[PODCAST] US Open Rundown 2nd September 2021
- European bourses/US futures are modestly firmer in quiet and rangebound trade before today's US data; ES +0.2%
- FX sees the DXY lower but still above Wednesday's trough with peers, ex-CHF/JPY, firmer
- WTI & Brent have recovered from yesterday's downside and the benchmarks are modestly firmer post-OPEC
- Looking ahead, highlights include US Challenger Layoffs, IJC, Canadian Trade Balance, Factory Orders, Fed's Bostic
Moderna (MRNA) submitted initial data to the US FDA for its COVID-19 vaccine booster and stated mRNA-1273 at 50mg dose induced robust antibody responses of more than 40x against the Delta variant, while it expects to submit data to the EMA and other regulatory bodies around the world for its COVID-19 vaccine booster in the approaching days. In relevant news, the FDA will hold an advisory committee meeting on September 17th regarding the Pfizer (PFE) - BioNTech (BNTX) application for a COVID-19 vaccine booster. (Newswires)
Tokyo COVID-19 cases 3099 vs prev. 3168. (Newswires)
Johnson & Johnson's (JNJ) arrangement to ship COVID vaccine doses from South Africa to Europe has been suspended, according to the African Union COVID envoy - details remain light. (Newswires)
Asian equity markets took their cues from a similar indecisive performance stateside where price action was choppy and the major indices finished relatively flat as participants digested varied data releases, including the disappointing ADP Employment data which precedes Friday’s NFP jobs report. ASX 200 (-0.6%) was pressured amid a continued surge of COVID-19 infections and with the declines led by mining names after the recent losses in commodity prices and fresh bout of China’s state reserve selling, with mining giant BHP the worst hit as it traded ex-dividend. Nikkei 225 (+0.3%) lacked firm direction with Japan mulling extending the COVID-19 state of emergency by two weeks and the KOSPI (-1.0%) failed to benefit from the upgrade to Q2 GDP which confirmed the fastest growth in more than a decade, as the strong economic growth data and a 9-year high CPI, added to the case for a further BoK rate hike this year. Hang Seng (+0.2%) and Shanghai Comp. (+0.8%) were kept afloat after recent soft data releases stoked calls for PBoC easing, while China's Cabinet will reportedly step up support for smaller businesses in which it will add CNY 300bln in relending quota for small firms and provide rediscount support to help ease their financing burdens. Finally, 10yr JGBs were slightly higher as they continued to nurse Tuesday’s slump and after having found support near 152.00. There were also comments from BoJ’s Kataoka who suggested the central bank should aggressively buy bonds and push yields down to prop up capex and investment, although the impact was muted given that he is a notorious dovish dissenter at BoJ meetings and with mixed results at the latest 10yr JGB auction also capping price action.
PBoC injected CNY 10bln via 7-day reverse repos with the rate at 2.20% for a CNY 40bln net drain. (Newswires) PBoC set USD/CNY mid-point at 6.4594 vs exp. 6.4580 (prev. 6.4680)
PBoC will reportedly address the September funding gap and liquidity in money markets will remain reasonably ample. (China Securities Journal)
US Climate Envoy Kerry met virtually with China’s Foreign Minister Wang and urged China to do more to reduce emissions. (Newswires)
Chinese regulators including the Transport Ministry have summoned 11 ride hailing firms to a meeting. It was also reported that China National Radio and Television Administration said will bolster regulation on cultural programs and staff, while it will firmly oppose overly high salaries and crack down on tax evasion in the sector. (Newswires)
Alibaba (BABA) will invest CNY 100bln by 2025 in support of "common prosperity", according to local media. (Newswires)
Japanese LDP leadership contender Kishida said some people feel the government may be optimistic about the COVID-19 situation, while he added that they aim to complete vaccination of all those that want it and that the government will give full support for development of COVID-19 oral drugs by year-end. Kishida stated that they need to swiftly conduct economic measures worth tens of trillions of yen to cope with the virus pain and that they need to implement business continuation support including payouts to households and businesses. Furthermore, he said they will provide cash payouts to non-regular workers, women and households with children that are facing a difficult situation due to the virus. (Newswires)
- Korea (Republic of) GDP Growth QQ Revised (Q2) 0.8% (Prev. 0.7%)
- Korea (Republic of) GDP Growth YY Revised (Q2) 6.0% (Prev. 5.9%)
- Korea (Republic of) CPI Growth MM (Aug) 0.6% vs. Exp. 0.3% (Prev. 0.2%)
- Korea (Republic of) CPI Growth YY (Aug) 2.6% vs. Exp. 2.3% (Prev. 2.6%)
NHC said post-tropical cyclone Ida is bringing widespread heavy rain and areas of life-threatening flash flooding, as well as enhanced risk for tornadoes across northeast New Jersey and southern New York, while the National Weather Service issued a flash flood emergency warning for New York City and its Mayor De Blasio later declared a state of emergency for the city. (Newswires)
UK shopper footfall in August was at 18.6% below pre-pandemic levels in August which is an improvement from July when footfall was 24.2% below pre-pandemic levels, according to Springboard data. (Newswires)
German election poll: CDU/CSU 21% (-2), SPD 25% (+2), via Kantar. (Newswires)
US President Biden said the US remains firmly committed to Ukraine sovereignty in the face of Russian aggression. Subsequently, the Russian Kremlin says US military assistance to Ukraine could cause Ukraine to behave unpredictably in conflict in the East, regrets that the US-Ukraine friendship opposes Russia. (Newswires)
European bourses remain just off the flat mark but have adopted more of an upside bias vs the mild downside seen across the region at the cash open following the cautious/mixed APAC handover. US equity futures have also seen some tailwinds from Europe, with broad-based performance across the ES, NQ, YM and RTY at the time of writing, and with catalysts scarce in European hours as the US jobs report looms. Sectors are predominantly in the green with no overarching theme. Travel & Leisure extends on earlier gains, led by its heaviest-weight stock Evolution (+3.5%) following reports that it has gone live in South Africa with SunBet. Healthcare also resides near the top of the bunch with AstraZeneca (+1.0%) cheering an announcement that multiple trials reinforce the efficacy of Imfinzi combinations, including with novel immunotherapies, for lung cancer patients across settings. On the downside, Basic resources are pressured as base metal prices remain subdued, albeit after taking somewhat of a breather overnight following yesterday’s selloff. However, some large-cap mining names are trading ex-divs, including the likes of Antofagasta (-0.4%), BHP (-6.3%) and Glencore (-0.6%). Banks have trundled to the foot of the bunch in sympathy with yields. In terms of individual movers, Babcock (-1.8%) continues to decline after the sale of its "nightmare" helicopter division for GBP 10mln after purchasing it for GBP 1.6bln seven years ago. The sale is part of the CEO's turnaround plan which includes GBP 400mln of disposals. In terms of the FTSE 100 reshuffle, Just Eat Takeaway (+1.0%) and Weir Group (+1.1%) are to exit the FTSE 100 and be replaced by Morrisons (+0.4%) and Meggitt (+0.2%).
Japan's FTC closed its investigation into the Apple (AAPL) App Store as the US tech giant announced an update that will allow developers of "reader" apps to include an in-app link to their website to allow users to set up or manage an account, while Apple will apply this change globally to all reader apps. Furthermore, a Japan FTC official later stated that a future antimonopoly investigation of Apple App games is possible. (Newswires)
Apple (AAPL) faces an Indian antitrust case relating to in-app payment issues, according to sources. (Newswires)
Tesla's (TSLA) China output was paused for around four days due to the chip shortage, according to reports. (Newswires)
AUD/NZD - The Aussie and Kiwi have both extended gains beyond half round number levels vs their US rival that were hampering further upside, with Aud/Usd and Nzd/Usd now approaching 0.7400 and 0.7100 respectively after the former cleared technical resistance in the form of the 50 DMA at 0.7376 today. Meanwhile, the Kiwi has topped its 100 DMA at 0.7083, but is still trying to make its way towards 0.7100 amidst headwinds from the Aud/Nzd cross that remains elevated above 1.0400 in wake of a 2nd consecutive record Aussie trade surplus that is shading robust NZ terms of trade marginally by virtue of the fact that it relates to July rather than Q2 and is therefore more current.
DXY - Antipodean Dollar outperformance aside, the Buck continues to flounder post-Powell and on the back of ADP most recently as the index struggles to find sure footing around 92.500 and the Greenback any real traction overall. However, the DXY is holding within a 92.536-388 range compared to Wednesday’s 92.376 low awaiting more pre-NFP jobs proxies that come via Challenger lay-offs today, but also a more timely snapshot of the labour market via IJC alongside trade and before factory orders, then 2 scheduled Fed speakers (Bostic and Daly).
CAD/GBP - A partial recovery in crude has given the Loonie another fillip and incentive to probe 1.2600 again in the run up to Canadian building permits and trade, while the Pound is back within striking distance of 1.3800, but still striving hard to defend or contain declines around 0.8600 against the Euro in the absence of anything UK specific.
EUR/JPY/CHF - All hugging tight lines vs their US counterpart, with the Euro taking a firmer grip of the 1.1800 handle and hardly hindered by stronger than expected Eurozone ppi data in contrast to the Yen that remains anchored around 110.00 following very dovish commentary from BoJ’s Katoaka. To recap, he stated that given economic developments bolder steps on monetary policy are needed, including an increase in bond buying to push short and long term rates down. Elsewhere, the Franc is restrained between 0.9160-40 and largely shrugged off, if not quite ignored conflicting Swiss macro releases, as CPI came in a tad firmer than forecast, but Q2 GDP missed and retail sales fell.
EM - The Zar’s remarkable resurgence rolls on and mainly on technical grounds compounded by repositioning vs the Usd after JH, but having scaled several key chart levels, like a Fib retracement and DMAs, the Rand faces some formidable fundamental hurdles such as SA mining production, PMI and GDP.
- Australian Trade Balance (AUD)(Jul) 12.1B vs. Exp. 10.2B (Prev. 10.5B)
- Australian Exports (Jul) 5% (Prev. 4%)
- Australian Imports (Jul) 3% (Prev. 1%)
- New Zealand Terms of Trade QQ (Q2) 3.3% vs. Exp. 2.5% (Prev. 0.1%)
- New Zealand Export Prices SA (Q2) 8.3% vs. Exp. 3.0% (Prev. -0.8%)
- New Zealand Import Prices SA (Q2) 4.8% vs. Exp. 1.8% (Prev. -0.8%)
It remains relatively measured in terms of pace and size, but bonds have maintained upside momentum in the main following their midweek rebound on pre-NFP jobs data gauges that do not bode well for the official BLS release. Bunds have now been up to 172.74 (+39 ticks on the day) and the corresponding yield has retreated towards -40 bp, while Gilts are crossing their pre-late August Bank holiday best, at 128.74 (+27 ticks) vs 128.73, and the 10 year T-note has matched Wednesday’s 133-20 apex. Ahead, Challenger lay-offs, IJC, factory orders and a duo of Fed orators in Bostic and Daly, but also details of next week’s auction trio.
WTI and Brent front month futures have been erring higher throughout the European session in the aftermath of the OPEC+ confab which turned out to be a smooth (and timely) affair. Producers, as expected, stuck to the plan of hiking 400k BPD – with the White House also welcoming the decision in a statement. WTI and Brent have erased the losses seen post-Novak yesterday, with the former just under USD 69/bbl and the latter near USD 72.00/bbl. Elsewhere, and from a policy standpoint, developments surrounding Iranian oil and nuclear talks will likely gain focus in the run-up to the next OPEC meeting in October. The Iranian Oil Minister said that as soon as the US’ unilateral illegal sanctions are lifted, Iran is ready to increase its oil output to the highest possible level to compensate for the losses caused by the sanctions, while he also noted that Tehran is determined to raise its oil exports irrespective of this. Aside from that, crude prices may take their cues from risk sentiment ahead of tomorrow’s US labour market report. In terms of bank commentary, the UBS notes that with oil demand set to rise, the bank expects the oil market to stay undersupplied, thus supporting prices. “We reiterate our advice for investors with a high-risk tolerance to be long Brent, add exposure to longer-dated oil contracts, or sell downside price risks”, the Swiss bank says. Elsewhere, spot gold and silver are once again uneventful within the same European ranges seen throughout most of this week thus far. LME copper remains subdued following yesterday’s selloff which was followed by a mild reprieve overnight – but again awaiting catalysts. Elsewhere, the Dalian commodity exchange is to raise speculative trading margin requirements for coking coal and coke futures to 15%, as of settlement on September 6th.
White House said it is glad OPEC is continuing with gradual increases to oil output and it continues to engage with OPEC+ members regarding the importance of competitive market when setting prices and doing more to assist the recovery. (Newswires)
Chile will seek USD 150bln of investments to achieve its copper output target of 9mln tonnes by 2050 and it expects 7mln tonnes of annual production by 2030 which will depend on at least 70% of 49 proposed projects coming to fruition. (Newswires)
Dalian commodity exchange is to raise speculative trading margin requirements for coking coal and coke futures to 15%, as of settlement on September 6th. (Newswires)