[PODCAST] US Open Rundown 11th January 2021
- European indices began the week on the backfoot, Euro Stoxx 50 -0.4%, following a similar APAC handover; stateside, ES -0.5%
- US National Security Adviser O'Brien said the US is examining additional options to respond to China regarding the virus and Hong Kong
- Secretary of State Pompeo announced the US is to remove all self-imposed restrictions on executive branch agencies’ interactions with their counterparts from Taiwan
- US House Speaker Pelosi said the House will take up a resolution to impeach US President Trump unless VP Pence and the cabinet invoke the 25th amendment
- Gilead (GILD) lifts FY20 guidance for EPS and product sales
- USD remains elevated but contained around 90.50 in DXY terms to the detriment of major peers; particular antipodeans and CAD
- Looking ahead, highlights include BoE's Tenreyro, ECB's Lagarde, Fed's Bostic & Kaplan; US 3yr supply
US CDC reported COVID-19 cases rose to a total 22.10mln from 21.85mln the day before and deaths rose to a total 371.1k from 367.7k, while a major newswire tally stated US cases rose by at least 199,213 to a total of 22.24mln and deaths rose by at least 1,859 to a total of 374.2k. (Newswires)
US President-elect Biden is reportedly planning to speed up vaccinations after his inauguration with gyms and stadiums to be used as staging areas. (Newswires)
Several government officials stated over the weekend that reports of a highly contagious new COVID-19 variant in the US were based on speculative statements made by Dr. Birx and were inaccurate. (Newswires/NYT)
UK COVID-19 cases +54,940 (prev. +59,937) and deaths +563 (prev. +1,035), Italy cases +18,627 (prev. +19,978) and deaths +361 (prev. +483), France cases +15,944 and deaths +151 over a 24-hour period. (Newswires)
UK Health Minister Hancock said it is a very, very serious situation for the health service, while he also stated that vaccinations are on track to reach 2mln per week and are running at over 200k daily. Furthermore, Hancock states he hopes progress is made on ending restrictions before end-March and noted that every adult will be offered a vaccine by Autumn. (Newswires)
UK government is considering tightening the lockdown and ministers are considering a "tough crackdown" to pressure people to stay at home after the daily coronavirus death toll hit a new record. Furthermore, police officers have been told to fine people GBP 200 if they believe they are in breach of the rules and refuse to return home at the first time of asking, in new guidance issued to all chief constables. (Telegraph)
French Health Ministry confirmed that the first doses of Moderna’s (MRNA) COVID-19 vaccine will arrive in France this Monday and that approval of the vaccine will allow France to have a further 50k of vaccine doses this week, while it hopes to have 8mln doses of Moderna’s vaccine between now and end-June. (Newswires)
German Chancellor Merkel said doctors and nurses in many hospitals are near to being overwhelmed and that virus mutations increase the level of concern, while she added the approaching weeks are set to be the country’s toughest yet and that they need to consistently adhere to the tougher lockdown measures. (Newswires)
China’s national health commission said the nation has administered almost 9mln COVID-19 vaccine doses and that it sees risk that the virus will spread more in the winter, while it added that the vaccine will be free for all citizens and stated the WHO expert team will go to China on January 14th to investigate the origins of the virus. In separate news, China's Hebei suspended sales of tickets to Beijing and passengers are required to provide negative nucleic acid tests taken within 72 hours if they want to travel to the capital by train, while it was also reported that China will continue to suspend flights to and from the UK effective Monday. (Newswires/Global Times)
Japan’s Kyoto, Osaka and Hyogo prefectures have requested for the government to declare a state of emergency for their regions. There were also separate reports the Japanese National Institute of Infectious Diseases said authorities discovered a new strain of COVID-19 in four passengers arriving from Brazil, which has similarities to the variants found in UK and South Africa. (Newswires)
Russia’s RDIF stated that Algeria was the first African country to register the Sputnik V vaccine. (Newswires)
Asian equity markets began the week indecisive amid tentativeness following the US NFP jobs data and with Japanese participants away for Coming of Age Day, while ongoing COVID-19 concerns and US-China tensions also contributed to the cautious overnight mood. ASX 200 (-0.9%) traded negative with better-than-expected Retail Sales and the lifting of the 3-day lockdown in Brisbane failing to lift the index which was pressured as tech and miners led the broad declines across sectors, while NZX 50 (-1.8%) was the worst hit after the RBNZ announced an illegal breach of one of its data systems. KOSPI (-0.1%) initially extended on record levels boosted by continued gains in Samsung Electronics which also notched fresh all-time highs after last week’s preliminary results and Hyundai Motor briefly surged by another 10% on the Apple EV tie-up reports, although the index then fluctuated between gains and losses with the latest trade figures providing headwinds after South Korean exports declined 15.4% Y/Y during the first 10-days of the 2021. Hang Seng (+0.1%) and Shanghai Comp. (-1.0%) were choppy as optimism from firmer than expected inflation data was offset by increased tensions after US Secretary of State Pompeo announced the US is to remove all self-imposed restrictions on executive branch agencies’ interactions with their counterparts from Taiwan ahead of the US Ambassador visit which China have already warned against. Furthermore, the White House is said to be examining additional options to respond to China regarding the virus and Hong Kong, while it was also reported that MOFCOM issued new rules which prevent companies from complying with foreign laws that prohibit transactions with Chinese companies.
PBoC injected CNY 5bln via 7-day reverse repos at a rate of 2.20% for a net daily drain of CNY 15bln. (Newswires) PBoC set USD/CNY mid-point at 6.4764 vs exp. 6.4781 (prev. 6.4708)
- Chinese CPI (Dec) M/M 0.7% vs. Exp. 0.4% (Prev. -0.6%)
- Chinese CPI (Dec) Y/Y 0.2% vs. Exp. 0.1% (Prev. -0.5%)
- Chinese PPI (Dec) Y/Y -0.4% vs. Exp. -0.8% (Prev. -1.5%)
US National Security Adviser O'Brien said the US is examining additional options to respond to China regarding the virus and Hong Kong, while there were separate reports that US banks including Goldman Sachs, JPMorgan and Morgan Stanley are among those set to delist 500 structured products listed in Hong Kong due to President Trump’s executive order. (Newswires/FT)
China’s MOFCOM issued new rules on unjustified extraterritorial application of foreign legislation which prevent companies from complying with foreign laws that prohibit transactions with Chinese companies which is effective immediately. (Newswires)
Chinese regulators are to push tech giants to share consumer data, sources state. Ant Group, Tencent and JD.com are among those that will be required to share data; push is in order to help manage consumer lending and prevent fraud, sources added. (Newswires)
A transition official said that US President-elect Biden made it clear on the campaign trail that he was committed to the 1979 Taiwan Relations Act, which has defined relations with the country and to the one-China policy, while the official added that once in office, he will continue to support a peaceful resolution of cross-strait issues consistent with the wishes and best interests of the people of Taiwan. (Newswires)
US Secretary of State Pompeo said he is lifting all self-imposed restrictions on executive branch agencies’ interactions with their counterparts from Taiwan, which he added will benefit both of our great democracies. There were also comments from China’s Global Times editor Hu that if this is the new starting point of US’ Taiwan policy, it will also start the countdown of the survival of the Taiwan authority. Furthermore, Hu added PLA fighter jets can fly over Taiwan island anytime and the option of using military means to solve Taiwan question will also be put on the table. Subsequently, China strongly condemns the US's removal of Taiwan restrictions. (Newswires) (Twitter)
South Korea January 1st-10th Trade Balance at provisional deficit of USD 636mln, while Exports fell 15.4% Y/Y and Imports fell 22.9% Y/Y. (Newswires)
Sriwijaya Air Flight 182 which was a 26-year-old Boeing 737-524 plane and was carrying 62 people was confirmed to have crashed into the Java Sea shortly after taking off from Jakarta, Indonesia. It was reported that debris was found although the search was delayed by darkness and bad weather. (Newswires)
RBNZ responded to an illegal breach of one of its data systems in which a third-party file sharing service used by the Bank to share and store some sensitive information was illegally accessed, while Governor Orr said the breach has been contained and the Bank is treating the matter with the highest priority and acting with urgency. Furthermore, the RBNZ later stated it was advised by the third-party provider that the attack wasn't specific to the Reserve Bank, while compromised data may include some commercially and personally sensitive info. (Newswires)
US Small Business Administration said it is determining the amount of additional relief assistance can be provided with newly issued congressional appropriation and that it was charged with making debt relief payment and is working to implement newly enacted assistance. (Newswires)
US Senate Republican Leader McConnell circulated procedures for the Senate impeachment trial of President Trump in which the memo stated that no trial can proceed until January 19th which is the eve before President-elect Biden’s inauguration, while there were comments from GOP Senator Toomey that he thinks President Trump should resign and could face criminal liability following the storming of the Capitol. Furthermore, Senate Democrat leader Schumer said the threat from violent extremist groups remains high and Democrat Rep. Clyburn separately noted that impeachment articles could be on the House floor on Tuesday or Wednesday. (Newswires)
US House Speaker Pelosi said the House will bring impeachment legislation to the floor and that President Trump is an imminent threat to the constitution and democracy. Pelosi commented that the House is to vote on measure seeking to remove President Trump and that they are giving VP Pence a couple more days to invoke 25th Amendment, and if nothing, the House will vote. (Newswires)
UK Chancellor Sunak is expected to postpone plans for tax increases in his March budget which raises concerns about the “colossal” scale of the economic fallout from COVID-19. To make a statement in Parliament today from 15:30GMT/10:30EST. (Times)
UK Cabinet Minister Gove warned businesses to brace for “significant disruption” at the border with France after the latter ordered its ports to crack down on lorries arriving from Britain with the incorrect documents. (Telegraph)
UK Trade and Agriculture Commission chief said they are to push for tough standards on imported food and suggested there should not be any backsliding or race to the bottom after having spent decades evolving food standards. (FT)
UK is to launch legislation as soon as in the week ahead to return the trading of Swiss shares back to London in the coming weeks. (FT)
Italy Finance Minister Gualtieri said the government will seek parliament approval to raise the deficit later this month to pay for vaccines, healthcare, support for companies and workers. (Newswires)
EU Commissioner for Internal Market Breton is confident that EU will find an agreement with the US on digital tax. (Newswires)
Italian President Mattarella has informed the ruling parties that they need to approve the EU recovery plan prior to resolving the internal political crisis that may destabilise the Gov't. (Newswires)
EU Sentix Index* (Jan) 1.3 vs. Exp. 0.7 (Prev. -2.7). (Newswires)
North Korean leader Kim said on Friday that the fundamental attitude to North Korea will not change no matter who rules the US, while he added the US is our biggest enemy and that North Korea will proceed with its nuclear submarine. There were separate comments from South Korea President Moon that North and South Korea should prove that peace and prosperity in the peninsula contribute to the international community and that they will make efforts for a breakthrough in inter-Korean ties and North Korea-US talks. (Newswires)
Indian army said it arrested a Chinese soldier in Ladakh and that the soldier's actions were under investigation, while China called on India to immediately return the soldier according to the relevant mechanism reached by two countries and contribute to de-escalation of border tensions. Soldier has subsequently been returned. (Newswires)
US plans to designate Yemen's Houthi movement as foreign terrorist as soon as Monday, according to sources. (Newswires)
European bourses trade with modest losses across the board (Euro Stoxx 50 -0.3%), albeit off worst levels following on from a similarly downbeat APAC handover where Japan was away and the Hang Seng remained the only gainer, albeit modest, with some reports citing Chinese traders purchasing a record amount of HK stocks via links. News-flow for the session thus far has been light in what feels like cautious trade, with the ramp-up in US-Sino rhetoric and COVID-19 variants weighing on investors' minds after Japan found a new strain distinct from the UK and South African types. Further, some have also suggested the vaccine rollout to provide headwinds for stocks in the form of an earlier-than-expected unwind in loose policy. US equity futures meanwhile succumb to the losses across the stock markets whilst Twitter (-7.5%) sees substantial pre-market losses after permanently suspending the outgoing US president on the platform. Back to Europe, bourses see broad-based losses with the AEX (-0.1%) narrowly faring better amid gains across some of its larger constituents. Sectors are mostly lower with Banks, Financials and Telecoms eking mild gains with the former two aiding by a similar outperformance in Hong Kong and against the backdrop of the recent rise in yields. Meanwhile, the other end of the spectrum sees Travel & Leisure pressured amid ongoing COVID-woes, whilst Auto names reside as the laggard amid a string of production halts amid semiconductor scarcity. Furthermore, Chinese EV-maker NIO (+4.8% pre-mkt) has partnered with NVIDIA (+0.8%) to develop a new generation of automated driving electric vehicles whilst Geely and Baidu (+5% pre-mkt) confirmed EV ambitions. In terms of some individual movers, Airbus (+0.7%) trades with gains as the Co's CEO said he is cautiously optimistic for 2021. Additionally, EU's VP/Trade Commissioner Dombrovskis said he is ready to end the Boeing/Airbus dispute and he hopes the incoming US government will be more cooperative. Roche (+0.5%) meanwhile is firmer after announcing that Xofluza approved by the European Commission for the treatment of influenza, the first new influenza antiviral for patients in almost 20 years.
Tesla (TSLA) - Co. sold 23.8k China-made vehicles in December, according to industry bod CPCA. (Newswires)
Gilead (GILD) raises FY20 EPS to USD 6.98-7.08/shr vs exp. USD 6.68/shr (prev. USD 6.25-6.60/shr); raises product sales to USD 24.3-24.4bln vs exp. USD 23.9bln (prev. USD 23-23.5bln)
Bluebird Bio (BLUE) is to spin off its cancer drug unit via IPO in the Q4, WSJ. (WSJ)
USD - The Buck is regrouping after backing off broadly with the DXY edging just over 90.500 after holding above overnight lows. Hence, the Greenback remains firm and in recovery mode against the backdrop of waning risk sentiment following a bullish start to the new year that has boosted global stocks and US benchmarks to fresh record highs. Perhaps, Friday’s sobering drop in non-farm payrolls has prompted some retrenchment, while the ongoing spread of COVID-19 and lag before vaccines can make some in-roads along with restrictive measures is also reining in some exuberance, as the index extends its parameters to 90.520-238 parameters ahead of employment trends and a couple of Fed speakers.
AUD/NZD/CAD - No retail therapy for the Aussie even though final consumption figures for November were revised a tad higher, or relief that Brisbane has come out of its 3-day lockdown, as Aud/Usd hovers just over 0.7700 and also feels the weight of weaker iron ore prices and a softer Yuan. Similarly, the Kiwi is struggling to keep sight of 0.7200 and Loonie contain losses through 1.2750 as the crude complex also falls victim to the US Dollar revival in the run up to Canada’s Q4 business outlook for future sales. Back down under, the Aussie may also be capped by decent option expiry interest at the 0.7725 strike (1.3 bn) into the NY cut.
CHF/GBP/EUR/JPY - All giving way to the Buck, with the Franc near the base of a 0.8850-0.9000 range after another decline in weekly Swiss sight deposits, Cable hovering just below 1.3500 awaiting comments from BoE’s Tenreyro and a statement on the economy from UK Chancellor Sunak amidst speculation about even tighter pandemic restrictions. Elsewhere, the Euro is sub-1.2200 and eyeing 1.2150, while the Yen is back under 104.00 in thinner volumes due to Japan’s Coming of Age market holiday, with ECB President Lagarde looming before the latest Japanese Economic Watchers survey on Tuesday.
SCANDI/EM - The tables have turned somewhat for the Nok and Sek as the former loses impetus from oil in wake of mixed Norwegian inflation data and retreats from 10.3000+ peaks vs the Eur, while the Try is undermined by a wider than forecast Turkish current account deficit, albeit finding underlying bids/support into 7.5000.
Notable FX Expiries, NY Cut:
- EUR/USD: 1.2095-1.2110 (1.6BLN), 1.2125-35 (831M), 1.2150 (669M), 1.2200(879M), 1.2250-60 (1.1BLN), 1.2295-1.2300 (3.8BN), 1.2310-15 (2.1B)
- AUD/USD: 0.7625 (1.2BLN), 0.7725 (1.3BLN)
Italian BTPs continue to lag awaiting another economic support bill from the coalition Government, while core debt looks somewhat caught between consolidation after heavy declines and wary that stocks may resume their early 2021 rally if vaccination efforts and other measures start to quell the virus resurgence. Indeed, equities have bounced from worst levels and 10 year benchmarks are meandering after retreating to fresh intraday lows in Europe, at 177.24 for Bunds and 134.38 for Gilts vs 177.30 and 134.37 respective closes and highs of 177.55 and 134.64, awaiting fresh impetus that could come from Central Bank speakers, data/surveys and US 3 year supply.
WTI and Brent front month futures experience a soft start to the week in lockstep with overall sentiment and alongside a firmer Dollar. Complex-specific newsflow has remained light. Over the weekend, Japan found a new COVID-19 variant which differs from the one found in the UK and South Africa, although specifics around the variant remain scarce. Elsewhere, Iraq said it has raised their OSP for all its crude grades into Asia in a similar move seen by Saudi Aramco. WTI Feb trades sub-52/bbl after declining from an overnight peak at USD 52.70/bbl, whilst Brent Mar eyes USD 55/bbl to the downside vs. high ~56.40/bbl. Turning to metals, spot gold and spot silver see gains despite the firmer Buck with some citing outflows from bitcoin into the traditional safe-haven metals whilst others also cite the inflationary playbook. In terms of base metals, Dalian iron ore future fell almost 2% overnight as the Dollar firmed and Australia's Port Hedland iron ore shipments to China jumped 16% in December. LME copper also trades on the backfoot today amid similar dynamics. Finally, something to be aware of - the outgoing US president's admin is reportedly moving to loosen some mining regulations and give the go-ahead for some mineral projects before leaving office, with some stated that the incoming administration may be unable to reverse some of the moves.
Kuwait set February crude OSP to Asia at Oman/Dubai + USD 0.65/bbl which is higher by USD 0.65/bbl from the prior month, while Iran set February Iranian light crude price to Asia at Oman/Dubai + USD 0.80/bbl which is higher by USD 0.55/bbl from the prior month. (Newswires)
Iraq has set the February Basra light crude price to Asia at Oman/Dubai +USD 1.10bbl (increase of USD 0.70 from the prior month), according to a pricing document. (Newswires)
Ineos expects controlled elevated flaring at the Grangemouth oil refinery (210k BPD) as the manufacturing plant restarts. (Newswires)