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International Summary

"CAPIS Global Recap – 9/13/2018"

posted by Clayton Duff on 09/13/2018 at 12:47 pm

by Clayton Duff

09/13/2018 at 12:47 pm

Asian Headlines

Asian indices regained a small bit of last week’s trade-induced losses today on yesterday’s word the US and China may be engaged again in talks. The Hang Seng outperformed, up 2.54%, and lifting it out of the “bear market” label attached by the talking heads this week. Casino names rebounded, up over 5%, despite reports noting slowing in Macau.  Autos led with IT and Energy names also up over 3% on the day.   Telcos and Energy names led broad gains in Japan with the ¥ a bit weaker overnight.

China noted their OM ops were in response to countering factors related to tax payments and the issuance of government bonds.   The Won strengthened after PM Lee Nak-yon was reported to have voiced the opinion that it was time to seriously consider upping interest rates.

News in Specific Names

  • Geely rallied 8.4% with Toyota +1.8% conceding to the Chinese government to provide insight into its gasoline-electric technology.  Additionally, Toyota is said to be licensing their hybrid technology to Geely.  Tata Motors fell 1.8% after Jaguar Land Rover said they face massive losses if a no-Brexit deal occurs.  It was noted a ceasing of production for each day could lead to a cost of £60M a day.

Not all was rosy with TSMC off 2.1% post the Apple announcements and its slide yesterday.

European Headlines

Europe closed mixed today with midday strength giving way by day’s end.  Italy and London underperformed with small gains seen in Spain, Germany, and Sweden.  On a sector basis Autos worked higher with Banks, Tech, and Chemicals delivery respectable gains today.  However, most sectors finish down with Retail and Media off over a percent on the day.

Central banks were front and center today with the ECB and BOE rate announcements and following press conference for the ECB. But first, the Turkish Lira fell overnight with President Erdogan calling for lower rates.  However, the currency quickly reversed and moved higher their central bank upped the one-week repo rate to 24% from 17.75% previously.  Estimates were for a move to 21.00%.  Also on the currency front the Yuan fell post a Trump tweet noting “We’re under no pressure to make deal with China; they’re under pressure to make deal with us”.

Back to European central banks both the ECB and BOE left rates as-is.  Draghi noted the underlying strength of the economy was supporting confidence but GDP forecasts were lowered for this year and next on weaker external demand.  (FY18: 2.0% from 2.1%; FY19 1.8% from 1.9%). He said that when the asset purchase program ceases policy will continue to be accommodative.  The BoE did not have a press conference but a report noted consumer spending was solid with warm weather cited. On a positive Brexit note the UK has been reported to have agreed to the EU’s request for info that could ease the Irish border issue.  This though after BoE Gov Carney said they are working on an outline in case of a no-Brexit deal.

To note the ECB lowered their emergency liquidity assistance cap for Greek banks to €5.2B from €8.4B.

News in Specific Names

  • Michelin +3.6% reiterated their FY estimates noting strength in Europe was offsetting weakness in China. Strength in the freight industry was buoying demand for truck tire with Specialty (such as RV’s) demand growing at a fast pace.  They added that lower rubber prices were being countered by higher oil price but their 2H view on raw materials was seen as neutral.
  • Debenhams fell 9.1% after Sports Direct -1% said they do not intend to bid for the firm.  Sports Direct currently holds ~27% of Debenhams.

Tonight China reports Industrial Production and Retail sales with Fixed Assets expected to grow 5.6%.  Industrial Production is expected in Japan as well.  Trade prices are out in South Korea.

Event Survey Actual Prior Revised
UK 27) RICS House Price Balance Aug 2% 2% 4%
JN 28) PPI YoY Aug 3.10% 3.00% 3.10% 3.00%
JN 29) PPI MoM Aug 0.10% 0.00% 0.50% 0.40%
JN 30) Core Machine Orders MoM Jul 5.50% 11.00% -8.80%
JN 31) Core Machine Orders YoY Jul 4.30% 13.90% 0.30%
JN 32) Japan Buying Foreign Bonds 7-Sep ¥297.6b ¥543.4b
JN 33) Japan Buying Foreign Stocks 7-Sep ¥97.6b ¥186.1b
JN 34) Foreign Buying Japan Bonds 7-Sep ¥329.9b -¥9.2b
JN 35) Foreign Buying Japan Stocks 7-Sep -¥1063.2b -¥4.6b
AU 36) Consumer Inflation Expectation Sep 4.00% 4.00%
AU 37) Employment Change Aug 18.0k 44.0k -3.9k -4.3k
AU 38) Unemployment Rate Aug 5.30% 5.30% 5.30%
AU 39) Full Time Employment Change Aug 33.7k 19.3k 20.1k
AU 40) Part Time Employment Change Aug 10.2k -23.2k -24.4k
AU 41) Participation Rate Aug 65.60% 65.70% 65.50% 65.60%
JN 42) Tokyo Avg Office Vacancies Aug 2.45 2.58
JN 43) Tokyo Condominium Sales YoY Aug -28.50% -12.80%
GE 44) CPI MoM Aug F 0.10% 0.10% 0.10%
GE 45) CPI YoY Aug F 2.00% 2.00% 2.00%
GE 46) CPI EU Harmonized MoM Aug F 0.00% 0.00% 0.00%
GE 47) CPI EU Harmonized YoY Aug F 1.90% 1.90% 1.90%
FI 48) Retail Sales Volume YoY Jul F 1.50% 0.90%
FR 49) CPI EU Harmonized MoM Aug F 0.60% 0.50% 0.60%
FR 50) CPI EU Harmonized YoY Aug F 2.60% 2.60% 2.60%
FR 51) CPI MoM Aug F 0.50% 0.50% 0.50%
FR 52) CPI YoY Aug F 2.30% 2.30% 2.30%
FR 53) CPI Ex-Tobacco Index Aug 103.47 103.48 102.96
CH 54) Foreign Direct Investment YoY CNY Aug 1.90% 14.90%
SP 55) House transactions YoY Jul 16.20% 1.80%
SZ 56) Producer & Import Prices MoM Aug 0.00% 0.00% 0.10%
SZ 57) Producer & Import Prices YoY Aug 3.40% 3.40% 3.60%
SW 58) GDP QoQ 2Q F 0.90% 0.80% 1.00%
SW 59) GDP WDA YoY 2Q F 3.30% 2.50% 3.30%
HK 60) Industrial Production YoY 2Q 1.60% 1.10%
HK 61) PPI YoY 2Q 3.80% 3.80%
GR 62) Unemployment Rate 2Q 19.00% 21.20%
IR 63) CPI EU Harmonized MoM Aug 0.30% 0.40%
IR 64) CPI EU Harmonized YoY Aug 0.90% 1.00%
IR 65) CPI MoM Aug 0.30% 0.40%
IR 66) CPI YoY Aug 0.70% 0.80%
IR 67) Current Account Balance 2Q 10162m 9552m
IR 68) GDP QoQ 2Q 1.00% 2.50% -0.60% -0.40%
IR 69) GDP YoY 2Q 7.70% 9.00% 9.10% 9.30%
UK 70) Bank of England Bank Rate 13-Sep 0.75% 0.75% 0.75%
UK 71) BOE Asset Purchase Target Sep 435b 435b 435b
UK 72) BOE Corporate Bond Target Sep 10b 10b 10b
EC 73) ECB Main Refinancing Rate 13-Sep 0.00% 0.00% 0.00%
EC 74) ECB Marginal Lending Facility 13-Sep 0.25% 0.25% 0.25%
EC 75) ECB Deposit Facility Rate 13-Sep -0.40% -0.40% -0.40%

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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