The region ticked higher but was mixed. Hong Kong advanced for the 14th consecutive session and Korea also provided lift. The ¥ continued to trade in the lower 111s and that prompted a modest tick down in Japan. Mainland China vacillated following trade date. India erased earlier gains due to concerns regarding a rift among top judiciary members. Health care gained more than 0.5% followed by energy and financials. Telcos fell by more than 0.5% with consumer staples and utilities off small.
- China’s December Trade Surplus was above expectations due to imports which were well below consensus The Customs Department stated the 2018 outlook is ‘upbeat’. However, they indicated is will be tough sledding to maintain double digit growth.
- H shares in Hong Kong traded very well. Today’s closing level in the Hang Seng Index leaves it less than 1% from its historical closing high and 1.7% from its all time high.
- CICC sees a strong outlook for the Hong Kong banking sector indicating conditions are favourable (not a typo) to improve net interest margins. It named BoC +1.2% as its preferred pick while maintaining sells on Hang Seng Bk -0.7% and Bk of East Asia +0.15%.
- Fast Retailing +6.0% helped limit the Nikkei declines. The company’s Q1 figures beat and Uniqlo saw a robust surge in international sales.
- China’s largest online movie ticketing service, Maoyan Weying, plans an IPO that could raise about $1b. Tencent +3.0% is among the company’s investors. CICC raised its price target on Tencent to HK$540, the highest among analysts.
- Tata Consulting -0.5% following yesterday’s earnings posted after the local close. After the close, Infosys posted NI that beat the range.
The € is once again trading well and has risen to 3 year highs. Following yesterday’s surge on the ECB minutes, there has been positive news out of Germany. Reports indicate German Chancellor Merkel has come to an agreement with the Social Democrats to form a coalition. An official announcement is expected later today.
Equities have spent most of the session to the upside. With the exception of consumer staples, all majors are green. Consumer discretionary is ahead by more thasn 0.5% followed by telcos and real estate.
- The auto sector is driving the gains among consumer discretionary names. Auto parts maker GKN +29.0% has rejected a takeover approach from Melrose Ind. +5.0%. The 402p bid a c. 21.0% premium to yesterday’s close. GKN CEO Stevens has pledged the company will instead split its two main divisions: aerospace and autoparts. Fiat Chrysler +3.56% has the pole position among the auto makers. The company has announced a $1b investment in Michigan and bonuses to employees due to the U.S. tax changes.
- Smith Group +4.3% has also made positive U.S. tax related announcements. The company’s effective rate will decline and both Liberum and Morgan Stanley see substantial increases to FY ’19 EPS.
- Vivendi’s %-2.7 FY sales and profits fell short of expectations. FY sales rose shy of 5% while EBITDA growth was 20.0% to 25.0%. Both of these fell short of the company’s own prognostications of greater than 5% and 25.0% (respectively) made during November.
Way South of the Border: Late yesterday, S&P cut Brazil’s long term rating further below investment grade to BB-. It did set the outlook at stable. Peru cut its benchmark lending rate 25 bps to 3%, as expected.
JP Morgan is trading up pre-market post results. Wells Fargo is also due to report.
Have a good weekend.
Market Levels and Macro Data
|JN||BoP Current Account Balance||Nov||¥1836.1b||¥1347.3b||¥2176.4b||—|
|JN||BoP Current Account Adjusted||Nov||¥2168.9b||¥1700.5b||¥2441.5b||—|
|JN||Trade Balance BoP Basis||Nov||¥310.6b||¥181.0b||¥430.2b||—|
|JN||Japan Buying Foreign Bonds||5-Jan||—||¥173.0b||—||—|
|JN||Japan Buying Foreign Stocks||5-Jan||—||¥217.1b||—||—|
|JN||Foreign Buying Japan Bonds||5-Jan||—||-¥128.3b||—||—|
|JN||Foreign Buying Japan Stocks||5-Jan||—||¥597.9b||—||—|
|JN||Bank Lending Incl Trusts YoY||Dec||—||2.50%||2.70%||—|
|JN||Bank Lending Ex-Trusts YoY||Dec||—||2.40%||2.70%||—|
|AU||Credit Card Purchases||Nov||—||A$27.9b||A$27.5b||—|
|AU||Credit Card Balances||Nov||—||A$52.2b||A$51.2b||—|
|JN||Bloomberg Jan. Japan Economic Survey (Table)|
|CH||Trade Balance CNY||Dec||235.20b||361.98b||263.60b||255.44b|
|CH||Exports YoY CNY||Dec||6.70%||7.40%||10.30%||9.50%|
|CH||Imports YoY CNY||Dec||11.80%||0.90%||15.60%||15.40%|
|JN||Eco Watchers Survey Current SA||Dec||55.1||53.9||55.1||54.1|
|JN||Eco Watchers Survey Outlook SA||Dec||53.5||52.7||53.8||53.4|
|FR||CPI EU Harmonized MoM||Dec F||0.40%||0.40%||0.40%||—|
|FR||CPI EU Harmonized YoY||Dec F||1.30%||1.20%||1.30%||—|
|FR||CPI MoM||Dec F||0.30%||0.30%||0.30%||—|
|FR||CPI YoY||Dec F||1.20%||1.20%||1.20%||—|
|FR||CPI Ex-Tobacco Index||Dec||101.8||101.76||101.47||—|
|SP||CPI MoM||Dec F||0.10%||0.00%||0.10%||—|
|SP||CPI YoY||Dec F||1.20%||1.10%||1.20%||—|
|SP||CPI EU Harmonised MoM||Dec F||0.10%||0.00%||0.10%||—|
|SP||CPI EU Harmonised YoY||Dec F||1.30%||1.20%||1.30%||—|
|SP||CPI Core MoM||Dec||—||0.00%||0.40%||—|
|SP||CPI Core YoY||Dec||—||0.80%||0.80%||—|
|CH||Aggregate Financing CNY||Dec||1500.0b||1140.0b||1600.0b||1598.2b|
|CH||New Yuan Loans CNY||Dec||1000.0b||584.4b||1120.0b||—|
|CH||Money Supply M2 YoY||Dec||9.20%||8.20%||9.10%||—|
|CH||Money Supply M1 YoY||Dec||12.60%||11.80%||12.70%||—|
|CH||Money Supply M0 YoY||Dec||5.90%||3.40%||5.70%||—|
|IT||Industrial Production MoM||Nov||0.60%||0.00%||0.50%||0.60%|
|IT||Industrial Production WDA YoY||Nov||3.30%||2.20%||3.10%||3.00%|
|IT||Industrial Production NSA YoY||Nov||—||2.20%||6.40%||6.30%|
|IN||Industrial Production YoY||Nov||4.40%||—||2.20%||—|
|CA||Teranet/National Bank HP Index||Dec||—||—||217.1||—|
|CA||Teranet/National Bank HPI MoM||Dec||—||—||-0.50%||—|
|CA||Teranet/National Bank HPI YoY||Dec||—||—||9.20%||—|
|US||CPI Ex Food and Energy MoM||Dec||0.20%||—||0.10%||—|
|US||CPI Ex Food and Energy YoY||Dec||1.70%||—||1.70%||—|
|US||CPI Index NSA||Dec||246.372||—||246.669||—|
|US||CPI Core Index SA||Dec||254.333||—||253.724||—|
|US||Retail Sales Advance MoM||Dec||0.50%||—||0.80%||—|
|US||Retail Sales Ex Auto MoM||Dec||0.30%||—||1.00%||—|
|US||Retail Sales Ex Auto and Gas||Dec||0.40%||—||0.80%||—|
|US||Retail Sales Control Group||Dec||0.40%||—||0.80%||—|
|US||Real Avg Weekly Earnings YoY||Dec||—||—||0.80%||—|
|US||Real Avg Hourly Earning YoY||Dec||—||—||0.20%||—|
|CA||Bloomberg Jan. Canada Economic Survey|