This and previous notes can be found at asianmarketsense.com
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Asia expect cautious trading after stronger US inflation and ahead of Powell’s testimony tonight, he will no doubt stress that the rise in inflation is temporary. Also China GDP and other data out Thursday and as the Biden warns on doing business in Hong Kong.
Australia Futures indicate market to open flat +4pts. Tech payment companies weak as Apple looks to enter the market -VE Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P). Oil firm after the IEA report although the API data was inline. Miners of Gold and Iron Ore also +VE. National Australia Bank Ltd (ASX: NAB) in focus on news it is interested in acquiring the Australian Consumer business of Citigroup. +VE
Data due Consumer Confidence Index & Change
Japan Nikkei futures -18pts (Chicago -50pts) cautious trading ahead of Powell’s testimony tonight and with investors watching local earnings.
S Korea Expect markets flat as inflation concerns temper +VE sentiment on the earnings outlook for S Korean companies in Q2.
Taiwan Expect market to open flat with caution ahead of TSMC’s investor day on Thursday. US inflation will also be a concern.
China Expect market to open lower with continued concerns over debt defaults and a slowdown of infrastructure spending by local governments. International relations also a concern.
HK ADR’s -98pts at 27,865 with broad weakness only Utilities and Petrochems in the green. Concerns about US relations and further restrictions on investment in China for US companies.
Europe UK inflation data and EU industrial production but covid concerns also weighting on the market.
Opened flat Dow +9pts, S&P and NDX slightly +VE. Focus tonight on PPI data, Fed Chairman Powell’s Testimony and the Beige Book.
DOW -0.31%, NDX -0.38%, S&P -0.35%, Russel 2K -1.88%
JPM and GS reported before the open both a little disappointing; JPM released reserves but lacked consumer loan demand, GS strong fee income from recent IPO’s and Spacs but the outlook is limited especially as Chinese companies withdraw. PepsiCo posted very strong results helped by the re-opening of the economy and a resumption of dining out. Inflation was much stronger than expected.
Amazon and Apple strong but Boeing -4.2% on new problems with the Dreamliner 787.
Dow opened flat and traded sideways in the red around flat all day. NDX a weak open but initially worked slowly better but sold down from midday. S&P opened flat and traded sideways around flat in the red for most of the day. Russell had its worst day for nearly a month.
Banks JPMorgan Chase -1.5%, Citigroup -1.1% Wells Fargo -2.1%, Amex -0.6%
Work from home names: Facebook -0.3%, Apple +0.8% looking at developing pay later service, Amazon -1.1%, Netflix +0.6%, Disney %, Zoom Video -0.2%, Alphabet +0.3% and Microsoft +1.3%,
Tech NXP Semi %-0.2, Nvidia -1.3%, Micron -1.4%, AMD -0.6%, Skyworks -0.9%
Re-opening stocks Boeing -4.2%, Caterpillar -1.6%, Simon Property -2.8%, Kohl’s -2.8%, Nordstrom -4%, Gap -2.5%, United Airlines -4.2%, Carnival -4.2%, Wynn Resorts -2.2%, Chevron -0.3%, Exxon Mobil -0.5%,
Lock down names Campbell Soup -1% General Mills -0.2%, JM Smucker -0.5%
NFIB Business Optimism Index Jun 102.5 vs 99.6 May (F/cast was 100)
Core Inflation Jun +4.5% YoY vs +3.8% May (F/cast was +3.9%)
Core Inflation Jun +0.9% MoM vs +0.7% May (F/cast was +0.4%)
Inflation Jun 5.4% YoY vs +5% May (F/cast was +4.9%)
Inflation Jun +0.9% MoM vs +0.6% May (F/cast was +0.5%)
Redbook +14% YoY vs 19.4% prior
30yr Bond Auction 2% vs 2.172% prior
Budget Statement Jun $-174B vs -132B May (F/cast was -245B)
API Crude Stock Change -4.079m vs -7.983m (Consensus was -4.333m).
USD was little changed vs Yen & Euro. Bitcoin -1.2% @ 32,536.73, VIX +5.9% @ 17.12, US T10 @ 1.418% rises as inflation see’s its biggest junp in 13 years. People watching to see if Powell changes his stance about it being transitory. Fed’s Daly said she thought it was asused car prices would ease but also that strong economic data could allow the Fed to taper early.
OIL Brent +1.65%, WTI +1.66% squeezed higher on expectation of stocks falling after IEA report. But API after market was in-line; expect slight weakness today
Gold +0.1%, Silver -0.7%, Copper -0.6% Platinum -1.8%, Palladium -1.1%. Little change despite rise in inflation as investors await Powells testimony today.
AHEAD MBA Mortgage Applications and 30yrs, PPI data, EIA Oil report, Fed Chairman Powell’s Testimony, Beige Book.
DAX -0.01%, CAC -0.01%, FTSE -0.01%
DAX & CAC a slightly weak open and traded sideways just in the red after German & French Inflation inline with f/casts. FTSE opened slightly higher as BoE Financial Stability Report allows for UK banks to resume dividends but drifted lower to traded around flat but in the green until the last hour. Covid concerns remain as France, Netherlands, Greece and Spain introduce new restrictions.
US banks which were inline with expectations but US inflation was higher than expected.
Telcos strong after good results from Nokia +8% and raised FY guidance
VW -1.3% announced strategy update to focus on the US and EV’s as petrol cars will become less profitable due to higher emission standards
Gerresheimer -8.9% after its earnings report.
German Inflation Jun +2.3% YoY vs +2.5% May (F/cast was +2.3%)
German Inflation Jun +0.4% MoM vs +0.5% May (F/cast was +0.4%)
French Inflation Jun +1.5% YoY vs +1.4% May (F/cast was +1.5%)
French Inflation Jun +0.1% MoM vs +0.3% May (F/cast was +0.2%)
IEA Oil report released; warned of tighter markets
EUROZONE Industrial Production.
GERMANY No data due
FRANCE No data due
UK Inflation Rate data, PPI data and Retail Price Index
Nikkei futures -18pts (Chicago -50pts) cautious trading ahead of Powell’s testimony tonight and with investors watching local earnings.
Yen currently 110.6
Data out Tankan Index Jul 25 vs 22 Jun (F/cast was 20)
Industrial Production and Capacity Utilisation.
Tokyo reported 830 new covid cases (+502 DoD) with 2,386 cases nationwide.
Japan will make additional donations of the AstraZeneca Plc (AZN.L) COVID-19 vaccine to Taiwan and other Asian neighbours this week, Foreign Minister Toshimitsu Motegi said on Tuesday.
Japan has for the first time referred to the importance of stability around Taiwan in its annual defense report, ratcheting up its concerns over the island that has been a flashpoint in tensions between China and the U.S. Annoying China.
Alphabet’s Google has agreed to buy payments business Pring from backers including fintech firm Metaps Inc as the U.S. tech giant pushes into Japan’s rapidly growing market for cashless services.
The startup’s three top shareholders - Metaps, software company Miroku Jyoho Service Co Ltd and Nippon Gas Co - announced on Tuesday they would sell their combined 87% holding in Pring to Google. Metaps said it is selling its 45% stake for 4.9 billion yen ($44 million).
Zett (8135.T), a sports gear wholesaler, have seen spikes in prices as well as trading volume. A rally traders link to excitement over Shohei Ohtani's success in U.S. Major League Baseball.
Summary from bloomberg
Nissan CEO Says $1.4 Billion U.K. EV-Making Hub ‘Just a Start’
Gunosy (6047): 4Q operating profit 154m yen vs analyst estimate 75m yen; forecasts 1H operating loss of 324m yen
Izumi (8273): 1Q operating profit 7.8b yen vs estimate 7.1b yen (2 analysts)
Japan Tobacco (2914): To end sale of Ploom S 2.0 in Japan
Metaps (6172), Nippon Gas (8174): To sell their stakes in fintech startup Pring to Google
Pal Group HD (2726): 1Q operating profit 1.79b yen vs 3.09b yen loss year ago
Toho (9602): 1Q operating profit 10.5b yen vs estimate 7.8b yen (2 analysts)
ABC-Mart Inc. (2670 JP)
Aidma Holdings Inc. (7373 JP)
Create Restaurants Holdings In (3387 JP)
Daito Pharmaceutical Co. (4577 JP)
Furuno Electric Co. (6814 JP)
Idom Inc. (7599 JP)
Ichigo Inc. (2337 JP)
Jins Holdings Inc. (3046 JP)
Komeda Holdings Co. (3543 JP)
Media Do Co. (3678 JP)
Nachi-Fujikoshi Corp. (6474 JP)
PR Times Inc. (3922 JP)
Ringer Hut Co. (8200 JP)
S. Foods Inc. (2292 JP)
SFP Holdings Co. (3198 JP)
Saizeriya Co. (7581 JP)
Sakata Seed Corp. (1377 JP)
Sansan Inc. (4443 JP)
Expect markets flat as inflation concern temper +VE Sentiment on the earnings outlook for S Korean companies in Q2.
Export Prices Jun +12.7% vs +12.6% May revised from +12.3%
Import Prices Jun +14% vs +14.2% May revised from +13.8%
Unemployment Rate Jun +3.7% vs +3.8% May
KDCA announced 1,150 new covid cases over 1,000 for an seventh day. -VE
Hyundai Motor Co., said Tuesday it will resume operations of its plant in Brazil this week following a 10-day suspension amid a global chip shortage. +VE
Samsung Electronics on Tuesday announced the launch of a new image sensor for automobiles, taking aim at a market segment controlled by Japanese rival Sony. +VE
Construction equipment makers +VE as Doosan Infracore Co. said its European subsidiary sold 543 units of excavators and other construction equipment in June, a new monthly high. Hyundai Construction Equipment Co. said it has an order backlog of 12,703 units, including some 8,000 for construction machinery, thanks to a jump in orders from emerging markets.
Expect market to open flat with caution ahead of TSMC’s investor day on Thursday. US inflation will also be a concern. But sentiment encouraged as Japan’s annual defense paper mentions support for Taiwan although that is likely to upset China.
CECC reported 28 new covid cases Tuesday
President Tsai Ing-wen yesterday named TSMC founder Morris Chang as Taiwan’s representative to the APEC economic leaders’ meeting in November. It is the fourth time that Tsai has appointed Chang to represent her at an APEC summit. The nation’s presidents cannot attend APEC summits due to opposition from China.
Taiwan's peak electricity demand on Tuesday soared to an all-time high, breaking the record set in May and sending operating reserves into the "yellow" warning range, according to state-run Taiwan Power Co. (Taipower).
Egis Technology Inc yesterday said that it has secured orders to supply its products to South Korea’s Hyundai Motor Co and its affiliate, Kia Motors Corp, in its latest bid to expand its presence in the higher-margin automotive components segment. +VE
Expect market to open lower with continued concerns over debt defaults and a slowdown of infrastructure spending by local governments. International relations also a concern.
No data due
Biden team preparing a digital trade deal in Asia to counter China’s advantage. In the FT; Biden to warn US companies about operating in China; citing Chinese access to data and a law that will allow sanctions on people who enable foreign penalties on Chinese groups and officials.
Turkish President Tayyip Erdogan told his Chinese counterpart Xi Jinping on Tuesday it was important to Turkey that Uyghur Muslims live in peace as "equal citizens of China" but said Turkey respects China's national sovereignty.
After market the banking regulator (CBIRC) issued a directive to prevent local governments increasing their current debt positions. Suggests that local debt issues are a concern; could also make it more difficult for local governments to bail out local companies and may indicate a slow down in infrastructure projects
The PBoC was also out making statements about policy being unchanged after the RRR cut and that policy had returned to pre-pandemic norms. But many remain concerned about a slowing recovery. Key data out Thursday
Sun Guofeng, Director of the Monetary Policy Department of the People's Bank of China, suggested looking at the phased upturn in China's producer price index (PPI) from a historical perspective and in an objective way. On another note, PPI had been noted for its sharp volatility historically. Overall, he expected PPI to stay high in the second and third quarters of 2021, and likely recede in the fourth quarter of 2021 and in 2022.
HONG KONG ADR’s -98pts at 27,865 with broad weakness only Utilities and Petrochems in the green. Futures slightly weaker too. Concerns about US relations and further restrictions on investment in China for US companies.
No data due
Short Selling Tuesday 14.8% vs 15% Monday
Top Shorts Country Garden (2007) 35%, CK Asset (1113) 34%, AIA (1299) 31%, Ping An (2318) 29%, Bank of China (3988) 28%, Hang Seng Bank (11) 27%, Xinyi Solar (968) 26%, Hengan (1044) 26%, Sunny Optical (2382) 24%.
XTEP INT'L (01368.HK) Positive Profit Alert, announcing that the group is expected to record a significant increase of not less than 65% in its unaudited consolidated profit attributable to ordinary equity holders of the company for the six months ended 30 June 2021 as compared to that for the corresponding period in 2020. Also, the group announced that the core XTEP brand realized a 40-45% year-over-year retail sell-through growth for the six months ended 30 June 2021 as compared to that for the corresponding period in 2020.
NCI (01336.HK) announced that the accumulated gross premium income of the company for the period between 1 January 2021 and 30 June 2021 was RMB100.61 billion, representing a 3.85% year-over-year increase.
CHOW TAI FOOK (01929.HK) announced a retail sales value (RSV) growth of 69.8% year-on-year for the fiscal quarter ended 30 June 2021. The same store sales (SSS) growth was 42.8% for Mainland China and 110.4% for Hong Kong and Macau.
DA YU FIN (01073.HK) May Swing to 1H21 Loss . It announced that based on the preliminary review on the unaudited consolidated management accounts of the Group for the five months ended 31st May, 2021, the Group has recorded a net loss attributable to the shareholders of the Company of approximately HK$3.7 million as compared to a net profit attributable to the Shareholders of approximately HK$10.7 million recorded in the same period last year.
This and previous notes can be found at asianmarketsense.com