European and APAC equity markets closed mixed, while all major
US indices were lower on the day. US and benchmark European
government bonds closed lower. European iTraxx and CDX-NA closed
slightly wider across IG and high yield. The US dollar closed
sharply higher, WTI was flat, and Brent, natural gas, gold, silver,
and copper were lower on the day. All eyes will be focused on
tomorrow morning's US nonfarm payroll report after last month's
much lower than expected increase in payrolls completely surprised
the markets.
Please note that we are now including a link to the profiles of
contributing authors who are available for one-on-one discussions
through our newly launched Experts
by IHS Markit platform.
Americas
- All major US equity indices closed lower; DJIA -0.1%, S&P
500 -0.4%, Russell 2000 -0.8%, and Nasdaq -1.0%.
- Inflation fears remain the main theme in global markets, though
major equity markets have extended their gains for the year.
Investors are increasingly optimistic on an improving economic
outlook, including that captured by a strong upswing in the J.P.
Morgan Global Manufacturing PMI, led by solid expansions in the
eurozone, UK and US. However, the survey continues to point towards
increased inflationary pressures, as confirmed by the steepest rise
in input costs for over a decade and record inflation of selling
prices. While Fed officials maintain the view that inflation is
largely driven by transitory factors, similar questions remain on
the transitory nature of another key theme to markets surrounding
the staying power of the current value cycle. (IHS Markit's
Research Signals)
- US: Strong performance was posted across value factors,
including Book-to-Market for large caps and TTM Free Cash
Flow-to-Enterprise Value for small caps
- Developed Europe: Forward 12-M EPS-to-Enterprise Value was a
top performing Deep Value factor, while Rational Decay Alpha sat at
the opposite extreme of Price Momentum factors
- Developed Pacific: In Japan, investors have consistently taken
on higher risk, as confirmed by negative spreads to 60-Month Beta
in 10 of the last 12 months
- Emerging markets: Investors demonstrated a renewed interest in
large cap names, as gauged by Natural Logarithm of Market
Capitalization, in addition to firms with high 2-Year Ahead EPS
Growth
- 10yr US govt bonds closed +4bps/1.63% yield and 30yr bonds
+3bps/2.30% yield.
- CDX-NAIG closed +1bp/51bps and CDX-NAHY +3bps/288bps.
- DXY US dollar index closed +0.7%/90.51.
- Gold closed -1.9%/$1,873 per troy oz, silver -2.6%/$27.48 per
troy oz, and copper -2.8%/$4.46 per pound.
- Crude oil closed flat/$68.81 per barrel and natural gas closed
-1.1%/$3.04 per mmbtu.
- US seasonally adjusted (SA) initial claims for unemployment
insurance fell by 20,000 to 385,000 in the week ended 29 May, its
lowest level since the week ended 14 March 2020. (IHS Markit
Economist Akshat Goel)
- Seasonally adjusted continuing claims (in regular state
programs) rose by 169,000 to 3,771,000 in the week ended 22 May.
The insured unemployment rate edged up to 2.7%.
- In the week ended 15 May, continuing claims for Pandemic
Emergency Unemployment Compensation (PEUC) rose by 102,200 to
5,293,842.
- There were 76,098 unadjusted initial claims for Pandemic
Unemployment Assistance (PUA) in the week ended 29 May. In the week
ended 15 May, continuing claims for PUA dropped by 147,356 to
6,368,301.
- In the week ended 15 May, the unadjusted total of continuing
claims for benefits in all programs fell by 366,178 to
15,435,982.
- Governors in many states—25 at last count—have
announced an early end to pandemic-related federal unemployment
programs. The federal pandemic-related unemployment programs, which
include extra $300-a-week payments, the PUA, and the PEUC, were set
to expire on 6 September. They are now slated to expire between 12
June and 19 July in the 25 states that have opted out.
- US employers announced 24,586 planned layoffs in May, according
to Challenger, Gray & Christmas—up 7.3% from April's
22,913, which was the lowest reading in over 20 years. Despite the
modest increase, May's total remains low by historical standards
and is 93.8% lower than the 397,106 cuts announced in May 2020,
when the negative effects of the pandemic were still in full force.
(IHS Markit Economist Juan
Turcios)
- For the year to date (YTD), 192,185 job cuts have been
announced, down 86% from the 1,414,828 job cuts announced over the
same period in 2020.
- So far this year employers have cited COVID-19 as a reason for
7,608 planned job cuts. Employers have cited other reasons
including market conditions (48,047), demand downturn (39,444),
closing (31,328), restructuring (27,275), and acquisition/merger
(9,260) more frequently than COVID-19 as causes of job cut
announcements.
- Job hiring plans are also down from the pandemic highs of last
year. So far in 2021 employers have announced plans to add 441,696
jobs, down 65% from the 1,260,661 announced through the same time
last year. The robust hiring announcements last year reflected a
surge in hiring in grocers, delivery apps, food chains, and
warehouses as employers dealt with a pandemic-driven increase in
demand for online shopping.
- Aerospace/defense has announced 32,779 job cuts so far this
year, the highest number of any industry. The entertainment/leisure
sector has announced 11,848 job cuts YTD, down a whopping 98% from
the same point last year. This sector was pummeled by the pandemic
and announced the highest number of jobs cut in 2020. This is
another indicator of the rapidly diminishing role of COVID-19 on
job-cut decisions.
- Rounding out the five sectors that have announced the most job
cuts this year are telecommunications (24,824), services (16,608),
retail (13,594), and entertainment/leisure (11,848).
- US productivity (output per hour) rose at a 5.4% annual rate in
the first quarter, more than reversing a fourth-quarter 2020
decline. Since the fourth quarter of 2019, productivity has risen
at a 3.1% annual rate. (IHS Markit Economists Ken
Matheny and Lawrence Nelson)
- Compensation per hour rose 7.2% in the first quarter and 9.7%
in the fourth quarter, encompassing substantial upward revisions
relative to prior estimates. From the fourth quarter of 2019,
compensation per hour has risen at an 8.5% annual rate, far higher
than the 3.1% annualized increase in productivity over that span.
The marked increase in compensation per hour reflects
pandemic-induced effects on employment: employment in lower-wage
sectors has declined relative to employment in higher-wage
sectors.
- Unit labor costs have shifted up since the pandemic began, as
increases in compensation per hour have exceeded net gains in
productivity. During the first quarter, unit labor costs rose at a
1.7% rate, but relative to the fourth quarter of 2019, unit labor
costs have risen at a 5.2% rate, the largest five-quarter increase
since the period ending in the fourth quarter of 1990.
- Hours rose at a 3.0% rate in the first quarter, continuing a
strong recovery that began in the third quarter of 2020. Over the
last three quarters, hours have risen 11.9% (not annualized),
reversing a little more than two-thirds of the 14.4% decline over
the first two quarters of 2020.
- As pandemic-induced distortions on labor markets unwind, we
expect growth in compensation per hour and productivity to
moderate, resulting in some easing in unit labor costs.
- In May, US light-vehicle sales settled down somewhat on a SAAR
basis compared with the frantic pace of March and April. US
light-vehicle sales increased 42% y/y in May, on comparison with a
weak market a year earlier amid the COVID-19 pandemic. IHS Markit
forecasts US light-vehicle sales at 16.5 million units in full-year
2021. As expected, auto demand levels in May moderated compared
with the pace of the previous two months. However, despite supply
pressures, US light-vehicle sales remained strong in May, with the
seasonally adjusted annualized rate (SAAR) estimated to be in the
range of 16.9-17.1 million units. (IHS Markit AutoIntelligence's Stephanie
Brinley)

- US financial services company Nasdaq said 1 June it had
acquired a majority stake in Puro.earth, a marketplace for carbon
removal. Nasdaq intends to scale up Puro.earth's operations, based
in Finland, to address a growing demand for carbon removal by
corporations, it said. The platform, launched in April 2019, counts
companies such as Microsoft and the Swedish financial group SEB as
participants. Puro.earth calls itself the world's first
business-to-business marketplace, standard, and registry focused
solely on carbon removal. Its customers are issued CO2 Removal
Certificates (CORCs) for each metric ton of carbon dioxide removed
and verified by an independent third party that meets Puro.earth's
methodologies. (IHS Markit Climate and Sustainability News' Kevin
Adler)
- New research finds methane emissions from concentrated meat and
dairy operations may be significantly undercounted, warning that
existing methods used by the EPA and other agencies are inadequate
and could compromise efforts to reduce agriculture's contribution
to climate change. Published this week by researchers at New York
University and Johns Hopkins University in the journal
Environmental Research Letters, the new analysis assessed eight
existing studies on methane and found that estimates of emissions
from large livestock operations are not corroborated by measuring
concentrations of the gas in the air. Recent studies monitoring
methane concentrations in the air above and downwind of animal
production facilities "consistently found more methane than the EPA
and other agencies expected coming from livestock." The discrepancy
is significant as the researchers reported methane amounts some
39-90% higher than previously estimated. (IHS Markit Food and
Agricultural Policy's JR Pegg)
- Genetically engineered salmon maker AquaBounty Technologies
reached two milestones this week - approval by regulatory officials
in Brazil and the first harvest of its biotech fish from its
Indiana fish farm. In a June 1 announcement, the company said
Brazil's National Biosafety Technical Commission has granted its
application for the sale of its GE salmon in Brazil, a move CEO
Sylvia Wulf calls "another significant achievement" in AquaBounty's
effort to open new markets. FDA was the first to approve the GE
salmon, which is an Atlantic salmon that contains a gene from a
Chinook salmon and a DNA sequence from an eel-like fish known as an
ocean pout. The modification allows it to grow to market size in
about half the time compared to a normal Atlantic salmon. (IHS
Markit Food and Agricultural Policy's JR Pegg)
- Wood has been engaged by Summit Carbon Solutions to perform
pre-FEED analysis on its carbon dioxide (CO2) pipeline network. The
contract was announced on 17 May. Summit had recently announced
plans to develop a new CO2 capture, transportation, and
sequestration project, which will connect multiple sources
throughout Iowa, Minnesota, Nebraska, South Dakota and North
Dakota. The project includes a gathering and transmission pipeline
system to support capture and permanent storage of up to 10 million
tons of CO2 annually. Wood will support Summit with concept
selection activities for the pipeline system, including route
development, hydraulics, preliminary engineering, cost estimating,
and an initial decarbonization SCORE assessment (Wood's in-house
scoring metric). (IHS Markit Upstream Costs and Technology's Jie
Sheng Aw)
- Pembina Pipeline (Calgary, Alberta, Canada) has agreed to
acquire Inter Pipeline (Calgary) in a share-for-share transaction
valued at C$15.2 billion ($12.6 billion), including the assumption
of Inter Pipeline's debt. The combination will create one of the
largest energy infrastructure companies in Canada, with a pro forma
enterprise value of C$53 billion, the companies say. Among the
assets included in the deal is Inter Pipeline's Heartland
Petrochemical Complex (HPC), an integrated propane dehydrogenation
(PDH)/polypropylene (PP) complex under construction near Edmonton,
Alberta. Last month, Inter Pipeline said that the PDH plant is
"substantially complete," the PP plant will be completed by the end
of this year, and the complex as a whole will be operational in
early 2022. PP capacity of the complex will be 525,000 metric
tons/year. (IHS Markit Chemical Advisory)
- According to the Central Bank of Chile (Banco Central de Chile:
BCC), the country's unadjusted monthly economic activity indicator,
which is a proxy for GDP, accelerated from a revised 5.8% year on
year (y/y) in March to 14.1% y/y during April, the fastest rate in
the past three decades. (IHS Markit Economist Claudia
Wehbe)
- The positive result was mainly driven by contributions in
services and commercial activities followed by goods production,
due partially to the very negative comparison base during April
2020 at the beginning of the coronavirus disease 2019 (COVID-19)
virus pandemic.
- The 16.3% y/y rise in services was led by personal and health
services, followed by entrepreneurial services, transportation, and
restaurants and hotels. Meanwhile, the 33.1% y/y increase in
commercial activities was propelled by gains in wholesale and
retail trade, amid moderate gains in car sales. Gains in
manufacturing and mining production explained a 3.8% y/y rise in
goods production, more than offsetting a modest drop in
construction.
- Seasonally adjusted data show a 2.8% m/m fall in services - the
largest driver that explains the overall drop in Chile's monthly
economic activity indicator - and 0.9% m/m drop in commercial
activity. Within goods production, the increase in mining activity
more than partially offset a contraction in manufacturing
industry.
Europe/Middle East/Africa
- Major European equity indices closed mixed; Italy +0.3%,
Germany +0.2%, France -0.2%, Spain -0.4%, and UK -0.6%.
- 10yr European govt bonds closed lower; UK +4bps, Germany +2bps,
and France/Italy/Spain +1bp.
- iTraxx-Europe closed +1bp/50bps and iTraxx-Xover
+4bps/247bps.
- Brent crude closed -0.1%/$71.31 per barrel.
- An offshore wind project set to supply the UK will reach into
Icelandic waters, one of several unprecedented measures being taken
to boost the project's wind turbine availability. The developer of
the HIP Atlantic Project, Hecate Independent Power (HIP), hopes to
export the entire output of the planned 10 GW fixed-and-floating
turbine offshore wind farm from the generation site in Icelandic
waters to the UK. HIP is a 50-50 joint venture between
UK-headquartered conventional and hydro-electric generator
Independent Power Corporation and US solar and storage developer
Hecate Energy, chaired by Tony Baldry, a former British energy
minister. The UK government has long envisioned a role for captive
foreign wind farms in the country's energy mix, as it was
specifically permitted in the 2013 Energy Act that laid down rules
for offshore wind development. (IHS Markit Climate and
Sustainability News' Cristina Brooks)
- Wood has been awarded a pre-FEED contract by Simply Blue Energy
for its Western Star floating offshore wind farm located off the
west coast of Ireland. The contract was announced on 27 May. Wood's
team of cross-functional experts will assess the suitability of
multiple floating platform designs against the site-specific
criteria. Simply Blue Energy is developing the floating offshore
wind farm in parallel with the company's Saoirse wave energy
conversion array. (IHS Markit Upstream Costs and Technology's Jie
Sheng Aw)
- German biopharma MorphoSys and US-based Constellation
Pharmaceuticals have announced that they have entered into a
definitive agreement under which MorphoSys will acquire
Constellation for a total consideration of USD1.7 billion. The
acquisition is expected to be concluded in the third quarter of
2021. Constellation specializes in epigenetics and has two leading
product candidates currently under development that address severe
unmet medical needs in particular groups of cancer patients.
Pelabresib (CPI-0610) is a potential first-in-class bromodomain and
extra-terminal motif (BET) inhibitor, currently undergoing Phase
III clinical trials in myelofibrosis, and CPI-0209 is a
second-generation EZH2 inhibitor undergoing Phase II clinical
trials in hematological and solid tumors. It is planned that once
the deal on the acquisition of Constellation is complete, the
merged company will headquartered in Germany and will maintain an
important commercial and R&D presence in Boston. (IHS Markit
Life Sciences' Brendan Melck)
- The Volkswagen (VW) Group has delivered electric vehicles (EVs)
to Astypalea in a step towards transforming the Greek island's
transport system. Greek Prime Minister Kyriakos Mitsotakis and VW
Group CEO Herbert Diess attended the delivery event, which also
involved the inauguration of the first public and private charging
points on the island. The EVs will be used by the police,
municipality, and at the local airport with an aim of increasing
the number of zero-emission vehicles and replacing about 1,500 ICE
vehicles. VW's EVs, which include the e-up!, ID.3, and ID.4, as
well as e-scooters from SEAT, will be available to customers. (IHS
Markit Automotive Mobility's Surabhi Rajpal)
- German-based transport app FlixMobility has closed more than
USD650 million in a Series G round of funding that will value the
company at over USD3 billion, reports TechCrunch. New backer Canyon
Partners, existing investors General Atlantic, Permira, TCV, HV
Capital, Blackrock, Baillie Gifford and SilverLake, and the
founders, all participated in this round. The company said the
round was a balanced mix of equity and debt and it plans to use the
proceeds to expand its network in the United States and across the
Europe. (IHS Markit Automotive Mobility's Surabhi Rajpal)
- Local Motors, a developer of hi-tech vehicles, has partnered
with German-based mobility software company door2door to jointly
offer autonomous on-demand shuttles in Europe. Under this
partnership, Local Motors' electric autonomous vehicle, Olli 2.0,
will be integrated with door2door's software to increase transit
ridership and optimise transit investment by identifying gaps in
cities, villages, and rural areas. (IHS Markit Automotive
Mobility's Surabhi Rajpal)
- Maire Tecnimont subsidiary NextChem has been awarded a contract
by TotalEnergies to carry out FEED on its Sustainable Aviation Fuel
(SAF) plant in Grandpuits, France. This forms part of an overall
plan to convert the Grandpuits Refinery into a zero-crude platform
that will include a biorefinery, where NextChem is already
engineering Europe's first plant to produce compostable and
biodegradable plastics, with a capacity of 100,000 tons per year.
The biojet plant, due to be operational in 2024, will strengthen
NextChem's role in TotalEnergies's net-zero strategy as a major
part of the Grandpuits Refinery 'zero-crude' platform development,
known as "Projet Galaxie". (IHS Markit Upstream Costs and
Technology's William Cunningham)
- Renault Group is to set up a standalone production unit that
will manufacture battery electric vehicles (BEVs) in France,
reports Bloomberg News. People familiar with the matter have told
the news service that the plan will make its Douai, Maubeuge and
Ruitz facilities into a separate, fully owned legal entity. The
sources added that this would pave the way for talks with unions on
pay and working conditions. Renault announced in May 2020 that as
part of its '2o22' restructuring plan, the company would undertake
a consultation related to the Douai and Maubeuge plants to create
"an optimized center of excellence" for BEVs and light commercial
vehicles (LCVs) in northern France. (IHS Markit AutoIntelligence's
Ian Fletcher)
- Italy now avoided a technical recession in early 2021, which is
defined as two consecutive quarters of GDP contraction. The
national statistical office reports that the economy grew by 0.1%
quarter on quarter (q/q) in the first three months of the year,
compared to its first estimate of a 0.4% q/q drop. The economy
shrank by 1.8% q/q in the fourth quarter of 2020. (IHS Markit
Economist Raj
Badiani)
- In annual terms, GDP fell by 0.8% year on year (y/y) in the
first quarter, after 8.9% drop in the full year 2020.
- ISTAT provided a detailed breakdown of the first-quarter GDP
data, which reveals that domestic demand excluding a change in
inventories was a drag on growth, lowering the GDP gain between the
fourth and first quarters by 0.1 percentage point.
- Consumer spending shrank by 1.2% q/q and 4.2% y/y in the first
quarter. Clearly, consumer-facing services continued to be affected
by fears of the spread of infection and by the impact of the tight
regional restrictions.
- Fixed investment provided a hugely positive surprise in the
first quarter, rising by 3.7% q/q and 11.4% y/y, and all the
components rose markedly, namely expenditure on plant, machinery
and armaments grew by 3.5% q/q while spending on homes and
non-residential buildings and other works grew by 4.8% q/q and 5.2%
q/q, respectively.
- According to Dutch maritime trade media, Heerema Marine
Contractors (HMC) is aiming for an end-2021 launch of its fixed
wind turbine generator (WTG) installation method, using its DP
heavy-lift fleet. The heavy-lift major is said to be gaining
approvals for its turbine assembly method, which would construct
the nacelle and blades on a dummy tower based on one of its HL3
vessels, before lifting the entire turbine "head" onto its
corresponding pre-installed tower and foundation. HMC expects to
offer the solution commercially to clients by the end of 2021, for
WTG installation contracts starting from 2024 onwards. HMC intends
to prove its dummy-tower WTG installation method with 9.5 MW WTGs
at Parkwind's Arcadis Ost 1, located in the German Baltic Sea
sector, where seabed conditions prohibit the use of traditional
jackup turbine installation vessels (WTIVs). The company's HL3
vessel Aegir is currently scheduled to execute this contract in
2023. (IHS Markit Upstream Costs and Technology's Genevieve Wheeler
Melvin)
- Croatian battery electric vehicle (BEV) hypercar manufacturer
Rimac has unveiled its latest model in the form of the Nevera. The
model is effectively the production version of the C Two electric
concept car that Rimac debuted at the Geneva Motor Show in 2018
(see Switzerland: 7 March 2021: Geneva Motor Show 2018: Rimac
unveils C_Two EV hypercar) Speaking at the car's launch, Rimac CEO
Mate Rimac said, "This is it. This is the car I had in mind when I
embarked on the impossible journey 10 years ago." Rimac said that
the company plans to deliver 150 units of the car to customers, who
will each pay USD2.4 million for the car. The Nevera has an
incredible level of power and torque, with the equivalent of 1,914
bhp and 1,740 pounds feet of torque. According to Rimac's own
performance data, this will propel the car to 60 mph in 1.85
seconds and will take the car to a top speed of 258 mph. (IHS
Markit AutoIntelligence's Tim Urquhart)
- Limited import gains in early 2021 led to a narrowing of
Turkey's merchandise-trade deficit. However, President Recep Tayyip
Erdoǧan's demand to relax monetary policy over the summer will
result in greater domestic demand and, subsequently, stronger
import growth, fueling a widening of the trade gap. More
expansionary monetary policy also adds to lira depreciation risks.
(IHS Markit Economist Andrew
Birch)
- In January-April 2021, Turkey posted a merchandise-trade
deficit of USD14.128 billion according to the Turkish Statistical
Institute (TurkStat). The gap was down by nearly 20% against its
year-earlier level.
- Strong demand from the resilient European production cycle
buoyed merchandise export growth through the first four months of
the year. Shipments to the European Union rose by 35.4% year on
year (y/y). While base effects was a major contributor to the
strong acceleration of growth of both exports and imports, the
shipment of intermediate goods to the EU grew particularly
strongly.
- Meanwhile, the tightening of monetary policy from November 2020
to February 2021 limited the impact of the base effects somewhat on
import gains. However, the ending of the tightening cycle in
February contributed to a more rapid rise of consumer good imports,
particularly in April.
- Shifting gold flows also affected Turkey's overall trade
patterns. In the first four months of 2021, a nearly doubling of
gold exports compared to a year earlier inflated overall export
gains while lower gold purchases deflated overall import gains.
Without the gold trade, Turkey posted a trade deficit of USD13.756
billion, up by about USD250 million from a year earlier.
- Wood has been engaged by ADNOC to perform pre-FEED work for its
planned blue ammonia production facility and the six additional
chemicals projects at the TA'ZIZ chemicals production hub at
Ruwais, Abu Dhabi, UAE. This contract was announced on 26 May. The
facility will have a capacity of 1,000,000 tons per annum. Blue
ammonia is made from nitrogen and "blue" hydrogen derived from
natural gas feedstock. In parallel ADNOC will undertake a
feasibility study on the supply of blue hydrogen to the project
from its operations in Ruwais. FID is expected in 2022 while and
startup is targeted for 2025. (IHS Markit Upstream Costs and
Technology's Jie Sheng Aw)
Asia-Pacific
- APAC equity markets closed mixed; India/South Korea +0.7%,
Australia +0.6%, Japan +0.4%, Mainland China -0.4%, and Hong Kong
-1.1%.
- Sinopec Heavy Lifting & Transportation Company, a
wholly-owned subsidiary of Sinopec Engineering (Group) Company, has
bareboat chartered and is converting Sinopec Offshore Oilfield
Services' retired drilling jackup Kan Tan II into a wind turbine
installation vessel (WTIV) for offshore wind farm projects in
Mainland China. Market sources have indicated that a two-year
bareboat charter contract, with an option for extension, started
from December 2020. The conversion and modification work on the
jackup is underway at China State Shipbuilding Corp. (CSSC) Huangpu
Wenchong Shipbuilding in Guangzhou. The yard work started in late
February 2021 and is expected to conclude in the second half of
2021. It is understood that the derrick equipment set and
cantilever module blocks will be removed to increase the deck space
to hold wind turbine parts. The modified WTIV is expected to
undertake installation and maintenance works on foundations, wind
towers, and wind turbines for offshore wind farm projects in
Mainland China. Kan Tan II is an ETA Robray 300-S design, 91 m (300
ft)-capable rig built in 1977, and has only worked offshore
Mainland China in its 44-year career as a drilling rig. (IHS Markit
Upstream Costs and Technology's Genevieve Wheeler Melvin)
- Chinese battery manufacturer Contemporary Amperex Technology
Co. Ltd (CATL) is planning a new automotive battery plant in
Shanghai (China), according to a report by Reuters citing two
unnamed people familiar with the matter. The battery supplier is
currently in discussions with the local government, but there is
currently no clear indication as to when an agreement might be
reached. According to the report, the planned plant would have the
capacity to produce 80 gigawatt-hours (GWh) of battery cells
annually. This would be in addition to CATL's current capacity of
69.1 GWh and another 77.5 GWh under construction. (IHS Markit
AutoIntelligence's Nitin Budhiraja)
- Great Wall Motors has signed a framework agreement for a
10-year partnership with Chinese battery manufacturer Contemporary
Amperex Technology Co. Ltd (CATL) to develop new-energy vehicle
(NEV) technologies, reports Gasgoo. The two parties are said to
have co-operated on the development of models since 2016. The
partnership is an important one to support an uninterrupted supply
of batteries for Great Wall's NEVs in the Chinese market. (IHS
Markit AutoIntelligence's Nitin Budhiraja)
- Premium car manufacturer BMW plans to make its Chinese plants
carbon neutral by the end of this year, according to Reuters. The
automaker is also aiming to reduce the total carbon emissions in
its Chinese production chain by 80% by 2030. In a separate
statement, it has revealed plans to set up 360,000 electric vehicle
(EV) charging stations across the country in a bid to enhance its
new energy vehicle (NEV) sales, according to Hindustan Times Auto.
(IHS Markit AutoIntelligence's Nitin Budhiraja)
- The private sector helped to propel Australia's economy's March
quarter (Q1) results and the return to pre-pandemic levels of GDP
output, as the economy expanded by a seasonally adjusted 1.8%
quarter on quarter (q/q). Given its firm commitments to returning
the economy to full employment and a recent outbreak of COVID-19
infections in Victoria, the GDP result may not heavily influence
the Reserve Bank of Australia's anticipated announcements related
to its yield targeting and quantitative easing programs in July.
(IHS Markit Economist Bree
Neff)
- Fixed investment spending led the economy's strong performance,
making the largest positive contribution to growth. The biggest
upside surprise was that machinery and equipment spending in real
terms expanded at its fastest pace since the December quarter of
2009 (up 11.5% q/q) after it rose by a robust 9.4% q/q in the
December quarter. Dwelling investment also expanded for a third
consecutive quarter (6.4% q/q in the March quarter), bolstered by
the construction pipeline build by the government's successful
HomeBuilder subsidy program.
- Household consumption also made a substantial contribution to
growth, as households drew down on their excess savings, with the
household savings ratio edging down to 11.6% from 12.2% in the
December quarter. Households moved away from spending on goods, as
all major goods categories recorded declines in real terms during
the quarter. In an indication that Australians are venturing out of
the house, growth areas were primarily for services with a 14.8%
q/q rise in spending at hotels, restaurants, and cafes (after an
18.2% q/q rise in December), an 8.8% q/q rise in transport services
expenditures, and solid increases in recreation and culture and
operation of vehicles.

- An executive order granting a PHP3-billion (USD62.7-million)
subsidy package for the eco-friendly vehicle manufacturing sector
has been submitted and is awaiting approval from President Rodrigo
Duterte, reports the Manila Bulletin, citing Philippine Trade and
Industry Undersecretary Rafaelita Aldaba. Under the executive
order, the PHP3-billion subsidy would be granted through tax
credits to manufacturers of Euro IV vehicles and electric public
utility vehicles (PUVs). Aside from the proposed subsidy,
manufacturers of batteries for electric vehicles (EVs) are entitled
to zero excise duty, while for hybrid vehicles it is 50% of the
statutory rate. (IHS Markit AutoIntelligence's Jamal Amir)
Posted 03 June 2021 by Chris Fenske, Head of Capital Markets Research, Global Markets Group, S&P Global Market Intelligence
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