amid border closures caused by the COVID-19 pandemic. The number of vehicles shipped by a single vessel has reached the highest in the port’s 44-year history, the port said. +VE Shippers and Auto dealers.
CHINA Expect market to open lower although sentiment remains cautious on the threat of more sanctions from Trump.
No data due
The Trump administration on Monday published a list of Chinese and Russian companies with alleged military ties that restrict them from buying a wide range of U.S. goods and technology; the list includes seven Aviation Industry Corporation of China (AVIC) subordinate entities. -VE
US lawmakers include Tibet bill in must-pass spending legislation. The act directs the US government to issue economic and visa sanctions against any Chinese official who interferes with the Dalai Lama’s succession. It also prohibits China from establishing any new consulates in the US until Washington is granted its own diplomatic outpost in Tibet another -VE for sentiment
China’s CanSino Biologics Inc. has recruited over 20,000 participants for late-stage human trials overseas for its coronavirus vaccine, a health official said on Monday. The candidate, known as Ad5-nCoV or Convidecia, which CanSinoBIO is jointly developing with a research institute backed by the Chinese military, is among the five vaccines China has moved into Phase 3 clinical trials to test their efficacy. There are concerns about the data from the Chinese trails not being made public.
China has begun work on a facility to manufacture its first COVID-19 vaccine candidate that uses messenger RNA (mRNA) technology, even though the candidate is still in early-stage clinical trials, state-backed media reported on Monday.
HONG KONG ADR’s -129pts at 16,177 but having had two down day expect some initial margin-call selling and with Markets closed on Friday we may see some positions being close. HSBC to see a rebound and ECommence names mixed.
Data due after market Current Account
After Market Monday
Inflation Rate Nov -0.2% YoY vs -0.2% Oct (F/cast was +0.5%)
Netting out the effects of all Government's one-off relief measures, the year-on-year rate of increase in the Composite CPI (i.e. the underlying inflation rate) in November 2020 was 0.3%, marginally smaller than that in October 2020 (0.4%). The smaller increase in November was mainly due to the decreases in private housing rentals and the smaller increases in the prices of fresh vegetables.
SHORT SELLING Monday 12.9% vs 15.6% Friday
Top Shorts Wharf REIC (1997) 45%, Country Garden (2007) 39%, Hang Seng Bank (11) 37%, CKI (1038) 35%, Ping An (2318) 34%, MTRC (66) 33%, Sands China (1928) 32%, Bud Apac (1876) 29%, Bank of China (3988) 28%, Power Assets (6) 25%.
CATHAY PAC AIR (00293.HK) announced to cancel passenger flights to the UK after HK banned flights from the UK till 10 January 2021. -VE
CHINA UNICOM (00762.HK) announced that the Net Addition of 4G Subscribers for November slowed to 481,000. But that the 5G Package Subscribers Net Increase accelerated to 7.62 million in November.
CHINA LIFE (02628.HK) (601628.SH) announced that the accumulated premium income of the Company for the period from 1 January 2020 to 20 December 2020 has exceeded RMB600 billion for the first time.
As the Hong Kong-Guangdong Dongjiang water supply agreement under a "package deal lump sum" principle is falling expired at end-20, Development Bureau wrote to the Legislative Council that adjustments should be made. Instead, a "reduction to package deal lump sum" principle shall be adopted, meaning that reduction will be applied to the water tariff based on the actual withdrawal from Dongjiang water.