Original insights into market moving news

[PODCAST] US Open Rundown 29th July 2021

  • European bourses are firmer after an earnings dominated morning with US futures positively-biased but more contained; Euro Stoxx 50 +0.4%, ES +0.2%
  • DXY is subdued and sub-92.00 at worst to the benefit of G10 peers while debt dips on sentiment and ahead of US 7yr supply
  • The US Senate voted 67-32 to move forward with the bipartisan infrastructure bill after a bipartisan agreement was reached
  • Japan's PM Suga will decide on the state of emergency and quasi-emergency measures for additional regions on Friday; following a record day of cases
  • Looking ahead, highlights include German CPI, US GDP, IJC
  • Earnings from Amazon, Mastercard, Comcast


US FDA says agrees with Johnson & Johnson (JNJ) that its COVID-19 vaccine shelf-life can be extended to six months from four and a half months when stored at 2-8 degrees Celsius, while it was also reported that contractor Emergent BioSolutions (EBS) is planning to resume vaccine production at its troubled plant in Baltimore. (Newswires/WSJ)

The UK expects the US to drop its travel ban on the nation after ministers reopened the border to the US, according to the UK Transport Secretary. (Telegraph)

Japan PM Suga says will decide on the state of emergency and quasi-emergency measures for additional regions on Friday; follows reports of over 10k daily cases in Japan (prev. 5757) and 3864 in Tokyo (prev. 3177). (Newswires)


Asia-Pac stock markets traded positively as focus in the region centred on a deluge of earnings results and with Chinese stocks rebounding after the nation’s securities regulator convened a meeting with banks and brokerages in a bid to restore market calm after the recent stock rout. Conversely, US equity futures were lacklustre amid ongoing Delta variant fears and following on from the FOMC which resulted in an indecisive mood for stocks after the Fed maintained its policy settings as expected and although it kept future tapering in play, as well as stated that the economy has made progress towards goals, it didn’t offer any clues on the timing for a taper and noted that sectors most adversely affected by the pandemic have not fully recovered. ASX 200 (+0.5%) was led higher by tech and mining names with software company IRESS rallying following a takeover approach and with participants digesting earnings and results from the likes of Rio Tinto and Regis Resources. Nikkei 225 (+0.7%) was also kept afloat with Nissan and Advantest the biggest gainers following their earnings including the return to profit by the automaker although upside for the index was initially limited by currency headwinds and anticipation of state of emergency declarations for Tokyo's neighbouring prefectures, while the KOSPI (+0.2%) was contained by increasing virus infections and with index top-constituent Samsung Electronics sluggish despite beating on its Q2 earnings. Hang Seng (+3.3%) and Shanghai Comp. (+1.5%) outperformed after the recent meeting involving China’s securities regulator to soothe market fears and where the regulator said it will continue to allow Chinese companies to go public in US as long as they satisfy listing requirements. In addition, the PBoC mildly upped its liquidity efforts, while the gains were amplified in Hong Kong amid notable strength in tech and digital health stocks. Finally, 10yr JGBs were relatively unchanged with demand subdued by the rebound in riskier assets, the indecisive post-FOMC mood in T-notes and mixed results at the 2yr JGB auction.

  • PBoC injected CNY 30bln via 7-day reverse repos with the rate at 2.20% for a net daily injection of CNY 20bln. (Newswires)
  • PBoC set USD/CNY mid-point at 6.4929 vs exp. 6.4976 (prev. 6.4929)

China's securities regulator told brokerages at yesterday's meeting that it will allow Chinese companies to go public in the US as long as they satisfy listing requirements, according to sources. (CNBC)

China press noted that Yuan-denominated assets are to become more attractive, while a separate report stated that China’s strengthening economy provides a guarantee and foundation for capital market development. (China Securities Journal/Xinhua)


US Senate voted 67-32 to move forward with the bipartisan infrastructure bill after a bipartisan agreement was reached on the major issues of the infrastructure plan and Senate Majority Leader Schumer commented after the vote that his goal remains to pass both the bipartisan infrastructure bill and budget framework before August recess. The deal was reported to include USD 550bln in new spending on infrastructure projects and will amount to USD 1tln when factoring in other expected funding such as for transportation projects, while the infrastructure financing authority was removed after GOPs objected to the provision intended to lift wages and the infrastructure deal is expected to be paid for by USD 200bln repurposed COVID aid, USD 50bln recouped UI fraud, USD 49bln Medicare Part D rebate rule, USD 56bln in dynamic scoring, USD 20bln in spectrum sales USD 13bln in superfund fees and 6bln in petroleum reserve sales. Furthermore, the White House stated the plan will be financed with unspent emergency relief funds, targeted corporate user fees, stronger tax enforcement related to crypto currencies and revenue from stronger growth. (Newswires)

US House Speaker Pelosi said that she can't commit to not changing the infrastructure bill. (Newswires)


UK H1 car production rose 31% Y/Y compared to slump last year and announced investment into the car industry for H1 rose by 25% Y/Y to GBP 606mln, according to SMMT. (Newswires)

ECB's Panetta says the ECB will raise interest rates only when convinced that inflation can stabilise at 2% in the medium-term; both fiscal and monetary policy needs to continue its support. (Newswires)

EU Consumer Confidence Final (Jul) -4.4 vs. Exp. -4.4 (Prev. -4.4, Rev. -3.3)

  • Economic Sentiment (Jul) 119.0 vs. Exp. 118.5 (Prev. 117.9); Services Sentiment (Jul) 19.3 vs. Exp. 19.9 (Prev. 17.9)
  • Consumer Inflation Expectations (Jul) 30.0 (Prev. 27.1); Selling Price Expectations (Jul) 35.4 (Prev. 36.0)


Armenian PM has proposed the deployment of Russian border posts along the border with Azerbaijan, via Tass. (Twitter)


Major bourses in Europe trade with modest gains (Stoxx 600 +0.4%) with the upbeat sentiment in APAC seeping into Europe on an earnings-abundant day. The mild risk appetite comes amid the aftermath of the Fed policy decision, and with China jitters somewhat stabilising for now after the recent meeting involving China’s securities regulator to soothe market fears. Regulators said Chinese companies will continue to be allowed to go public in the US as long as they satisfy listing requirements. This news was received well across large-cap Chinese stocks, with Alibaba rising over 7.5%, Tencent surging 10% and gaining almost 13%. In related news, WSJ sources reported that Didi (+36% pre-market) is reportedly mulling going private and compensating investors. This comes amid Beijing's crackdown on Didi following its US IPO, suggesting it poses national security risks to China. Now with two risks out of the way, markets will likely be focusing on earnings alongside US GDP and PCE data. Back to Europe, the DAX (+0.2%) remains slightly sluggish vs peers as Volkswagen (-0.4%) fail to gain traction due to the ongoing chip shortage prompting a cut in delivery guidance, whilst Chinese demand lagged. The bellwether Euro Stoxx 50 index (+0.2%) is meanwhile capped by post-earnings losses in AB InBev (-6%), Safran (-2.4%) and Air Liquide (-2%). Sectors are mostly firmer and portray a mild cyclical bias, although Travel & Leisure bucks the trend as COVID cases across APAC and with the UK set to review its travel list one week from today. To touch on some highlights from the morning's earnings, aside from those already mentioned, Shell (+3.3%) topped forecasts across all metrics, declared a dividend of USD 0.24/shr (+38% QQ) and launched a USD 2bln share buyback programme. Airbus (+3.4%) topped analyst forecasts and upgraded its guidance. Nokia (+6%) currently resides as the top performer after raising its FY operating margin forecast to 10-12% vs prev. 7-10%. On the flip side, Credit Suisse (-3.2%) is hampered by its dealings with Archegos, with earnings missing forecasts and as the probe regarding Archegos found a failure to effectively manage risks by both first and second lines of defence as well as a lack of risk escalation.

Facebook Inc (FB) - Q2 2021 (USD) EPS 3.61 (exp. 3.04), Revenue 29.08bln (exp. 27.87bln); Advertising Revenue 28.58bln (exp. 27.05bln). Daily Active Users 1.91bln (exp. 1.95bln); Monthly Active Users 2.90bln (exp. 2.97bln). Co. expects that advertising revenue growth will be driven by YY advertising price increases during the rest of 2021. Co. expects total revenue growth vs 2019 levels to decelerate modestly in H2 vs Q2 growth rate. Co. sees increased ad targeting headwinds in 2021 from regulatory and platform changes, notably the recent Apple (AAPL) iOS updates, which are expected to have a greater impact in Q3 vs Q2. (PR Newswire) -4.0% in pre-market trade [2.8% SPX weight 5.7% NDX weight]

Didi (DIDI) is mulling going private and compensating investors, according to sources. (WSJ)

Please see here for the Daily European Equity Opening News and the Additional Equity News for the morning's European earnings/stories.


USD - The Dollar has unwound all and more of its knee-jerk gains in wake of the FOMC flagging more progress towards its policy targets, but nowhere near enough in terms of reaching maximum employment to light the QE taper. Moreover, Fed chair Powell stuck to the transitory line on inflation during his press conference, albeit conceding that it could turn out to be higher and more persistent than expected. However, the jury remains out over the prospect of Jackson Hole being the venue to signal ‘substantial’ or the September meeting itself that comes with a new SEP, while another potentially key NFP update looms before either next Friday. Looking at the DXY as a proxy, the index is hovering towards the lower end of a 91.979-92.289 range having breached the last ‘support’ before 92.000 and prior July low of 92.003 from the 6th of the month. Ahead, US jobless claims and advance Q2 GDP are likely to be more influential than pending home sales, while the Usd 62 bn 7 year auction could impact via any big reaction in Treasury yields and/or the curve along with month end rebalancing that is mildly negative for the Buck according to Citi’s portfolio hedging model.

NZD/CAD/GBP/AUD - The major beneficiaries of their US adversary’s downfall, and to the extent that the Kiwi has probed 0.7000 regardless of declines in NBNZ’s business outlook and own activity readings, while the Loonie continues to glean traction from crude prices and has tested offers/resistance into 1.2450 as WTI tops Usd 73/brl. Elsewhere, Sterling has shrugged off somewhat mixed BoE consumer credit, mortgage approvals and lending data to establish a foothold above 1.3950 and take another close look at 0.8500 vs the Euro in similar vein to the Aussie amidst more calls for the RBA to reverse QE tapering on downward revisions to GDP forecasts prompted by the extended lockdown in NSW and virus restrictions in other areas. In fact, Aud/Usd has been over 0.7400 and Aud/Nzd beyond 1.0600 even though hefty 1.5 bn option expiry interest sits between 0.7385 and the round number in the headline pair.

EUR/CHF/JPY - Also firmer against the Greenback, albeit to varying degrees with the Euro extending through 1.1850, option expiries from the half round number up to 1.1870 and a Fib retracement on the way to circa 1.1879, while the Franc has scaled 0.9100 and Yen is holding 110.00+ status within a 109.95-68 range irrespective of buoyant risk sentiment.

SCANDI/EM - The Sek is hovering above 10.2000 vs the Eur following conflicting Swedish macro releases, but the Nok, Rub and Mxn are all deriving impetus from oil and the Try via an improvement in Turkish economic confidence rather than comments from the CBRT Governor or upward revisions to year-end CPI forecasts for this year and 2022 - see 8.42BST post on the Headline Feed for more. Meanwhile, EM currencies in general are taking advantage of broad Usd weakness, including the Cnh and Cny after a recovery in Chinese stock markets overnight, in part on the back of assurances by the securities regulator at a meeting with brokerages that it will allow Chinese companies to go public in the US as long as they satisfy listing requirements, according to sources. The Zar is also eyeing firmer than expected SA PPI alongside Gold around Usd 1820/oz following its ratings reprieve.

Notable FX Expiries, NY Cut:

- AUD/USD: 0.7385-0.7400 (1BLN), 0.7500 (593M)

- EUR: 1.1795-1.1800 (1.5BN), 1.1850 (1.7BN), 1.1860-70 (1.5BN), 1.1900(815M)

New Zealand NBNZ Own Activity (Jul) 26.3% (Prev. 31.6%)

New Zealand NBNZ Business Outlook (Jul) -3.8% (Prev. -0.6%)


Debt futures have succumbed to fairly sustained, but gradual selling pressure after topping out at 176.67, 129.80 and 134-16 (+26 ticks, +11 ticks and +7/32+ on the day) in Bunds, Gilts and the 10 year T-note, and the retreat could be attributed to several factors. Data and survey based indicators have been broadly above consensus in the Eurozone, oil benchmarks are firm and risk appetite overall is quite buoyant, while Treasuries need to make room for 7 year supply as the yield hovers just above 1%. Also ahead, IJC updates, advanced Q2 GDP, pending home sales as the respective bonds hover just above 176.22, 129.52 and 134-06+ on Eurex, Liffe and the overnight platform respectively.


WTI and Brent front month futures remain on the upward trajectory seen during APAC trade, with the former north of USD 73/bbl (vs low USD 72.26/bbl) and the latter on either side of USD 75.50/bbl (vs low USD 74.63/bbl). News flow for the crude complex has remained light but prices have been underpinned by this week’s larger-than-expected inventory drawdowns, the post-Fed Dollar, alongside the general risk appetite. Participants will also be cognizant of a Magnitude 8 earthquake near oil state Alaska, although the event was not geographically close to any known oil infrastructure. Elsewhere, spot gold and silver have been driving higher in tandem with the decline in the Buck. Spot gold sees its 200 DMA around USD 1,821/oz and the 50 DMA at 1,829/oz. Spot silver remains around USD 25.50/oz ahead of its 200/50/100 DMAs at USD 25.88/26.54/26.31oz respectively. Base metals have been supported across the board by the broader sentiment after China attempted to smooth some recent woes. LME copper resides around session highs just above USD 9,800/t (vs low USD 9,665/t) with comfortable gains also seen across nickel, tin, lead and zinc. It’s also worth noting that China is to raise export duty of some iron products in a bid to promote high-quality development of the steel industry, according to the Chinese Commerce Ministry.