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07.20.2018 11 new posts under International Summary (10) and Compliance Docs. (1)

International Summary

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International Summary

"CAPIS Global Markets 7/10/2018"

posted by Matthew Kiselica on 07/10/2018 at 7:03 am

by Matthew Kiselica

07/10/2018 at 7:03 am

Asian Markets

Following the strong gains in the States, the local markets built upon yesterday’s gains to a lesser extent.  China see-sawed following inflation data.  The mainland finished higher with Hong Kong flat.  Recent outperformer Australia dipped with financials, utilities and telcos weighing.  Most sectors gained with energy higher by more than 1% followed by materials.  Several of the defensive sectors: consumer staples, utilities and telcos fell shy of 0.5%.

Top headlines included:

  • China’s June CPI had a slight m/m decline which was inline with expectations.  However, the PPI rose more than expected y/y.
  • Removing overhang worries, Softbank +2.1% has agreed to purchase an 11.0% stake of Yahoo Japan +11.4% from Altaba.  In turn, Yahoo Japan was agreed to buyback those shares.  Separately, Softbank’s telecom unit has filed for its IPO on the Tokyo Stock Exchange.
  • Thanks in part to a weaker ¥ which traded with a 111 handle,  Nissan Motors +3.8% pared some of yesterday’s declines following yesterday’s emission admissions.
  • Anhui Conch +3.1% caused the cement sector to have a solid day.  (We know you wish to groan.)  The company sees H1 NI rising 80.0% to 100.0% thanks to rising prices.
  • Xiaomi +13.1% had a much better 2nd day of trading closing well above the IPO price.
  • Weichai Power -2.9% sees H1 net profit surging 50% – 70% y/y to 3.98b yuan to 4.5b yuan.
  • Geely Auto’s +1.6% June sales volume ramped up 45% y/y to 128,449 units.
  • China pledged local measures to help offset the pain of the U.S. trade tariffs.   On a related note, Mitsubishi Elec. +2.9% plans to raise prices on machine tools in the U.S. to counter tariffs.

European Markets

The European markets have been trading to the upside since the open and is currently near highs.  Sectors are mixed with energy better more than 1% while telcos are lower by more than 0.5%.

The £ has vacillated given yesterday’s resignations and a slew of macro data.  PM May appears to have inched closer to a softer Brexit.   Additionally, she appears to have enough support to remain in power.  However, that grasp remains tenuous and former Foreign Secretary Johnson’s resignation statement were critical to say the least.  It is safe to say he is not going to go away quietly.  His replacement to the vacated post is Jeremy Hunt.  He originally opposed Brexit but announced his support last year.  The various U.K. macro data points saw both industrial and manufacturing production miss while GDP was inline and constructions output beat.

The moved to lows following both German and EC ZEW readings that missed projections.  The German reading is a 6 year low with the recent trade worries cited.  The Turkish Lira is also facing selling pressure.  This follows Pres. Erdogan’s appointment of his son-in law as Finance Minister. This also has Turkish equities trading lower.

Top headlines include:

  • The U.S. FTC has granted approval of Takeda Pharma’s acquisition of Shire +0.5%.  This was announced after the Japanese close.
  • Sources claim 21st Century Fox will increase its bid for Sky Plc +2.2% to beat out Comcast for ownership of the company.
  • Ocado +4.6% warned its pretax loss will be worse than the market consensus.  This was in part due to higher than expected investments.  Also, flat retail revenue growth disappointed.  The shares have rallied sharply and it feels like the call must be going well.  However, we have not identified a specific reason.

The region awaits President Trump’s visit in Brussels for the NATO summit.  We are sure he will receive a warm welcome there.  His trip will include a 3 day visit in the U.K.

Crude is rising with a number of factors contributing.  Norwegian rig works have vote to go on strike following a breakdown in labour (not a typo) talks.  Also, MUFG says a “perfect storm” is brewing in the market for prices to rise.

On Our Side of the Pond

  • Political debate will center upon Pres. Trump’s nomination of Hon. Brett Kavanaugh to replace C.J. Kennedy in the Supreme Court.
  •  J.M. Smucker is selling the its baking unit including the Pillsbury Doughboy to Brynwood Partners for c. $375m.
  • Pepsi’s revenues were inline while EPS were well ahead of expectations.

Markets and Macro Data

Market Snapshot

Event Survey Actual Prior Revised
UK BRC Sales Like-For-Like YoY Jun 1.10% 2.80%
AU ANZ Roy Morgan Weekly Consumer Confidence Index 8-Jul 120.1 120.4
JN Money Stock M3 YoY Jun 2.70% 2.70% 2.70%
JN Money Stock M2 YoY Jun 3.20% 3.20% 3.20%
AU NAB Business Conditions Jun 15 15 14
AU NAB Business Confidence Jun 6 6 7
CH PPI YoY Jun 4.50% 4.70% 4.10%
CH CPI YoY Jun 1.90% 1.90% 1.80%
JN Machine Tool Orders YoY Jun P 11.40% 14.90%
FR Industrial Production MoM May 0.70% -0.20% -0.50%
FR Industrial Production YoY May 0.40% -0.90% 2.10% 1.90%
FR Manufacturing Production MoM May 0.30% -0.60% 0.40%
FR Manufacturing Production YoY May 0.80% -0.70% 3.00% 2.80%
IT Industrial Production MoM May 0.80% 0.70% -1.20% -1.30%
IT Industrial Production WDA YoY May 2.80% 2.10% 1.90%
IT Industrial Production NSA YoY May 2.10% 6.70%
UK Visible Trade Balance GBP/Mn May -£12000 -£12362 -£14035 -£12396
UK Trade Balance Non EU GBP/Mn May -£3950 -£3491 -£5372 -£4335
UK Trade Balance May -£3400 -£2790 -£5280 -£3087
UK Industrial Production MoM May 0.50% -0.40% -0.80% -1.00%
UK Industrial Production YoY May 1.90% 0.80% 1.80% 1.60%
UK Manufacturing Production MoM May 0.70% 0.40% -1.40% -1.30%
UK Manufacturing Production YoY May 1.90% 1.10% 1.40% 0.90%
UK Construction Output SA MoM May 0.60% 2.90% 0.50% 0.00%
UK Construction Output SA YoY May -1.60% 1.60% -3.30% -1.20%
UK Monthly GDP 3M/3M Change May 0.20% 0.20% 0.00%
UK GDP (MoM) May 0.30% 0.30% 0.20%
UK Index of Services MoM May 0.20% 0.30% 0.30% 0.40%
UK Index of Services 3M/3M May 0.40% 0.40% 0.20%
GE ZEW Survey Current Situation Jul 78.1 72.4 80.6
GE ZEW Survey Expectations Jul -18.9 -24.7 -16.1
EC ZEW Survey Expectations Jul -18.7 -12.6
US NFIB Small Business Optimism Jun 106.9 107.2 107.8
CA Housing Starts Jun 210.0k 195.6k
CA Building Permits MoM May 0.00% -4.60%
US JOLTS Job Openings May 6620 6698

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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