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"CAPIS Global Recap – 9/18/2018"

posted by Clayton Duff on 09/18/2018 at 8:21 am

by Clayton Duff

09/18/2018 at 8:21 am

Asian Headlines

Japan reopened today and shrugged off yesterday’s weakness in the region and the trade concerns to finish higher on the session.  China along with Hong Kong also closed higher, erasing much of yesterday’s losses as well.  This after HK Press reported China will likely not send trade reps to Washington in the face of the confirmed tariffs.  The list of targeted items was pared down but the 10% current tariff level will ramp up by the end of the year to 25% if demands are not met.  And as expected China’s Commerce Ministry said late in today’s session they will levy retaliatory tariffs against the US while ratcheting up rhetoric against their biggest trading partner.

Earlier in the session MofCom reiterated their view that 2018 targets will be met which helped sentiment in the region. The China Sec Journal reported the PBoC may announce targeted RRR cuts next month.  HK’s FinSec called their currency peg ‘very strong’ adding the trade war impact on them is manageable.  Also affecting sentiment leaders from North and South Korea met again today.

Ahead of the BoJ meeting the Nikkei today said Japan will seek ways to reduce its trade surplus with the US so as to not face auto tariffs.  On that their EconMin said a bilateral trade deal is coming together with the US with an announcement shortly.  Apart from Telcos all sectors gained on the day with Consumer Staples and Financials leading  most of the Nikkei with gains of over 2%.

Several Apple suppliers slipped overnight on concerns the newly-unveiled iPhones may be too costly which could affect their shipments. An analyst at CLSA said iPhone unit sales could fall 5% with a Daiwa analyst calling pre-orders lukewarm.  Largan fell 10% with Pegatron down 1.4%, TSMC -1.3%, and Hon Hai -2.6%.

Chinese construction firms gained with the Economic Information Daily reporting the gov may soon announce supportive measure for construction in transportation infrastructure.  This buoyed names like Conch Cement +5.1%, China National Building Material +4.5%, and China Communications Construction +7%.

European Headlines

European indices ticked higher after the open but have since given back most gains with the bulk of indices currently posting small losses. Just before the US open China announced some specifics on tariff against the US which will take place on the 24th.   Basic Resources and Energy lead on the day with Retailers off.  Volume on the session is up 18% with an even split of companies trading up vs down on the Stoxx 600.

Oil prices are on the rise today with Saudi Arabia reported to have said they are comfortable with Brent above $80.00 a barrel.  To note, Turkey’s central bank upped their Lira Reserve Requirement to 13% from 7%.

TomTom -25% is finding its way lower today after auto-maker Renault chose Google’s Android OS for their next generation of mapping.  The move threatens the overall deal TomTom has Renault/Nissan/Mitsubishi.

Fashion retailer Zalando -12% is seeing a sale on their stock today after they reduced their FY18 outlook.  3Q revs and adj ebit are seen significantly below estimates with the company citing hotter weather as the culprit.  Berenberg’s analyst dismissed the weather-only reason noting their expansion and growth plans are more costly than expected. Asos -5%, Hugo Boss -2.7%, BooHoo +2.6%.

Pandora is up 6% with a report out noting KKR and Bain are considering purchasing the firm.

Ferrari is flat post several investor day announcements. The firm sees €1.1B adj ebita this year with the same between €1.8-2B by 2022.  They will upped their payout to 30% of NI while announcing a €1.5B buyback to be spread over 4 years.   In addition to a new V12 Supercar the firm said 15 new launches will come over the next 4 years including a hybrid SUV.

Event Survey Actual Prior Revised
AU 21) ANZ Roy Morgan Weekly Consumer Confidence Index 16-Sep 118 116.2
AU 22) House Price Index QoQ 2Q -0.70% -0.70% -0.70%
AU 23) House Price Index YoY 2Q -0.70% -0.60% 2.00%
AU 24) RBA Sept. Meeting Minutes
SP 25) Labour Costs YoY 2Q 0.70% 0.70%
SW 26) Valueguard Swedish Housing Price Data
SW 27) Unemployment Rate Aug 5.80% 6.10% 6.00%
SW 28) Unemployment Rate Trend Aug 6.40% 6.20% 6.40%
SW 29) Unemployment Rate SA Aug 6.30% 6.60% 6.40%
EC 30) Bloomberg Sept. Eurozone Economic Survey (Table)
SZ 31) SURVEY REPORT: Economists Raise Swiss Growth Outlook
IR 32) SURVEY REPORT:Irish ’18 Growth Revised Up After Strong 2Q Data
IT 33) Industrial Sales WDA YoY Jul 2.90% 4.70%
IT 34) Industrial Sales MoM Jul -1.00% -0.30%
IT 35) Industrial Orders NSA YoY Jul 2.80% 2.00%
IT 36) Industrial Orders MoM Jul -2.30% -1.50%
HK 37) Unemployment Rate SA Aug 2.80% 2.80% 2.80%

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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