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"CAPIS Global Markets 6/13/2018"

posted by Matthew Kiselica on 06/13/2018 at 6:40 am

by Matthew Kiselica

06/13/2018 at 6:40 am

Asian Markets

The markets were mixed as investors continue to weigh the impact of yesterday’s Kim/Trump Summit and await today’s Fed decision.  This caused volume to be muted.  Greater China suffered selling pressure for several reasons reasons.  The first was ZTE’s resumption of trading (more on this below).  Concerns following the funding data we flagged after yesterday’s local close.  The May aggregate CNY financing missed consensus by almost 50.0%.  Lastly, trade woes weighed with the U.S. press indicating a portion of the previously announced U.S. tariffs on Chinese goods could be levied as soon as Friday.  India benefited from yesterday’s CPI and Industrial Production which were below consensus.  S. Korea and Indonesia were closed.  Weighed down by Chinese names, all of the major sectors traded lower.  Most were off > 0.5% including financials, IT and materials.

Other top stories included:

  • The stock of the day was ZTE -41.6%.  The shares finally resumed trading following their trading halt in the wake of the U.S. sanction announced in April.  The company estimates the impact of the settlement will results in losses of at least $3.1b.  Related suppliers also suffered.
  • Nintendo’s -6.1% gaming lineup and Switch sales guidance at an important gaming conference disappointed.
  • Toshiba +7.0% announced a $6.3b share buyback which is more than twice what the market was anticipating.
  • It was a g’day for APA Grp +20.9% shareholders.  Cheung Kong Infrastructure -0.25% has made a non-binding bid for the Australian, natural gas utility totaling A$13b.  The A$11 per share cash price tag is a 33.0% premium to yesterday’s close.
  • The Xinhua reported property prices in top tear Chinese cities remained stable while smaller cities are seeing signs of price appreciation.
  • The Aussie strengthened when RBA Gov. Lowe stated the next rate move is most likely to the upside.  However, he cautioned that is “some time away.”

 

European Markets

The markets have been trading to the upside for most of the session.  Currently, the region its at its highs and Italy has advanced 1% prior to paring some of the gain.  Most sectors are to the upside with IT better by more than 1% (See Ericsson below).  Telcos are off by c. 1% with energy also red (See Crude below).

For now, PM May has once again managed to walk the razor’s edge and appease some Tory members their Brexit wishes will be observed.   Debate on measures continue today in the House of Commons.  However, most pundits believe this is just the “can being kicked down the road” again.  The £ has been weaker as her position remains tenuous.  Additionally, U.K. inflation data showed no surprises to the upside.

Top headlines include:

  • Inditex +2.9% reported a mixed set of results.  Q1 sales missed as they trailed off during the tail end of the quarter.  However, EBIT, NI and margins were a beat.   On the call, the company was able to assuage some of the slowing sales fears and the shares reversed losses.
  • Ericsson +2.9% has provided upbeat comments regarding its outlook for I0T cellular connections.  The company noted strong demand in China.  It also sees the first commercial launch of 5G this year.
  • Dixons Carphone -3.7% disclosed 1.2m user accounts were hacked.  A total of 5.9m accounts were attempted to be accessed illegally.
  • The strong Adyen +92.0% IPO and corresponding valuation is providing a lift to payment processing peers such as Ingenico +5.3% and Wirecard +3.0%.
  • After the local Japanese close, the Renault +1.8%, Nissan, Mitsubishi alliance raised its synergies outlook.  It sees annual benefits of €5.7b for FY ’17 up from its prior estimate of €5b.   They went on to add €10b will be targeted for FY 20.
  • Crude is trading lower on reports Russia will push for a reduction to the production cuts enacted with OPEC.  Also in the sector, the IEA estimated U.S. sanctions against Iran and Venezuela could cause their output to decline 30.0% next year.  However, it sees output from other sources including U.S shale meeting demand.

On Our Side of the Pond

  • Late yesterday, a Federal judge ruled in favor of the AT&T/Time Warner merger.  He went on to caution the government from taking additional action to hold up the deal.  The is now expected to clear the way for Comcast to make a counter offer for 21st Century Fox assets.  Disney has already made a bid and Sky Plc % is trading down in the U.K.  This link is a brief recap of the implications for various players in the sector. 
  • Of course, the Fed will be the day’s major event.

Markets and Macro Data

Event Survey Actual Prior Revised
AU ANZ Roy Morgan Weekly Consumer Confidence Index 10-Jun 123 116.5
AU Westpac Consumer Conf Index Jun 102.1 101.8
AU Westpac Consumer Conf SA MoM Jun 0.30% -0.60%
SP CPI MoM May F 0.90% 0.90% 0.90%
SP CPI YoY May F 2.00% 2.10% 2.00%
SP CPI EU Harmonised MoM May F 0.90% 0.90% 0.90%
SP CPI EU Harmonised YoY May F 2.10% 2.10% 2.10%
SP CPI Core MoM May 0.40% 0.80%
SP CPI Core YoY May 1.10% 1.10% 0.80%
UK CPIH YoY May 2.30% 2.30% 2.20%
UK CPI MoM May 0.40% 0.40% 0.40%
UK CPI YoY May 2.40% 2.40% 2.40%
UK CPI Core YoY May 2.10% 2.10% 2.10%
UK Retail Price Index May 280.9 280.7 279.7
UK RPI MoM May 0.40% 0.40% 0.50%
UK RPI YoY May 3.40% 3.30% 3.40%
UK RPI Ex Mort Int.Payments (YoY) May 3.40% 3.40% 3.40%
UK PPI Input NSA MoM May 1.80% 2.80% 0.40% 0.60%
UK PPI Input NSA YoY May 7.60% 9.20% 5.30% 5.60%
UK PPI Output NSA MoM May 0.30% 0.40% 0.30% 0.40%
UK PPI Output NSA YoY May 2.90% 2.90% 2.70% 2.50%
UK PPI Output Core NSA MoM May 0.20% 0.20% 0.10% 0.20%
UK PPI Output Core NSA YoY May 2.50% 2.10% 2.40% 2.00%
UK House Price Index YoY Apr 3.90% 4.20%
EC Industrial Production SA MoM Apr -0.70% -0.90% 0.50% 0.60%
EC Industrial Production WDA YoY Apr 2.50% 1.70% 3.00% 3.20%
EC Employment QoQ 1Q 0.40% 0.30%
EC Employment YoY 1Q 1.40% 1.60%
US MBA Mortgage Applications 8-Jun -1.50% 4.10%
CA Teranet/National Bank HP Index May 219.49
CA Teranet/National Bank HPI MoM May 0.20%
CA Teranet/National Bank HPI YoY May 5.60%
US PPI Final Demand MoM May 0.30% 0.10%
US PPI Ex Food and Energy MoM May 0.20% 0.20%
US PPI Ex Food, Energy, Trade MoM May 0.20% 0.10%
US PPI Final Demand YoY May 2.80% 2.60%
US PPI Ex Food and Energy YoY May 2.30% 2.30%
US PPI Ex Food, Energy, Trade YoY May 2.50%
US FOMC Rate Decision (Upper Bound) 13-Jun 2.00% 1.75%
US FOMC Rate Decision (Lower Bound) 13-Jun 1.75% 1.50%
UK RICS House Price Balance May -5% -8%

About the Author

MatthewKiselicaFVP,Manager of International Trading

Matthew Kiselica joined CAPIS in 2010 and has over twenty-five years of industry experience. Prior to CAPIS, he was vice president of Cazenove’s global sales trading desk in New York. Matthew is a board member for the National Psoriasis Foundation. He earned his bachelor’s degrees in fina...

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