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Major APAC equity markets closed mixed, while most major US and
European indices were lower. US and benchmark European government
bonds closed sharply lower. CDX-NAIG and European iTraxx closed
almost unchanged, while iTraxx-Xover and CDX-NAHY were modestly
wider on the day. The US dollar closed higher, while oil, natural
gas, gold, copper, and silver closed lower.
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Americas
Most major US equity indices closed lower except for Nasdaq
+0.1%; S&P 500 -0.3%, Russell 2000 -0.7%, and DJIA -0.8%.
10yr US govt bonds closed +4bps/1.37% yield and +4bps/1.99%
yield.
CDX-NAIG closed flat/47bps and CDX-NAHY +3bps/278bps.
DXY US dollar index closed +0.5%/92.51.
Gold closed -1.9%/$1,799 per troy oz, silver -1.7%/$24.37 per
troy oz, and copper -1.2%/$4.28 per pound.
Crude oil closed -1.4%/$68.35 per barrel and natural gas closed
-3.1%/$4.57 per mmbtu.
Averaged over the seven days ending Sunday, the count of seated
diners on the OpenTable platform was 0.7% above the comparable
period in 2019. While encouraging, this could reflect the timing of
the Labor Day holiday. How this comparison evolves over the next
week or so will shed light on the state of the recovery in dining
out. Meanwhile, box-office revenues last week were 42.5% below the
comparable week in 2019. This is close to recent readings and up
from averages earlier in the summer. Still, the recovery in
movie-theater activity has a long way to go. Finally, the Weekly
Economic Index (WEI) stood at a value of 8.0 last week. If
sustained through the end of this month, this would suggest about
8.3% GDP growth over the four quarters ending in the third quarter.
We look for materially slower growth over this period (5.2%), so
the WEI could suggest some upside risk to our forecast. (IHS Markit
Economists Ben
Herzon and Joel
Prakken)
Tesla CEO Elon Musk has confirmed that production of the
electric vehicle (EV) maker's much-anticipated Cybertruck is to be
delayed until the end of 2022, according to a Bloomberg report.
Tesla initially stated that customer deliveries of the battery
electric vehicle (BEV) truck would begin in 2021. Later, Tesla said
that the plan had been pushed back to 2022, when announcing its
second-quarter 2021 financial results. However, in a company-wide
phone call to Tesla workers Musk has confirmed that production of
the futuristic-looking electric truck would be delayed to the end
of 2022 and that significant levels of production would not occur
until the latter months of 2023. IHS Markit's forecast currently
has around 30,000 units of production of the Cybertruck allocated
for 2022 at the company's new Texas Gigafactory. (IHS Markit
AutoIntelligence's Tim Urquhart)
PPG Industries now expects third-quarter sales will be $225-275
million lower than the company anticipated at the start of the
quarter. The company cites increasing disruptions in commodity
supplies; further reductions in customer production due to certain
parts shortages, such as semiconductor chips; and continuing
logistics and transportation challenges in many regions, including
the US, Europe, and China. (IHS Markit Chemical Advisory)
The company had previously expected supply chain disruptions to
lower third-quarter sales by about $150 million. Raw material
inflation for the third quarter is also trending higher than
previously expected by about $60-70 million.
PPG says coatings commodity supply disruptions have further
deteriorated since its earnings announcement, due to several
additional force majeure declarations and lower material
allocations from certain suppliers. The company is also still
assessing the full impact of Hurricane Ida, which made landfall
along the Gulf Coast of Louisiana last week and could exacerbate
supply chain effects even further. The company has withdrawn its
financial guidance for the third quarter and full year 2021.
PPG declined to comment on whether the supply chain issues were
centered in the automotive and aerospace sectors, which are
particularly impacted by the global semiconductor shortage. IHS
Markit expects the semiconductor shortage to reduce 2021 light
vehicle production by 7.1 million. It also expects semiconductor
shortages across the automotive sector to extend into the first
quarter of 2022 and possibly into the second quarter.
Mercedes-Benz, at its 70th anniversary celebrations of the
brand's presence in Argentina, has announced a planned investment
of USD54 million in the country, reports NF News Center. With the
investment, the automaker will align resources to expand its
commercial network, developing a new regional training center, as
well as develop a new engine for the Sprinter van. According to a
statement by the automaker, "The commercial network is making
investments of USD25 million in openings and remodeling of
dealerships throughout the country. It is inaugurating a new
Regional Training Center with the latest technology located in (the
Buenos Aires district of) Malvinas Argentinas, for which an
investment of USD10 million was made, and in this new center not
only local dealers will receive training, but it will also be
possible to train for other Latin American markets." The statement
added, "Mercedes-Benz is adding USD19 million for the development
of a new engine for this (Sprinter) commercial vehicle." (IHS
Markit AutoIntelligence's Tarun Thakur)
Europe/Middle East/Africa
Most major European equity indices closed lower except for
Spain +0.1%; France -0.3%, UK -0.5%, Germany -0.6%, and Italy
-0.7%.
10yr European govt bonds closed sharply lower; Germany/UK
+4bps, Spain +5bps, France +6bps, and Italy +8bps.
iTraxx-Europe closed +1bp/45bps and iTraxx-Xover
+3bps/229bps.
Brent crude closed -0.7%/$71.69 per barrel.
The UK construction industry is being hit by unprecedented
shortages of raw materials and labour, the costs of which are also
rising at rates far in excess of anything previously recorded in
over two decades of PMI survey history. UK PMI data showed
construction activity slowing sharply in August. The headline IHS
Markit/CIPS PMI slumped form 58.7 in July to 55.2, its lowest since
February. While the index remained above 50.0 to indicate ongoing
growth in total construction activity, the current reading compares
with an historical average of 53.8. Given the amount of stimulus
and relatively early stage in the recovery, to be slowing so close
to the long-term trend is disappointing. (IHS Markit Economist Chris
Williamson)
Part of the slowdown can be linked to weaker growth of new
orders for construction work, with the survey's New Orders Index
slowing for a third consecutive month to register a further cooling
of demand growth from May's record high.
However, the New Orders Index remains far higher than the Total
Activity Index, reading at 59.4 in August. Thus, activity has
slowed much more sharply than demand for new work, meaning there
must be other factors at play in explaining the sharp output
slowdown.
The slowdown can also be partly attributed to ongoing and
near-record shortages of raw materials, as measured by suppliers'
delivery times, which have in turn led to unprecedented price hikes
for building materials in recent months.
UK authorities have allowed the cultivation of wheat created
with a controversial gene-editing technique for the first time in
Europe. On 24 August, the UK's Department of Environment, Food and
Rural Affairs (DEFRA) approved a series of field trials using wheat
created through the gene-editing tool CRISPR-CAS9. Rothamsted
Research institute will conduct the tests and said these would be
the first field trials of CRISPR-edited wheat "anywhere in the UK
or Europe". The CRISPR technique aims to facilitate crop breeding
by introducing small changes to plant genes and has been praised by
industry as a game-changer, but the technology has been
controversial among other groups such as environmental NGOs. The
trials are planned to run for the next five years and will end in
2026, with plants sown in September and October and harvested the
following year. The researchers said they hope the project will
lead to new GMO rules in the UK and allow genome edited food to be
sold to consumers. The UK tests also represent another step away
from the EU's GMO rules after the British government sought advice
on how gene-editing could unlock "substantial benefits" for the
agri-food sector and environment. The EU currently still treats
CRISPR-edit plants as GMOs and subjects them to the same strict
regulations, which essentially blocks the use of the technology
across the bloc. However, the bloc's policymakers could change
their stance after the European Commission concluded in April that
the current GMOs rules are "not fit for purpose" and could prevent
farmers and food producers from supporting the bloc's
sustainability goals. (IHS Markit Food and Agricultural Policy's
Pieter Devuyst)
Eurostat's third estimate of second-quarter GDP for the
eurozone has resulted in an upward revision to the
quarter-on-quarter (q/q) growth rate, from 2.0% to 2.2%, taking it
further above the initial market consensus expectation (of 1.5%
q/q). The prior quarter's 0.3% q/q decline was unrevised. (IHS
Markit Economist Ken
Wattret)
As expected, the key driver of the second quarter's GDP
increase was a strong rebound in private consumption due to reduced
COVID-19 restrictions. The rise of 3.7% q/q followed two large
declines and contributed the bulk (1.9 percentage points) of the
2.2% q/q increase in GDP.
Investment rose by 1.1% q/q in the second quarter, following a
(downwardly revised) 0.2% q/q decline in the first quarter. Exports
rose by 2.2% q/q, the fourth successive increase. Imports rose by a
slightly larger 2.3% q/q, also the fourth straight increase,
resulting in a zero contribution to GDP growth from net trade.
Inventories subtracted by 0.2 percentage point from the q/q GDP
growth rate in the second quarter, following back-to-back strong
contributions in the prior two quarters.
As year-on-year (y/y) rates of change are hugely distorted by
base effects currently, we continue to favor looking at levels of
expenditure. Despite the second quarter's strong rise, eurozone GDP
was still 2.5% below its pre-pandemic level in the fourth quarter
of 2019, with wide variations in performance across expenditure
components.
Seasonally and calendar-adjusted German industrial production
excluding construction increased by 1.0% month on month (m/m) in
July, unwinding part of the cumulative decline by 1.6% in
April-June. July's output level is 6.2% higher than a year ago, but
conversely still about 6% below its February 2020 pre-pandemic
high. (IHS Markit Economist Timo
Klein)
Total production including construction equally posted 1.0% m/m
in July given the similar 1.1% m/m increase of construction output.
In contrast, energy output declined by 3.2% m/m, its third
successive dip.
The split by type of goods reveals that the first truly robust
increase in the investment goods sector since October 2020 was the
driving force in July. Consumer goods production expanded only
modestly after their combined 6.3% surge during May-June (then
driven by loosened COVID-19 restrictions), and intermediate goods
production slipped for the second consecutive month.
The breakdown by industrial branch is dominated by a sharp
rebound of the recently suffering machinery and equipment sector
(6.9% m/m), followed by a much more limited improvement of motor
vehicle production (1.9% m/m). The latter is still hampered by the
ongoing shortage of semiconductors - car production in July
remained about 23% lower than at its interim peak in December 2020.
The monthly change in the other key industrial sectors ranged
between -0.9% and 1.1%, averaging out to be almost unchanged.
The headline increase of manufacturing orders by 3.4% m/m after
June's even stronger 4.6% m/m, lifting the orders volume to 16%
above its pre-pandemic level in February 2020, is heavily qualified
by recent big-ticket items. In June, this had pertained to domestic
investment goods, while the July surge was propelled by their
foreign counterpart, specifically ship-building orders from Asia.
The measure excluding big-ticket items only increased by 1.5% in
June-July, which compares with 8.1% in headline terms.
Automotive and industrial supplier Schaeffler has partnered
with Intel's Mobileye to advance industrialization of autonomous
shuttles, according to a company statement. Under this partnership,
the rolling chassis from Schaeffler is to be combined with
Mobileye's autonomous system Mobileye Drive, to develop a platform
of Level 4 automation. The platform will enable autonomous
transport solutions from 2023. Matthias Zink, CEO automotive
technologies at Schaeffler, said, "Rapid regulatory and
technological change, increasing urbanization and growing social
awareness of mobility are increasing the need for alternative,
novel concepts such as autonomous people or logistics movers. They
play a crucial role in sustainable mobility and are a future field
in our Roadmap 2025. With the partnership with Mobileye, we want to
develop autonomous shuttles to series production." (IHS Markit
Automotive Mobility's Surabhi Rajpal)
Volkswagen (VW) Group's CEO Herbert Diess has said that the
company will aim to retain its ownership of battery electric
vehicles (BEVs) through used-car vehicle leases so that it can
utilize the batteries for 'second-life' purposes. According to an
Automotive News Europe report, Diess has been outlining how the
plan would work at this week's IAA Mobility Show. He said, "In
Europe, we are trying to get a second lease and even a third lease,
and keep the car in our hands" and added, "Battery life, we think
today is about 1,000 charging cycles and around 350,000 kilometers
[about 215,000 miles], something like that. So, the battery would
probably live longer than the car, and we want to get hold of the
battery. We don't want to give the battery away." It has long been
anticipated that the battery packs in BEV passenger cars have the
potential to outlast the vehicle they initially power and be used
in a secondary role; this would even take into account the
deterioration in performance that will occur over time in terms of
charge retention. (IHS Markit AutoIntelligence)
Bladt Industries and Steelwind Nordenham have signed monopile
foundation supply contracts with Ørsted for the Gode Wind 3 (242MW)
and Borkum Riffgrund 3 (900MW) offshore wind farms in Germany. In
addition, Ørsted has also secured call-off rights with Bladt and
Steelwind for other projects, if needed. The two suppliers will
deliver a total of 107 XXL monopile foundations of which 106 are
for wind turbines and one is for the Gode Wind 3 offshore
substation. According to Ørsted, each monopile will be up to 100
meters long with diameter of approximately 10 meters and will weigh
upwards of 1,200 tons. Installation of Gode Wind 3 is expected to
begin in 2023 with commissioning completed in 2024. Construction of
Borkum Riffgrund 3 will be carried out in parallel with
commissioning planned for 2025. Both projects will be powered by
Siemens Gamesa's 11MW offshore wind turbines with the topside to be
built by Atlantique Offshore Energy in Saint Nazaire, France. (IHS
Markit Upstream Costs and Technology's Monish Thakkar)
French car leasing group ALD Automotive has invested an
undisclosed amount in Belgian mobility startup Skipr, according to
a company statement. In return, ALD has acquired a 17% stake in the
mobility startup in a shareholder agreement with two existing
investors Belgian bank Belfius and Lab Box. The capital infused
will enable the companies to take advantage of growth opportunities
by integrating consultancy services for mobility transformation
with digital access to multimodal mobility solutions for employees.
ALD is a full-service leasing and fleet management group. It has a
presence in 41 countries and manages around 1.5 million vehicles.
Skipr, founded in 2018, is an all-in-one solution for corporate
mobility. It helps companies organise transport and mobility for
employees in Belgium and France through its platform. This deal
will allow Skipr's expertise to complement ALD Move, ALD's
mobility-as-a-service (MaaS) solution in the Netherlands. (IHS
Markit Automotive Mobility's Surabhi Rajpal)
Leading chemicals distributor Azelis (Antwerp, Belgium) has
announced plans to launch an initial public offering (IPO) aimed at
raising gross proceeds of €880 million ($1.04 billion), with the
company to list its shares on the Euronext Brussels exchange. A
schedule for the IPO process has not been disclosed. (IHS Markit
Chemical Advisory)
Azelis, acquired by private equity firm EQT (Stockholm, Sweden)
in 2018, says the IPO will consist of a primary offering of new
shares from a capital increase, as well as a secondary component
from existing shareholders. The offering will consist of private
placements to qualified investors in Belgium, qualified
institutional buyers in the US, and certain other qualified and/or
institutional investors in the rest of the world, it says.
Proceeds from the planned IPO, in addition to borrowings under
new credit facilities, will be used to "significantly strengthen"
Azelis's financial position by repaying current outstanding debt of
approximately €1.6 billion and providing the group with "increased
financial flexibility that is more consistent with its current
profile and maturity," according to Azelis. The IPO is also
expected to support the company's growth strategy and future
acquisitions by providing funding and giving it access to capital
markets.
The specialty chemicals and food ingredients distribution
market was valued at €117 billion in 2019, with the top-four
companies together holding a 10% market share, according to Azelis.
"The industry is expected to consolidate as principals and
customers look to streamline their distributor relationships.
Acquisitions will enable Azelis to expand its product portfolio and
its geographic and product segment market coverage," it says.
Vattenfall has officially opened its 604 MW Kriegers Flak
offshore wind farm in an inauguration ceremony presided by the
Crown Prince of Denmark and the Danish Minister for Industry,
Business and Financial Affairs. Comprising 72 Siemens Gamesa 8.4 MW
offshore wind turbines, Kriegers Flak has surpassed the 407 MW
Horns Rev 3 to become the largest wind farm in the country.
Construction of the wind farm began in May 2020 with the foundation
works, with wind turbine installation taking place at the beginning
of 2021 and lasting until June. First power was delivered in
February. Kriegers Flak is located in the Baltic Sea, around 15 to
50 kilometers off the coast of Denmark in water depths of up to 25
meters. (IHS Markit Upstream Costs and Technology's Melvin
Leong)
Asia-Pacific
Major APAC equity markets closed mixed; Mainland China +1.5%,
Japan +0.9%, Hong Kong +0.7%, Australia/India flat, and South Korea
-0.5%.
Geely-backed ride-hailing platform Caocao Mobility has raised
CNY3.8 billion (USD589 million) in a Series B funding round,
reports Gasgoo. This financing round attracted five investors, most
of which were state-owned companies in Suzhou (China). The company
plans to use the infused capital to develop technology, expand its
business, improve service quality, and strengthen safeguards for
drivers. (IHS Markit Automotive Mobility's Surabhi Rajpal)
Volkswagen Group (VW) plans to co-operate with Chinese
companies to offer autonomous vehicle (AV) solutions in China.
Stephan Woellenstein, CEO of VW China, said, "The approach in China
is somewhat different from what we see in Europe and the US. We
believe we need a strong Chinese partner or two on our side in
order to comply with the forthcoming frame (of autonomous driving)
in China. We try to keep the global synergies but in a
China-specific way. We cannot do it alone." Woellenstein did not
reveal the names of potential Chinese candidates but he said they
are in intense talks and VW is "coming to conclusion very soon who
this partner will be", reports the China Daily. VW is already
working with Chinese drone maker DJI to develop advanced driving
assist functions to be deployed in vehicles manufactured in China.
In the United States and Europe, VW is working with AV startup Argo
AI. VW and Argo are debuting their all-electric test vehicle, the
ID. Buzz AD (Autonomous Driving), this week at the Munich auto
show. (IHS Markit Automotive Mobility's Surabhi Rajpal)
Japan's real household expenditure fell by 0.9% month on month
(m/m) in July for the third consecutive month of decline, although
the year-on-year (y/y) figure turned positive with an increase of
0.7%. The main reasons behind the m/m decline were lower spending
on a broad range of categories, particularly for education and
housing, which were partially offset by rebounds in spending on
miscellaneous items and transportation and communication. The
weakness suggests that continued containment measures are having a
negative impact. (IHS Markit Economist Harumi
Taguchi)
Nominal monthly average cash earnings rose by 1.0% y/y in July
following a 0.1% y/y drop in the previous month. The improvement
reflected a 0.7% y/y rise in special earnings (mainly seasonal
bonuses) following a 1.8% y/y drop in June.
Scheduled cash earnings as well as non-scheduled cash earnings
also rose by 0.4% y/y and 12.2% y/y, respectively.
Despite overall improvement, nominal monthly average cash
earnings declined from a year ago in medical and healthcare,
information and communication, finance and insurance, life-related
services, education services, and some other industry
groupings.
Wilson Engineering was awarded a contract to build a hydrogen
manufacturing unit (HMU-2) for IRPC Public Company, a Thai refiner.
The HMU-2 project is part of the Ultra Clean Fuel Diesel Euro V
project (UCF project) located in IRPC Industrial Estate at Rayong
province of Thailand. The scope includes detailed engineering,
supply of all equipment and materials, construction and
installation, as well as pre-commissioning, commissioning and
performance test. Upon completion, the HMU-2 project will provide
hydrogen (40,000Nm3/h) to the UCF project. Detailed engineering and
procurement of the project is in progress and construction is
expected to commence in 2022. Completion of the HMU-2 is scheduled
by third quarter 2023. IRPC is a leading integrated petroleum and
petrochemical complex with fully managed infrastructure including
ports, tanks and power plants. (IHS Markit Upstream Costs and
Technology's Jessica
Goh)
Mobilink Microfinance Bank Limited (MMBL), Pakistan's digital
bank that offers digital wallet payments, has signed a memorandum
of understanding (MOU) with Universal Motors Private Limited, an
importer, exporter, as well as manufacturer of commercial vehicles
(CVs) in Pakistan, reports Business Recorder. President and CEO of
MMBL Ghazanfar Azzam said, "MMBL's expansive product portfolio has
witnessed a significant growth trajectory over the past few years
with the introduction of more and more customer-centric products
that are aimed at facilitating maximum convenience for empowering
our borrowers in true sense." The collaboration will help MMBL
customers purchase CVs from Universal Motors under convenient terms
and on priority financing. The MOU will also help in a hassle-free
purchase, which will be backed by the provision of 1S/2S/3S
dealership or retailer services by Universal Motors near the bank's
branches across the country. (IHS Markit AutoIntelligence's Tarun
Thakur)
Posted 07 September 2021 by Ana Moreno, Director, Product Development, IHS Markit and
Chris Fenske, Head of Fixed Income Research, Americas, S&P Global Market Intelligence
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