04.23.2019 15 new posts under Morning Note (8), General (3), International Summary (3), and 1 more category

International Summary

News Trading Desk

International Summary

"CAPIS Global Recap – 8/16/2018"

posted by Clayton Duff on 08/16/2018 at 6:35 am

by Clayton Duff

08/16/2018 at 6:35 am

Asian Headlines

Previous day weakness bled over again into Asia today but losses were rather subdued by day’s end.  Early on Japan and Hong Kong were over 1.5% weaker with Shanghai down nearly 2%. However the initially selling quickly abated with indices finishing down small on the day. Shanghai was able to hold the 2700 level with Hong Kong holding 27000 but that is still under the 400 day.   Sentiment inched higher with word China’s Vice ComMin will meet with the US’ Treasury Undersecretary later this month.  A strengthening Turkish Lira also helped.

On the economic front Chinese Foreign Direct Investment rose 14.9% on a YoY basis in July.  Japanese exports slowed in July, up only 3.9% which was light estimates and the prior reading. As expected imports grew 14.6% as they moved to a Trade Deficit of ¥231.2B in July.  After several months of growth Employment slowed in July Down Under.   Of interest yesterday headlines hit that foreign nationals will be allowed to open A-share (Renminbi-denominated) security accounts there.

Real estate names held in China upon press reports expressing caution on the rise in mortgages as they added banks are seeing added risk with exposure to the sector.

  • Post results yesterday morning, ADR’s in Tencent fell 6.7% in the US, closing down 3% in Hong Kong today.  This was after revenues and earnings fell well short of estimates.
  • Li & Fung fell 2.1% ahead of Walmart results today.
  • Aluminum Corp of China (Chalco) closed flat on 1H Revs of 82.1B Yuan with NI up 15% YoY to CNY 848.3M.
  • Yahoo Japan fell 2.5% with the US’ Apple being investigated by Japan’s FTC on allegations YJ was pressured to remove itself from a game platform that competed with Apple’s App store. YJ’s largest shareholder Softbank -1.8% looks to temper the findings as they keep a portion of the revs users pay when purchasing from the App store.
  • QBE Insurance +6.8% was a standout today post their 1H report that revealed better margins.  They will also institute a three-year A$1B stock buyback, spending no more than a third of that each year.

European Headlines

European indices have steadily worked higher today apart from Italy with underperformance in Atlantia and their banks weighing.   The Healthcare sector is a bit weaker but the balance of sectors are somewhat higher.  Post the solid Cisco report Tech names lead both the Euro and Pound up vs the Dollar today. All markets are open, this after Italy and several others were shut yesterday as they play catch-down today.

The UK turned in solid retail sales numbers with ex-fuel MoM growth up .9% vs a pullback in June.  Norway left their Deposit rate unchanged with expectations they will raise rates next month.  This is despite underlying inflation below target levels with expectations they will rise.

  • Atlantia -19% continues to fall, both equities and its debt, with Italy taking a hard approach on the company post the Genoa bridge collapse.  While engineers work to figure out the ultimate cause of the collapse the government is working to pull the company’s toll-road concession license.   The company is steadfast that they will reimbursed if the road deal is pulled with one official speaking off the record that the license suspension may only apply to the A10 highway that includes the bridge.
  • A day after reporting solid earnings Admiral is off 1.3% today with Amazon said to be considering getting into the space with a price comparison service. Reuters said UK insurance firms are being asked if they will contribute offerings onto the site with comparison website off 4.2%.
  • Strong gains in Carlsberg +3.6% today with their CEO calling growth in Asia “stellar”. 1H organic revs grew 5.1% with the firm upping their FY outlook to high single-digits for organic profit growth. Their Russian unit is on the turnaround as well. And, while others move into the marijuana space the firm said they are watching but no moves or announcements expected soon.
  • Bayer -6.5% continues to sell off with the stock off 20% over the last few days on the Glyphosate court ruling.

Focus today will be on Walmart’s strong earnings (indicating up 7% currently) along with Applied Materials.

Markets and Macro Data

Event Survey Actual Prior Revised
JN 21) Trade Balance Jul -¥41.2b -¥231.2b ¥721.4b
JN 22) Trade Balance Adjusted Jul ¥20.7b -¥45.6b ¥66.2b ¥83.1b
JN 23) Exports YoY Jul 6.30% 3.90% 6.70%
JN 24) Imports YoY Jul 14.20% 14.60% 2.50%
JN 25) Japan Buying Foreign Bonds 10-Aug ¥123.9b ¥1171.0b ¥1164.0b
JN 26) Japan Buying Foreign Stocks 10-Aug ¥181.7b ¥505.0b
JN 27) Foreign Buying Japan Bonds 10-Aug -¥58.9b -¥661.5b -¥663.2b
JN 28) Foreign Buying Japan Stocks 10-Aug -¥107.1b -¥225.2b -¥224.8b
AU 29) Consumer Inflation Expectation Aug 4.00% 3.90%
JN 30) Bloomberg Aug. Japan Economic Survey (Table)
AU 31) Employment Change Jul 15.0k -3.9k 50.9k 58.2k
AU 32) Unemployment Rate Jul 5.40% 5.30% 5.40%
AU 33) Full Time Employment Change Jul 19.3k 41.2k 43.2k
AU 34) Part Time Employment Change Jul -23.2k 9.7k 15.0k
AU 35) Participation Rate Jul 65.70% 65.50% 65.70%
AU 36) RBA FX Transactions Market Jul A$573m A$1752m
AU 37) RBA FX Transactions Government Jul -A$672m -A$1843m
AU 38) RBA FX Transactions Other Jul A$138m A$4821m
NE 39) Unemployment Rate Jul 3.90% 3.80% 3.90%
GE 40) Wholesale Price Index MoM Jul 0.00% 0.50%
GE 41) Wholesale Price Index YoY Jul 3.50% 3.40%
CH 42) Foreign Direct Investment YoY CNY Jul 14.90% 0.30%
NO 43) Deposit Rates 16-Aug 0.50% 0.50% 0.50%
UK 44) Retail Sales Ex Auto Fuel MoM Jul 0.00% 0.90% -0.60%
UK 45) Retail Sales Ex Auto Fuel YoY Jul 2.80% 3.70% 3.00% 2.90%
UK 46) Retail Sales Inc Auto Fuel MoM Jul 0.20% 0.70% -0.50%
UK 47) Retail Sales Inc Auto Fuel YoY Jul 2.90% 3.50% 2.90%
EC 48) Trade Balance SA Jun 16.9b 16.7b 16.9b
EC 49) Trade Balance NSA Jun 22.5b 16.5b

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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