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Breakfast Bites - Fri Aug 18, 2023

Rise and shine everyone and Happy Friday!


US equity futures continue to sell off this morning after yesterday’s US sell off. 4400 was a key level which the S&P500 broke to close almost 1% lower on the day. Global bond yields are marginally lower this morning but the sell off continues with China and Europe.


Bitcoin took a severe beating with a sharp -7.7% sell off yesterday quite likely on news that Elon Musk would be selling all of SpaceX’s Bitcoin holding. Crude Oil is off it’s lows this morning but, unless it can cross $83/bbl, we’re looking at the first red week in 6 weeks.


Given the risk-off sentiment, Gold is up while the US Dollar Index is mostly flat.


Earnings this morning include Deere (double beat); Estee Lauder (double beat) while Palo Alto Network reports after the close.


Remember today is monthly Options Expiry!


Asia and Australia

  • Asian equities ended Friday weaker once again as the risk-off mood continues.

  • Losses greatest in Hong Kong, that shed another 2.0% with mainland bourses also down by varied amounts. Tokyo, Seoul and Taipei all lower and ended down for the week. Australia closed a handful of points higher.

  • 18 out of 38 state-owned property developers listed in Hong Kong and the mainland reported preliminary losses in H1, up from 11 that warned of full-year losses in 2022.

  • Evergrande files for Chapter 15 Bankruptcy in New York. Restructuring proceedings are being carried out in Hong Kong and the Cayman Islands. Evergrande has had its share of troubles for the two years but, this isn’t a great sign because there was always the hope that they would be bailed out. This is an important signal that the Government certainly hasn’t done enough for failing property market in China.

  • PBOC set daily yuan fixing with strongest bias on record on Friday, signaling central bank's growing unease with pace of depreciation. This continues to be a trend with the PBoC now with every new fixing.

  • Malaysia's economy grew 2.9% in Q2 versus consensus forecast of 3.3% and Q1's 5.6%. It would seem that growth has slowed there because of slower exports. Malaysia restricted the exports of certain goods earlier this year.

  • Japan reported inflation largely in line with expectations. Core CPI rose 3.1% y/y in July, matching expectations, easing from 3.3% in the previous month. Ex-food & energy was also in line at 4.3%, though slightly firmer than 4.2% in June (returning to May level). The BoJ increased their forecast to 2.5% and 3.2% respectively during the July meeting.


Europe, Middle East, Africa

  • European equity markets lower. Follows broad weakness in Asia. The Euro Stoxx 50 broke below its 200D moving average today.

  • No surprises for the final Eurozone inflation print for July. Headline confirmed at 5.3% y/y vs 5.3% in the advance reading and 5.5% prior, while core reading confirmed at 5.5% y/y vs 5.5% prior

  • Adyen selloff spooks investors; valuation concerns grow: Dutch payment processor ADYEN-NL sold off ~40% in the previous session and is down currently ~2.3% after Thursday's H1 earnings fell sharply below Street forecasts and company's own targets.

  • UK Retail sales in the United Kingdom dropped by 1.2% from the previous month in July 2023, worse than market forecasts of a 0.5% fall, and after a downwardly revised 0.6% growth in June. It was the first contraction in retail trade since March.


The Americas

  • The Philly Fed Manufacturing survey increased by more than expected in August, returning to expansionary territory, in contrast with the Empire Manufacturing survey earlier this week. Good news seems to be bad news again with the market seeing this as a reason for the Fed to continue hiking. Focus remains on Jackson Hole next week.

  • Money Market Assets hit another all time high yesterday at $5.57 trillion with another $40 billion pouring into funds.

  • Microsoft planning to start selling new version of Databricks software to help customers make AI apps own their own

  • New report finds impending strike against big three automakers could cost $5B in just 10 days

  • Cleveland Cliffs' bid for US Steel promises national security through consolidation but would raise competition worries

Calendars

(news taken from Reuters, FT, Bloomberg; Calendars from Trading Economics and Benzinga Pro)



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