Daily Morning Note – 14 July 2021

PHILLIP SUMMARY

Asian stocks are set for a mixed start after Wall Street fell from a record and bond yields rose following a surprise U.S. inflation jump that stirred the debate on how long Federal Reserve policy can stay ultra-loose. Futures slipped in Japan and Hong Kong Wednesday and were little changed in Australia. The S&P 500 slipped for the first time in three trading sessions as traders digested a release showing the highest inflation since 2008 as well as mixed earnings reports from JPMorgan Chase & Co. and Goldman Sachs Group Inc. Tech shares were relatively resilient and the Nasdaq 100 little changed. The Treasury yield curve saw volatility Tuesday. Weak demand for the monthly 30-year bond auction unleashed a bout of steepening that reversed a flattening move spurred by hot June inflation readings. The dollar jumped.


BREAKING NEWS

SG News

The Singaporean economy rebounded 14.3% on the year in the April-June quarter, according to preliminary figures released Wednesday, continuing a steady recovery from the darkest days of the COVID-19 pandemic. The latest figure is the highest jump since the second quarter of 2010, when the city-state posted an 18.6% surge as it rebounded from the global financial crisis. Gross domestic product did decline 2.0% from the first quarter on a seasonally adjusted basis, as an uptick in local coronavirus infections prompted tighter restrictions for four weeks from May to June of this year. This included a ban on dining at restaurants.

CNMC Goldmine Holdings subsidiary CMNM Mining Group Sdn Bhd has gained approval from the relevant authorities in Malaysia to resume mining operations at its flagship Sokor gold mine in Kelantan, the Catalist-listed gold producer said on Tuesday in a Singapore Exchange filing. This follows the Malaysian federal government’s decision to ease Covid-19 restrictions in Kelantan and four other states from July 5.

Entertainment group mm2 Asia’s independent auditor has noted a material uncertainty regarding the group’s ability to continue as a going concern, in view of the latest financial year’s net loss and its liabilities exceeding assets, the mainboard-listed firm said in a Singapore Exchange filing on Tuesday night. The observation is part of Messrs Nexia TS Public Accounting Corporation’s unmodified audit opinion in its report on the group’s audited financial statements for the year ended March 31, 2021. The auditor’s opinion remains unqualified.

Resale condominium prices in Singapore were up 0.1 per cent month on month in June, while prices rose 6.8 per cent year on year, flash figures from SRX Property showed on Tuesday. An estimated 1,510 units were resold in June, a decrease of 12.6 per cent from the 1,727 units resold a month earlier. However, volumes were 198.4 per cent higher than in June 2020, and 83.9 per cent higher than the five-year average for the month of June.


US News

The June U.S. inflation print topped all forecasts and pointed to higher costs associated with the reopening from the pandemic. Fed officials have said they expect such pressures to be transitory but some commentators see a risk of more durable increases that could force a quicker-than-expected reduction in stimulus. Traders will be scrutinizing testimony due from Fed Chair Jerome Powell this week.

Netflix and Comcast’s Universal Pictures are extending a multi-year exclusive rights deal in the United States for animated film franchises such as Minions and Puss in Boots, the streaming giant said on Tuesday. Netflix’s rights to stream these popular movies, which are made by Universal’s DreamWorks Animation studios, will begin after a four-month window on Peacock, Comcast’s in-house streaming service. Netflix currently streams movies including Despicable Me and The Grinch from Universal’s Illumination studios.

PepsiCo will increase the prices of its products this year, the company said on Tuesday after it raised its full-year earnings forecast on surging demand for its sodas from pandemic-weary people flocking to restaurants and theatres. A host of factors, including disruptions in global supply chains and rising demand, has pushed up raw-material prices, forcing packaged food companies such as PepsiCo and rival Coca-Cola to pass on costs to consumers.

JPMorgan Chase & Co reported a 155 per cent jump in profit on Tuesday, getting a boost from the release of loss reserves and a surge in dealmaking, even as the largest US bank dealt with a sharp slowdown in trading activity from last year’s record-breaking levels. The Wall Street behemoth, whose fortunes tend to reflect the health of the US economy, released another US$3 billion from the funds it had set aside last year in anticipation of a wave of pandemic-related loan defaults.

Goldman Sachs Group on Tuesday blew past analysts’ estimates for second-quarter profit as record global dealmaking activity helped Wall Street’s biggest investment bank offset a slowdown in trading. Deals worth US$1.5 trillion were announced in the three months to June 30 despite slowing activity among blank-cheque firms, more than any second quarter on record and up 13 per cent from the record first quarter of the year, according to Refinitiv data.


Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, CNBC, PSR

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