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International Summary

"CAPIS Global Markets – 7/17/2018"

posted by Clayton Duff on 07/17/2018 at 6:39 am

by Clayton Duff

07/17/2018 at 6:39 am

Asian Markets

While most Asian markets closed lower, Japan reopened and finished the day higher.  This was thanks to the ¥ which traded with a 112 handle and boosted exporters. Following yesterday’s assertions by Iran of OPEC production quotas being exceeded, Energy finished lower in Japan (and elsewhere) with the balance of sectors on the Nikkei higher.  Most sectors turned off on both the mainland and Hong Kong exchanges.  Real estate managed to advance.  June New Home Prices rose +1.0% m/m vs. 0.8% during May.  Y/y they saw a 5.0% increase.

China’s NDRC said the country will provide support to companies affected by the trade spat.  Of interest, Xinhua said outbound FDI is now pointed more towards Europe and away from North America.

  • Rio Tinto’s -0.3% 2Q Pilbara iron shipments were inline with estimates. They expect FY output near the higher end of guidance.
  • After yesterday’s close, Ping An Insurance -0.7% reported H1 Life Insurance Premiums of CNY 289.1b.
  • Cosmetics retailer Sa Sa International -2.9% despite reporting SSS up 25.3% in HK and Macau.  Jefferies said sales slowed late in June as tough weather coupled with a weaker yuan and the World Cup weighed.  Next year, they see net profit up over 40%.
  • ZTE +3.0% again closed higher but headlines noted it will take weeks to get back up and going as they face a worker shortage in the face of waiting for components from the US.
  • Japan’s Harmonic Drive Systems -14.8% after Friday’s report at their parent saw 1Q orders fall 47.0% YoY.

Australia’s central bank released July meeting minutes which again outlined they saw no need for a near-term rate move while reiterating the next move will be up rather than down. New Zealand had another uptick in inflation buoying the Kiwi. The 2Q reading came in at 1.7%.

European Headlines

Europe has spent most of the morning trading flat.  However, following some U.S. results and a decline in our futures the markets hace suffered some modest declines and are currently near lows.   The vast majority sectors are lower with telcos off more than 1%.   In part, due to news noted below.  Additionally, the French government declared it sees no current need for consolidation in the sector and French names are weaker.   Materials is the only sector that is currently green better my more than 0.5%.  It has pulled back from highs along with the region.

Top corporate stories include:

  • The leadership shakeup continues at ThyssenKrupp +8.5%.  This time, Chairman Lehner announced he would be stepping down.  This follows the news from two weeks ago CEO Hiesinger would also depart.
  • SEB +4.2% had a strong set of Q2 earnings.  A trifecta of net interest income, commissions and trading income were all better than expected.
  • Telenor’s -3.8% revenues were inline.  However, NI fell far short of estimates.  Its performance in Norway disappointed.  Elsewhere in the sector, Telia -4.1% is purchasing Get and TDC Norway for EV of NOK 21b.
  • Casino Guichard +2.0% saw strong performance in France with LFLs a positive surprise.  Latin America also performed well.  The CFO noted the World Cup provided a one off boost in recent weeks.
  • Investors have been cutting positions in chain saw maker Husqvarna -18.0%.  The companies OP missed the bottom end of the range.  Its consumer unit posted an unexpected operating loss due to higher material costs and poor performance in N. America.
  • There were plenty more results including TomTom +5.0% guiding higher and the Royal Mail +2.3% parceling out more packages which offset lower letter volume.

Macro results included EU new car registrations posting a strong bounce during June.   U.K. employment change was ahead of expectations.

On Our Side of the Pond

  • All eyes will be on Fed Chair Powell as he presents on Capitol Hill.
  • Netflix subscriber numbers fell short of estimates.
  • Amazon suffered technical issues on Prime Day.
  • United Healthcare, Johnson & Johnson and Goldman are on the tape.
  • Boeing confirms a $9.8b 777 freighter order as the Farnborough Expo.  This follows $29b in orders yesterday.

Markets and Macro Data

Event Survey Actual Prior Revised
AU ANZ Roy Morgan Weekly Consumer Confidence Index 15-Jul 121.5 120.1
AU RBA July Meeting Minutes
CH New Home Prices MoM Jun 1.11% 0.80%
JN Tokyo Condominium Sales YoY Jun 16.40% -5.40%
EC EU27 New Car Registrations Jun 5.20% 0.80%
IT Industrial Sales WDA YoY May 5.00% 4.00% 3.90%
IT Industrial Sales MoM May 1.70% 0.30% 0.20%
IT Industrial Orders NSA YoY May 4.90% 6.40% 7.20%
IT Industrial Orders MoM May 3.60% -1.30% -0.60%
UK Claimant Count Rate Jun 2.50% 2.50%
UK Jobless Claims Change Jun 7.8k -7.7k -3.0k
UK Average Weekly Earnings 3M/YoY May 2.50% 2.50% 2.50% 2.60%
UK Weekly Earnings ex Bonus 3M/YoY May 2.70% 2.70% 2.80%
UK ILO Unemployment Rate 3Mths May 4.20% 4.20% 4.20%
UK Employment Change 3M/3M May 115k 137k 146k
IT CPI EU Harmonized YoY Jun F 1.50% 1.40% 1.50%
IT CPI FOI Index Ex Tobacco Jun 102.2 102
CA Manufacturing Sales MoM May 0.40% -1.30%
US Industrial Production MoM Jun 0.50% -0.10%
US Manufacturing (SIC) Production Jun 0.70% -0.70%
US Capacity Utilization Jun 78.30% 77.90%
US NAHB Housing Market Index Jul 68 68
US Total Net TIC Flows May $138.7b
US Net Long-term TIC Flows May $93.9b

About the Author

ClaytonDuffFVP,Senior International Trader

Clayton Duff joined the firm in 2008. He has worked in the industry since 1994 and held various trading and sales positions before CAPIS, including four years as a trader for First Southwest. He earned his bachelor’s degree from the University of Texas Arlington. Clayton maintains Series 3,...

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