Daily Morning Note – 5 January 2022
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Stocks in Asia look set to open steady Wednesday as investors fret about interest rates increases that dragged down U.S. stocks from a record and extended a decline in Treasuries. Australian shares opened little changed. Futures ticked higher in Japan and dipped in Hong Kong. U.S. contracts were steady after the Nasdaq 100 underperformed amid a selloff in technology shares and the S&P 500 was little changed. The rout in U.S. Treasuries deepened for a second day amid increasing conviction the Federal Reserve will raise rates at least three times beginning in May to counter price pressures. Yields on long maturities climbed amid heavy supply of new corporate bonds following a year-end lull. The dollar was little changed, while the yen hit the lowest since January 2017.
Singapore manufacturing sentiment ended 2021 on a hopeful note amid improving economic conditions, echoing the rising optimism elsewhere in Asia. The Purchasing Managers’ Index (PMI) inched up 0.1 point to 50.7 in December, following a brief dip in the previous month and marking 18 straight months of expansion, said the Singapore Institute of Purchasing and Materials Management (SIPMM) on Tuesday (Jan 4).
A fire incident occurred on Monday (Jan 3) at a factory building of Koda in Vietnam’s Long An province, the mainboard-listed furniture maker disclosed in a Tuesday bourse filing. No casualties were reported and Koda’s management has made immediate arrangements for affected orders to be produced in other factory buildings. The company has 11 factory buildings in the province.
Several states in Malaysia have been hit by sporadic floods in December caused by continuous heavy rain. Market watchers believe this could spell trouble for the country’s crude palm oil (CPO) sector, especially if the floods continue. The flooding has been particularly harsh in the Malaysian states of Kelantan, Trengganu, Pahang, Johor, Malacca, Negri Sembilan and Sabah. Any impact on Malaysia’s CPO supply will likely have an impact on the global industry, as Malaysia is one of the key producers of the commodity. Data from the Malaysian Palm Oil Council showed that in 2020 Malaysia accounted for 25.8 per cent of the world’s palm oil production and 34.4 per cent of global exports.
Walmart Inc. and Kroger Co. are boosting the price of a popular at-home Covid-19 test after a deal with the White House to sell the kits at cost expired. The price of BinaxNOW tests at Walmart is rising to $19.88 this week from $14, the company said in an email Tuesday. Kroger said it reinstated “retail pricing” after completing the three-month commitment to President Joe Biden’s administration. The grocer now lists a price of $23.99 on its website. Each pack includes two tests.
Walmart temporarily shut almost 60 US stores in Covid-19 hotspots in December to sanitise them against the virus, in a sign the new Omicron variant is disrupting the retail industry.
President Joe Biden announced on Tuesday a doubling of US government purchases of new Pfizer therapeutic pills designed to combat the worst effects of Covid-19. At a meeting with his White House pandemic response team, Biden said the new order will take the stockpile to 20 million from 10 million pills.
Yum Brands Inc’s KFC restaurants will start selling plant-based fried “chicken” from Beyond Meat Inc across the United States on Jan 10 for a limited time, KFC said on Tuesday. Beyond shares rose more than 7 per cent in after-market trading.
Self-driving vehicles are moving off the roads and onto the fields.
Deere & Co., the largest farm equipment manufacturer in the world, unveiled a fully autonomous tractor on Tuesday, propelling it past rivals in the tech space. The company introduced the technology on its iconic 8 series tractor, which it says can be controlled from farmers’ mobile phones. Humans will need to transport the machine to a field and configure it for an autonomous run, but then they can let the tractor plant seeds, spray nutrients and harvest crops down to one inch of accuracy without touching a steering wheel, the company said.
Ford Motor Co. stock surged to a 20-year high after doubling factory capacity for its battery-powered F-150 Lightning pickup — a sign of its optimism that electric vehicles could grow to 10% of the U.S. market this year. The carmaker said Tuesday it’s capitalizing on soaring demand by raising F-150 Lightning capacity to 150,000 trucks a year. Ford plans to start taking orders on Jan. 6 for the model going on sale this spring. It’s the second time Ford has doubled production of the plug-in pickup that received nearly 200,000 nonbinding reservations.
Verizon Communications and AT&T said late on Monday (Jan 3) they had agreed to a 2-week delay in deploying C-Band wireless spectrum, averting an aviation safety standoff that threatened to disrupt flights starting this week. The carriers had faced pressure from the White House, airlines and aviation unions to delay the deployment amid concerns about potential interference of 5G with sensitive aircraft electronics like radio altimeters that could disrupt flights.
Treasury yields rose a second day amid increasing conviction that the Federal Reserve will raise rates at least three times beginning in May.
Long-maturity yields rose the most, which traders attributed to a second day of heavy supply of new corporate bonds following a three-week lull at the end of last year. The five-year note’s yield climbed as much as 4 basis points to 1.395%, the highest since Feb. 20, 2020, but ended the day higher by less than a basis point.
A measure of US manufacturing fell short of expectations at the end of 2021, reflecting declines in gauges of delivery times and prices that belie an otherwise solid demand picture. The Institute for Supply Management’s gauge of December factory activity fell to 58.7, the lowest level since January 2021, from 61.1 in the prior month, according to data released on Tuesday. Readings above 50 indicate expansion and the median forecast in a Bloomberg survey of economists called for 60.
The biggest U.S. chipmakers, including Intel Corp., Nvidia Corp., Advanced Micro Devices Inc. and Qualcomm Inc., are starting off 2022 by unveiling products that push further into each other’s main territories, signaling they’re girding for tough competition as semiconductor demand increases across industries.
Intel, clinging to its title of world’s largest chipmaker by revenue, showed off graphics chips aimed at fighting Nvidia and AMD in their area of domination. Nvidia’s latest chips are targeted at persuading more laptop owners to choose its highly specialized graphics capabilities, and AMD touted products meant to maintain its market share gains.
Qualcomm, the biggest maker of mobile-phone chips, bolstered its push to win a chunk of the personal-computer market, leveraging its strength in smartphone technology.
US human rights and trade groups on Tuesday blasted Tesla’s New Year’s Eve announcement that it opened a showroom in Xinjiang, the latest foreign firm caught up in tensions related to the far-western Chinese region where detention camps have drawn heavy criticism
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, CNBC, PSR
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