Wednesday, September 2, 2020

Asia Times: Zoom soars 40% after quadrupling revenue from a year before; S&P500 and Nasdaq continues to record new highs

  • China
  • Dollar
  • Gold
  • Euro
  • Stocks
  • Oil


Market Recap: Zoom soars 40% after quadrupling revenue from a year before; S&P500 and Nasdaq continues to record new highs

Better-than-expected PMI drives investors' sentiment to push the S&P500 and Nasdaq to new record highs. ISM's manufacturing PMI report for August beat expectations and surged to 56.0 from 54.2 in July. As expected, the new orders (67.6) and the production (63.3) sub-indices were the highlights of the reports, continuing to reflect strong - and possibly stronger-than-expected - demand both domestically and internationally. Employment (46.5) however, remained in contractionary territory for the 13th month in a row despite improving for the fourth consecutive month since the record low in April of 27.5. But supplier deliveries (58.2) slowing from July, may have distorted the headline figure into a better-than-expected reading as Covid-19-related difficulties continue to impact delivery times. ISM's report also indicated that the current level of supplier deliveries is expected to continue in the near future and is likely to impact production output and inventory growth.

Indexes Daily Change (%) Net Change Closing Price
Dow +0.76% +215.61 28,645.66
S&P500 +0.75% +26.34 3,526.65
Nasdaq +1.39% +164.21 11,939.67
*Source: Bloomberg

Materials led gains among S&P500 sectors followed by tech, while utilities, health care and real estate lagged the index. Chemical product-related companies were at the top of the S&P500 table in terms of percentage gains as the industry was well highlighted in ISM's PMI report, with respondents saying that production is unable to keep up with demand, and that some upstream supply chains are starting to face issues with sourcing materials and transportation. This does coincide with the current environment, since we should see an increase in demand for materials for the new normal amid the current pandemic which should drive demand for products such as plastics and rubber for end-products such as packaging for food deliveries, and medical gloves. In another note, Zoom’s stock soared 40.78% after reporting earnings that dwarfed analysts forecasts as it quadrupled its revenue for the quarter from a year ago, while doubling expectations for earnings per shares (A: US$0.92/share, E: US$0.45/share). Zoom’s better-than-expected earnings also spilled over to other work-from-home-related shares, driving share prices of companies in the segment.

Tech gained again, with none other than Apple at the helm, after it was reported that the company has asked suppliers to build at least 75 million 5G iPhones for later this year. Investors and Apple followers likely inferred from the reports that the orders may likely be for an upcoming launch, in which was also reported by Bloomberg to feature four new models in October with 5G networks speeds, citing people familiar with the situation. The 75 million figure, if true, will be in line with similar news back in the same period of 2019, suggesting that the iPhone maker was confident in demand for its most important product, which spilled over in terms of investor sentiment and eventually stock valuations across the broad tech market as well, pushing stocks such as Broadcom and Taiwan SemiConductor up on Tuesday as well.

Nvidia was another driver for the S&P500, along with Walmart after both companies announced the launch of its anticipated products. Nvidia gained 3.34% after the launch of its RTX 3000 series line-up, touting its Ampere architecture line-up as game changing and the "greatest generational leap" in the company's history. While real-world test cases and third-party benchmarks have yet to be released, it appears that investors are bullish on the company's potential to tap on to a growing market of ray-traced enabled games, which is likely to gain a greater footing with the launch of next-generation consoles from Microsoft and Sony later this year. Walmart's shares jumped 6.29% after it announced the that its new subscription program, Walmart+, will be available from September 15th. The program will cost US$98 a year, undercutting rival Amazon's Prime membership at US$119 a year, and will include unlimited free delivery from stores plus gasoline discounts. Investors welcomed Walmart's news as the world’s largest retailer looks set to recapture some of its lost market share to Amazon as it capitalises on the current surge in demand for e-commerce.


The Australian dollar was little moved on the Reserve Bank of Australia's (RBA) decision to expand its low-cost Term Funding Facility while keeping its key rate unchanged. The central bank increased its Term Funding Facility by another A$57 billion and pushed back the deadline for an assessment of the program to June 30th 2021. The decision likely comes on the heels of Victoria's lockdown restrictions, in order to better support the economy from what is expected to delay Australia's economic recovery in the short term by increasing the timeframe for banks to take up the program while also increasing the available size. The expansion also helps with financial stability since the increased size reduces the pressure on banks to raise funds in higher-cost markets. The Australian dollar however, was unexpectedly little changed despite RBA Governor Philip Lowe's increased dovishness in the central bank's statement, adding to the final paragraph of guidance that the central bank "continues to consider how further monetary measure could support the recovery". Consequently, we may see the Australian dollar have some downside moving into today's trading session as traders price in the a greater probability of future monetary policy easing.

The dollar gained against most G10 currencies on Tuesday, possibly as growing uncertainty starts to be reflected in the greenback's movement. Comments from Fed Lael Brainard that the US economy faces "considerable uncertainty" in coming months, reports that Senate Republicans have been working on a US$500 billion (half of the initial US$1 trillion proposal) stimulus proposal, and reports from the Pentagon that China's rapid military build-up suggesting that it was closer to joining the US and Russia in being capable of deploying nuclear weapons on land, air and sea likely provided some support for the dollar. A shift in speculation regarding the November presidential elections may also have driven the dollar higher, as polls start to show Democrat president candidate Joe Biden's lead over US President Donald Trump starting to narrow.


Safe haven assets were mixed on Tuesday, with indications of possible increased hedging positions among market participants. Gold inched slightly higher while silver lost some steam. The Japanese yen fell against the dollar but rose against the euro. US Treasuries were mostly higher, with benchmark 10-year yields falling 3.6bps to 0.67%.

Safe Haven Assets Daily Change (%) Net Change Closing Price
Gold +0.12% +2.38 1,970.18
Silver -0.11% -0.03 28.11
USD/JPY +0.05% +0.05 105.96
*Source: Bloomberg
US Treasury yields Daily Change (bps) Yield (%)
2-Year +0.0bps 0.13%
10-Year -3.6bps 0.67%
30-Year -5.5bps 1.42%
*Source: Bloomberg

Oil futures traded slightly higher on Tuesday, but gains were mostly muted despite better-than-expected economic data in both the US and China. In addition to upbeat manufacturing data in the US, China's Caixin manufacturing PMI improved in August from 52.8 to 53.1, beating economists' forecasts for a slight dip to 52.5. The weekly report from the American Petroleum Institute also helped oil inch higher into the trading session on Wednesday morning as the private industry funded report showed US crude oil stockpiles declining more than six million barrels, along with a decrease in both gasoline and distillate supplies. OPEC's monthly crude production in August rising only be half the amount permitted under their agreement thanks to compensatory cuts is also likely to help drive trader sentiment moving into to today's trading session as we may see more speculation that oil prices is likely to start recovering at a faster pace than initially anticipated.

Oil Futures Daily Change (%) Net Change Closing Price
Brent +0.66% +0.30 45.58
WTI +0.35% +0.15 42.76
*Source: Bloomberg

Stocks in Asia started the day higher, with the ASX200 leading gains likely thanks to the RBA's decision to expand its Term Funding Program. The Nikkei and KOSPI were also trading higher in the early hours of Wednesday's trading day. Futures tracking major indices in the US were trading in the green as well as risk appetite continues to grow in line with optimistic economic data.

Asia Daily Change (%) Net Change Last Price As of (GMT +8)
Nikkei +0.51% +119.45 23,257.52 8:57:15 AM
KOSPI +0.50% +11.70 2,361.25 9:17:10 AM
ASX200 +1.47% +88.80 6,042.20 9:17:15 AM
*Source: Bloomberg
US Futures Daily Change (%) Net Change Last Price As of (GMT +8)
Dow Futures +0.24% +71.00 28,692.00 9:07:11 AM
US Futures +0.29% +10.25 3,537.25 9:07:12 AM
Nasdaq Futures +0.58% +72.25 12,384.75 9:07:16 AM
*Source: Bloomberg

Economic releases for the day ahead include (all timings in GMT +8):

  • Australia Q2 GDP (9.30am)
  • US Aug Private Employment Change (ADP) (8.15pm)