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Australia Futures indicate market to open -19pts ahead of RBA rate decision and other data. Afterpay remains in focus as US investors reacted positively to the Square takeover plans. Oil names weak, Gold flat. Credit Corp due to release FY earnings.
Data due Home Loans, Building Permits, Investment Lending for Homes RBA Rate Decision
Japan Local Nikkei futures +35pts , Chicago futures +60pts. Results remain in focus with 113 companies due to report.
S Korea Expect markets to open lower following the US. Pre market inflation data slightly stronger than expected makes a rate hike later this year more likely; slight -VE
Taiwan Market to open lower following the weakness in the US markets.
China Market to open lower with concerns about the delta variant spreading along with the existing policy and debt/credit concerns.
HK ADR’s -136pts at 26,099 with broad weakness. Ecommerce names slight +VE but expect caution ahead of Alibaba numbers due later today. Earnings in focus with more companies due to report this week.
Opened slightly higher Dow +50pts, S&P and NDX +0.1%. Covid concerns remain. Last big week for US earnings
DOW -0.28%, NDX +0.06%, S&P -0.18%, Russel 2K -0.48%
Markets opened higher but drifted lower through the day with selling accelerating into the close. Shares of travel stocks that could be hit hardest by new health restrictions, including major airlines, moved lower on Monday afternoon. However, the major indexes are still trading near all-time highs even as concerns grow about the delta variant. That offset the +VE sentiment from the progress over the bipartisan infrastructue bill +VE Caterpiller initially although it closed lower. Earnings still in focus being the last big week for reporting.
Square, +10% announced a $29 billion all-stock deal to buy Australian Afterpay. Also Q2 earnings; gross profit +91% YoY and that its Cash App has 40 million monthly active customers +VE
Banks JPMorgan Chase -0.4%, Citigroup -2%, Wells Fargo -0.3%, Amex -0.7%
Work from home names: Facebook -1.2%, Apple -0.2%, Amazon +0.1%, Netflix -0.5%, Disney -0.3%, Zoom Video +0.2%, Alphabet +0.1% and Microsoft -0.03%,
Tech NXP Semi +1.3%, Nvidia +1.3%, Micron +0.1%, AMD +2.3%, Skyworks +1.5%
Re-opening stocks Boeing -0.5%, Caterpillar -0.8%, Simon Property -0.2%, Kohl’s -1.1%, Nordstrom +3.6%, Gap -0.2%, United Airlines -1.4%, Carnival -0.9%, Wynn Resorts +0.04%, Chevron -0.2%, Exxon Mobil +0.02%,
Lock down names Campbell Soup -0.9% General Mills +0.9%, JM Smucker +0.1%
Manufacturing PMI Jul 63.4 vs 62.1 Jun (F/cast was 63.1)
Construction Spending Jun +0.1% vs -0.2% May revised from -0.3% (F/cast was +0.4%)
ISM Manufacturing Data
PMI Jul 59.5 vs 60.6 Jun (F/cast was 60.4)
Employment Jul 52.9 vs 49.9 Jun (F/cast was 49.8)
Prices Jul 85.7 vs 92.1 Jun (F/cast was 88)
New Orders Jul 64.9 vs 66 Jun (F/cast was 65)
USD was weak vs Yen & Euro. Bitcoin -5% @ 39,232.00, VIX +6.7% @ 19.5, US T10 @ 1.179% disappointing data and the impact of the delta variant.
OIL Brent -3.3%, WTI -2.8% on concerns over Chinese demand and increased supplies
Gold -0.02%, Silver -0.34%, Copper -1.13% Platinum +0.64%, Palladium +0.9%.
Total Vehicle Sales, Redbook, Factory Orders, IBD/TIPP Economic Optimism, Logistics Managers Index, API Crude Oil Stock Change
Earnings due from : Alibaba, Amgen, Eli Lilly, Clorox, KKR, Under Armour, Eaton, Discovery, Pitney Bowes, Marriott, ConocoPhillips, Activision Blizzard, Avis Budget, Public Storage, Devon Energy, Jacobs Engineering, Bausch Health, Incyte, Philips 66, Ralph Lauren, Expeditors International, Nikola, Warner Music.
DAX +0.16%, CAC +0.96%, FTSE +0.7%
Markets open higher CAC then traded sideways, the DAX dipped back to trade around flat and the FTSE initially traded sideways but then drifted lower in the PM. Retail names +VE but Insurers weak.
PMI data for Europe showed good strength whilst for the UK it slowed from May’s peak. Earnings from Heineken (beat), AXA and HSBC (beat) amongst the big names reporting.
Automakers’ lobby CCFA-PFA said Sunday that the global semiconductor shortage and surging infections are hindering rebound prospects for the French auto market.
Sunday Times reported that private equity firm Clayton, Dubilier & Rice is preparing a fresh counteroffer to take over British supermarket chain Morrisons.
Parker-Hannifin agreed to buy British rival Meggitt +55% for £6.3 billion ($8.76 billion). Allianz -7.5% after the U.S. Department of Justice opened an investigation into Allianz Global Investors’ Structured Alpha Funds unit.
Manufacturing PMI Jul 62.8 vs 63.4 Jun (F/cast was 62.6)
Retail Sales Jun +4.2% MoM vs 4.6% May revised (F/cast was +1.5%)
Retail Sales Jun +6.2% YoY vs -1.8% May revised (F/cast was -0.6%)
Manufacturing PMI Jul 65.9 vs 65.1 Jun (F/cast was 65.6)
Manufacturing PMI Jul 58 vs 59.0 Jun (F/cast was 58.1)
Manufacturing PMI Jul 60.4 vs 63.0 Jun (F/cast was 60.4)
Germany No data due
France New Car Registrations
UK No data due
Local Nikkei futures +35pts , Chicago futures +60pts. Results remain in focus with 113 companies due to report.
Yen currently 109.30
Tokyo Core CPI Jul -0.1% YoY vs 0.0% Jun (F/cast was 0.0%)
Tokyo Core CPI Jul +0.1% MoM vs 0.0% Jun (F/cast was -0.1%)
Tokyo reported 2,195 new covid cases, and expanded the state of emergency covering the capital and Okinawa to include Osaka and three prefectures near Tokyo due to a recent spike in coronavirus cases amid fears of a medical system collapse during the Olympics.
Mitsubishi UFJ Financial Group Inc (MUFG), Japan’s largest lender by assets, on Monday reported that first-quarter net profit doubled year on year as credit-related costs dropped sharply. The bank retained its full-year profit forecast of 850 billion yen. Slight +VE
Toyota Motor Corp on Monday launched a new Land Cruiser sport utility vehicle, fully redesigning the popular vehicle for the first time in 14 years to achieve improved car security and a better driving experience under bad road conditions. +VE
Expect markets to open lower following the US. Pre market inflation data slightly stronger than expected makes a rate hike later this year more likely; slight -VE
Inflation Rate Jul +2.6% YoY vs +2.4% Jun (F/cast was +2.4%)
Inflation Rate Jul +0.2%MoM vs -0.1% Jun (F/cast was 0.0%)
KDCA reported 1,219 new covid cases on Monday
Government said on Monday no decision has yet been made on its joint military exercises with the United States but they should not create tension, after North Korea warned the South against holding the exercises amid signs of a thaw in relations.
Netmarble Corp. said Monday it plans to acquire Hong-Kong based social casino game company SpinX Games in a deal estimated at $2.1 billion. +VE
Starbucks Coffee Korea and auto brand Mini Korea have collaborated to launch three drinks, two food items, six pieces of merchandise and three voucher cards. Slight +VE
KT&G is expanding its social outreach to Indonesia, offering vocational training and programs on Korean culture and language in the Southeast Asian country. +VE
Kia Corp. on Monday released its first all-electric sedan EV6 in the domestic market ahead of its global launch set for later this year. +VE
Korea Aerospace Industries said Monday it had won a $78 million deal from Thailand to supply two T-50TH advanced trainer jets and provide support for their operation. The contract period is until Jan. 30, 2023. +VE
Samsung Electronics Co. said Monday it will expand overseas sales of its wind-free air conditioner after the product posted robust sales in the first half of the year amid the pandemic-induced stay-at-home trend. +VE
Expect market to open lower following the weakness in the US markets.
No data due.
PMI data out Monday was good thanks to robust demand for all product categories ahead of the peak season, although customers refrained from unbridled inventory building, cautiously monitoring supply-and-demand dynamics. +VE
CECC reported 12 local covid cases (incl 2 imported).
New vehicle sales rebounded 36.3 percent to 38,064 units last month from 27,930 units in June, according to data compiled by online market researcher U-Car.com. The figure was down 13.4% YoY, but the pace of decline was much slower than the 32.5 percent fall in June. Slight +VE
Taiya Renewable Energy Co has entered the competition for the third phase of Taiwan’s offshore wind farm development with two projects totaling 2.1 gigawatts (GW) in capacity, the company said yesterday as it applied for an environmental impact assessment (EIA). One of the projects, called HuanYu, with a capacity of 627 megawatts, would be off the coast of Taichung, the firm said. It would use fixed-bottom turbines and would be submitted to next year’s auction, it added. Slight +VE
Expect market to open lower with concerns about the delta variant spreading along with the existing policy and debt/credit concerns.
No data due
China's government quietly issued new procurement guidelines in May that require up to 100% local content on hundreds of items including X-ray machines and magnetic resonance imaging equipment, erecting fresh barriers for foreign suppliers, three U.S.-based sources told Reuters. -VE
Ningbo Shanshan said on Monday it would invest 8 billion yuan ($1.24 billion) in new facilities in Southwest China to boost production, with an eye on exporting more products to Europe.
ADR’s -136pts at 26,099 with broad weakness. Ecommerce names slight +VE but expect caution ahead of Alibaba numbers due later today. Earnings in focus with more companies due to report this week.
No data due but after market Monday
Retail Sales Volume Jun +2.8% vs +7.7% May revised (F/cast was +6%)
Retail Sales Value Jun +5.8% vs +10.4% May (F/cast was +10.5%)
Weakness may be due to people waiting for the government consumption vouchers which started to be distributed on Sunday. Over the coming months citizens will get a total of HK$5,000 in three tranches (2k, 2k and 1k)
EARNINGS Due Tuesday Include CK Life Science (775) SJM (880), HK Electric Investments (2638), Standard Chartered (2888).
Short Selling Monday 16.3% vs 15.8% Friday
Top Shorts Wharf REIC (1997) 65%, CLP (2) 48%, WH Group (288) 43%, Shenzhou (2313) 38%, Hang Lung Property (101) 38%, Bank of China (3988) 37%, CK Asset (1113) 35%,Mengniu Dairy (2319) 33%, Bud Apac (1876) 32%, New World Dev (17) 31%, Geely Auto (175) 31%, BankComm (3328) 29%, Country Garden (2007) 29%, BoC HK (2388) 28%, Power Assets (6) 25%.
Hong Kong Social Distancing Measures due on 4 Aug To Extend by 2 Weeks. The testing requirements for the staff working in catering businesses following the B mode of operation will be tightened in August as all unvaccinated staff will be required to be tested every seven days, tighter than the current 14 days, Chan added.
CHINAGRANDPHARM (00512.HK) announced that the Group and the U.S. FastWave Medical entered into a series of investment and strategic cooperation agreements. Among which, the Group will acquire 100% equity of FastWave with up to total USD72 million by phases, and will invest up to total USD8 million for supporting and jointly developing an innovative medical device, intravascular shockwave calcification treatment system, for the treatment of moderate to severe arterial calcification.
XINYI ENERGY(03868.HK) announced interim result ended June 2021. The revenue rose 30.4% year on year to HK$1.113 billion. The net profit amounted to HK$621 million, up 41.9% YoY. EPS was HK8.73 cents. An interim dividend of HK7.4 cents was declared against a dividend of HK6 cents in the corresponding period of the previous year.
XINYI SOLAR (00968.HK) announced interim result ended June 2021. The revenue rose 74.7% year on year to HK$8.075 billion. The net profit amounted to HK$3.072 billion, up 118.4%. EPS was HK34.87 cents. An interim dividend of HK17 cents was declared against a dividend of HK8.5 cents in the corresponding period of the previous year.
Hong Kong's chief executive Carrie Lam expressed during a press conference that Hong Kong has found no local cases for 56 consecutive days and has basically achieved the target of "zero local infection". Lam added that she is glad to see Hong Kong economy showing signs of recovery and hopes that the consumption voucher scheme would pose a positive effect on the economy.
HSBC HOLDINGS (00005.HK) will not distribute a quarterly dividend this year, said CFO Ewen Stevenson at a conference call. Therefore, the Group may only declare a dividend payment during the next annual result release. HSBC declared an interim DPS of US7 cents for 1H21, representing a payout ratio of around 20%. This stood below the group's payout target of 40%-55%. However, Stevenson envisioned a higher payout for the full year.
This and previous notes can be found at asianmarketsense.com and Substack ( Asian Market Sense )