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"CAPIS Global Recap 12/6/2017"

posted by Matt Kiselica on 12/06/2017 at 6:40 am

by Matt Kiselica

12/06/2017 at 6:40 am

Asian Headlines

The selling pressure seen in the West extended into Asia.  All of the major sectors finished the day lower.  The following suffered losses of 1% or more: materials, financials, IT, consumer discretionary, real estate and healthcare.  The Shenzhen Composite managed to advance suggesting some appetite for small caps.  IT gained over 2% within the index.

A variety of factors played into the day’s action.  Material names reacted to the sharp declines in commodity prices.  Risk-off concerns due to Pres. Trump’s announcement to move the American embassy in Israel to Tel Aviv and woes for U.K. PM May were also part of the equation.  The ¥ steadily moved lower throughout the session to trade in the low 112s and briefly dipped just below that.

Here are other snippets from the day:

  • In India, the RBI left rates unchanged, as expected.  The central bank retained its neutral stance.  However, it noted it was still “absorbing liquidity” and the the Rupee has weakened since the headlines.
  • Guangzhou Auto’s -9.0% single digit sales gains during November raised concerns for the entire sector.
  • Reports indicated Japan will raise taxes on e-cigarettes and other “heated” tobacco products to 80% of conventional tobacco over a 5 year period:  Japan Tobacco -1.25%
  • Shipbuilders sank as Samsung Heavy -29.0% issued a profit warning and announced a $1.37b share sale.
  • ABC Mart’s +2.6% same store sales jumped 8.4% y/y during November.

European Headlines

Europe has been to the downside since the open but pared about half of the day’s losses.  The U.K. outperforms due to a weaker £. Sources claim PM May is is battling her Cabinet regarding Brexit.  However, the weaker currency is a help to corporate earnings.  Most sectors are red but have improved.  Consumer discretionary and IT are lower by c. 0.9%.  Consumer staples advance by 0.4% with real estate also making headway.

It is a tough day of trading for Steinhoff Intl -70.6%!  CEO Jooste has resigned and the company is delaying its results as it investigates accounting irregularities.  The company’s largest shareholder and Chairman, Christo Wiese will take up the role on an interim basis.  Additionally, CFO Le Grange who is CEO of Steinhoff Africa -37.5% stepped down.

The gains in the real estate sector have been provided by Hammerson’s -2.4% bid for Intu Properties +19.3%.  The bid values Intu at c. 28.0% premium to yesterday’s close.

Nestle +0.8% has traded well following yesterday’s acquisition of supplement maker Atrium Innovations.  The news hit the tape just after yesterday’s Swiss close.

Copper is rebounding following yesterday’s drubbing while crude and gasoline pull back.  The weekly API data showed a large build in gasoline inventories ahead of today’s D0E report.

Way south of the boarder, Brazil is expected to cut is benchmark rate 50 bps to 7.0%.  North of the boarder, investors anticipate the Bank of Canada leaving rates unchanged at 1.0%.

Market Levels and Macro Results

Event Survey Actual Prior Revised
AU GDP SA QoQ 3Q 0.70% 0.60% 0.80% 0.90%
AU GDP YoY 3Q 3.00% 2.80% 1.80% 1.90%
GE Factory Orders MoM Oct -0.20% 0.50% 1.00% 1.20%
GE Factory Orders WDA YoY Oct 7.00% 6.90% 9.50% 9.70%
GE Markit Germany Construction PMI Nov 53.1 53.3
IN RBI Repurchase Rate 6-Dec 6.00% 6.00% 6.00%
IN RBI Reverse Repo Rate 6-Dec 5.75% 5.75% 5.75%
IN RBI Cash Reserve Ratio 6-Dec 4.00% 4.00% 4.00%
GE Markit Germany Retail PMI Nov 54.6 51.2
EC Markit Eurozone Retail PMI Nov 52.4 51.1
FR Markit France Retail PMI Nov 52.2 51.5
IT Markit Italy Retail PMI Nov 49.2 50.3
US MBA Mortgage Applications 1-Dec -3.10%
US ADP Employment Change Nov 190k 235k
CA Labor Productivity QoQ 3Q -0.10%
US Nonfarm Productivity 3Q F 3.30% 3.00%
US Unit Labor Costs 3Q F 0.20% 0.50%
CA Bank of Canada Rate Decision 6-Dec 1.00% 1.00%

About the Author

MattKiselicaFVP,Manager International Trading

Mr. Kiselica has over 20 years of industry experience. Prior to joining CAPIS, he was Vice President of Cazenove’s global sales trading desk, in New York. He earned his bachelor degree from Rutgers University. Mr. Kiselica maintains Series 3, 7, 24, 55, and 63 licenses.

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