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.
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
|AU||GDP SA QoQ||3Q||0.70%||0.60%||0.80%||0.90%|
|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%||—|