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Rise and shine everyone.
China’s news story on Apple gaining traction - China’s is banning the use of Apple phones in government and sensitive sectors, to reciprocate actions taken by the US. China’s semiconductor stocks took a hit. Semiconductor stocks got dragged down. SMIC, the company producing Huawei’s chips was down -7%.
Equity Futures are trading lower this morning despite a pullback in yields. Apple’s China story seems to be hitting hard with the stock down another -2.7% after closing down -3.5% yesterday. The US Dollar Index continues to remain strong. Crude oil has also pulled back marginally with WTI hovering at $86.99. Gold is getting a slight bid while Bitcoin remains marginally lower.
Asia and Australia
Asian equities ended mostly lower Thursday. More losses for the Hang Seng, which is now in the red for the week once again despite the property sector rally; mainland stocks also lower. Japan lower, Australia dragged down by commodity stocks post China's trade data. India broke to four-week highs
China’s news story on Apple gaining traction - China’s is banning the use of Apple phones in government and sensitive sectors, to reciprocate actions taken by the US. China’s semiconductor stocks took a hit. Semiconductor stocks got dragged down. SMIC, the company producing Huawei’s chips was down -7%.
Also from China - Exports shrank 8.8% YoY, the fourth straight month of decline, better than market consensus of a 9.2% fall; while imports fell by 7.3%, the sixth consecutive month of decrease, compared to the consensus of a 9% drop. The Trade Surplus fell more than expected to $68.36B. We were expecting a higher number in light of improved PMI numbers.
We got results from the 30Y JGB auction that didn’t go very well. Earlier in the week, we saw the 10Y JGB auction meet the same fate. There was low demand for the JGBs, causing prices to drop and yields to rise. It makes sense that people don’t want to buy much here because they know yields could eventually go higher, and they are waiting for that. We have 5Y and 20Y auctions next week.
Bank Negara Malaysia kept its overnight policy rate (OPR) on hold at 3.0% Thursday as forecast
Australia gas strike delayed until Friday as talks continue
Headline inflation in Emerging Asia appear to be rising again as higher food and energy costs push August YoY CPI readings higher. The inflation story is not over.
Taiwan 2.3% from 1.9% in July
Indonesia 3.3% from 3.1% in July
Vietnam 3.0% from 2.1% in July
Thailand 0.9% from 0.4% in July
South Korea from 3.4% from 2.3%
Europe, Middle East, Africa
European equity markets mixed: STOXX 600 unch, FTSE 100 +0.1%, DAX unch, CAC +0.4% - basic resources and tech slide; defensives and insurance stronger.
Eurozone final Q2 GDP came in lower than expected, at 0.1% q/q vs 0.3% expected. Looks like we will have a tug of war now between keeping growth steady and conquering inflation. This is when policy mistakes happen.
Poland cut interest rates from 6.75% to 6%. Poland’s inflation is still at +10.1% YoY. .The Governor had guided strongly towards rate cuts and the market was pricing in a -25bps cut. So they surprised the consensus. They have elections coming up on Oct 15 and that could be the catalyst for this, although there still have another meeting on Oct 3-4 before elections.
Luxury stocks in Europe got hit on headlines coming out of the CFR AGM, where the chairman Johann Rupert was quoted saying that inflation in Europe is starting to hit luxury demand.
BoE rate hike expectations have dipped to the lowest since June with the terminal rate now seen under 5.75% after survey of decision makers.
Saudi Arabia raises Asia crude selling prices for fourth straight month, increase smaller-than-expected
German Industrial production numbers come in weaker than expected at -0.8% vs. -0.5% expected and -1.4% last month.
The Americas
Bank of Canada kept rates steady at 5% in what could be seen as a hawkish pause.
US Trade Deficit came in slightly higher at -$65B surprising estimates by $3B.
Amazon reportedly on the verge of being hit with an antitrust lawsuit from the FTC after declining to offer any specific concessions at a meeting with the agency's three commissioners last month. Suit expected to target Amazon's marketplace and call for structural remedies, including a breakup of the 3P and 1P platforms.
Biden administration scraps Alaskan oil leases in effort to clamp down on Arctic drilling
Fed's latest Beige Book said economic growth modest during July and August, with consumer spending tourism was stronger than expected, though other retail spending continued to slow, especially discretionary items and some reports suggested consumers may have exhausted pandemic-era savings.
Calendars
(news taken from Reuters, FT, Bloomberg; Calendar from Trading Economics and Benzinga Pro)
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