Markets across Asia looked poised to close higher after small gains in the US ahead of the elections. Most indices spent at least the morning session if not much of the day to the upside before core market gains evaporated quickly late day. The Nikkei slipped on sizable losses in Energy with Industrials and Financials also weaker. The ¥ ultimately gained after several sharp intra-day moves in either direction.
Losses in Hong Kong and mainland China were kept in-check while Australia registered a small gain on IT and Real Estate names. Economic releases in the region were scant with Japanese real cash earnings showing a slowing decline from prior results. The PBoC skipped OMO’s today but did sell a total of 20B Yuan of bills in Hong Kong. A press report out in China noted government plans for new tax cuts were in motion but no details were provided.
Markets that overlapped with Europe were higher across the board.
Important Corporate News
- The Hong Kong Exchange +1.2% closed up after a strong NI reading. Derivatives trading surged 55% for the 9M by volume.
- Both OP and NI at Kubota +2.9% were ahead of consensus and seen as a relief to the markets. The company also noted FY overseas sales would exceed its previous target. The icing on the cake was an increase to its dividend.
- NTT +4.9% & NTT DoComo -1.2% following the results and share exchange we flagged yesterday.
- OP at Daikin Ind. -5.7% fell short of consensus by c. 7% during Q2.
- Olympus -4.5% fared even worse. Q2 OP was only c. 2.3rds of projections and the company cuts FY OP outlook by 24.0%.
- The various listed units of China Datang and China Huadian traded to the upside most of the session on reports the merger of the two parent companies is awaiting final approval.
- Per the tone set my Chairman Son at their recent press conference, Softbank -.2% said they will go ahead with a $1.2B solar power plant in Saudi Arabia. The fossil-fuel rich country is looking to build 16 nuclear plants over the next quarter century along with developing wind and solar power plants as they deem it more beneficial to sell their oil and gas.
Europe spent the entire session to the upside and most of the time was higher c. 1.0%. Spain lead with the banking sector driving the gains. After yesterday’s close, the Spanish Supreme Court reversed an earlier decision that had called upon mortgage lenders to pay related stamp taxes. Today’s ruling places the tax liability back upon the purchaser.
Chock Full O’ Earnings
- BMW’s 3.5% Q3 EBIT of €1.75b fell short of the consensus €1.91b. Return on sales fell sharply to 4.4%. The company noted higher provisions, pricing pressure and trade worries.
- Adidas -3.6% lost traction post its Q3 results. While the company increased its FY earnings and margin outlook, the market is worried about revenue comments. It now sees FY revenue growth of 8-9% vs. a prior outlook of 10.0%.
- Ahold +7.0% posted strong Q3 results helped in part by Hurricane Florence. To one extent or another, Sales, OP, OP margin and NI surpassed expectations.
- Marks and Spencer -0.5% posted better than expected PTP. However, analysts have chalked this up to some one-offs and focused more upon disappointing LFLs and food sales.
- Munch Re -0.15% confirmed its FY profit goals after returning to a profit during Q3. However, concerns regarding the impact of natural disasters that have already occurred during Q4 are weighing.
- Headlines results at ITV -2.8% were okay but its ad outlook disappointed. The company sees Q4 advertising down 3% and flat y/y
- Other earnings of note: Credit Agricole -0.8%, ABN Amro %, Barry Callebaut +0.5% and Symrise -2.2%.
Aside from earnings
- Balfour Beatty % won two contracts in the U.K. worth £425m.
- In addition to a trading update, Persimmon’s % CEO Jeff Fairburn is stepping down following outrage regarding his compensation. Fortunately for him, since this was with the company’s agreement, he will retain his entire £75m bonus package.
Our Side of the Pond
- After a slight pullback opening levels, the three major U.S. indices are all higher by at least 1% and tech is leading the way.
- Canabis stocks have been trading up post the U.S. election results.
On the Markets’ Agenda Tonight
- Provided the U.S. retains today’s gains, Asia should play catch up. Although trading could be tempered by the pending Fed decision.
- Earnings due include Siemens, National Grid, AstraZeneca, Nissan Motor, Singapore Tel., Bridgestone, Worldpay, Unicredit, Deutsche Tel. et. al.
- Macro data: BOJ minutes, Chinese trade data, German trade data and European Commission economic forecasts.
Markets and Macro Data
|JN||Core Machine Orders MoM||Sep||-9.00%||—||6.80%||—|
|JN||Core Machine Orders YoY||Sep||7.70%||—||12.60%||—|
|JN||BoP Current Account Balance||Sep||¥1786.5b||—||¥1838.4b||—|
|JN||BoP Current Account Adjusted||Sep||¥1349.9b||—||¥1428.8b||—|
|JN||Trade Balance BoP Basis||Sep||¥334.2b||—||-¥219.3b||—|
|JN||Bank Lending Incl Trusts YoY||Oct||—||—||2.30%||—|
|JN||Bank Lending Ex-Trusts YoY||Oct||—||—||2.30%||—|
|JN||Japan Buying Foreign Bonds||2-Nov||—||—||-¥1077.8b||—|
|JN||Japan Buying Foreign Stocks||2-Nov||—||—||¥2.7b||—|
|JN||Foreign Buying Japan Bonds||2-Nov||—||—||¥556.8b||—|
|JN||Foreign Buying Japan Stocks||2-Nov||—||—||-¥349.0b||—|
|UK||RICS House Price Balance||Oct||-2%||—||-2%||—|
|JN||Tokyo Avg Office Vacancies||Oct||—||—||2.33||—|
|JN||Eco Watchers Survey Current SA||Oct||48.7||—||48.6||—|
|JN||Eco Watchers Survey Outlook SA||Oct||50.3||—||51.3||—|
|CH||Exports YoY CNY||Oct||14.20%||—||17.00%||—|
|CH||Imports YoY CNY||Oct||17.70%||—||17.40%||—|
|CH||Trade Balance CNY||Oct||237.00b||—||213.23b||—|
|CH||Foreign Direct Investment YoY CNY||Oct||—||—||8.00%||—|
|GE||Current Account Balance||Sep||21.0b||—||15.3b||—|
|GE||Exports SA MoM||Sep||0.40%||—||-0.10%||0.10%|
|GE||Imports SA MoM||Sep||0.80%||—||-2.70%||-2.40%|
|FR||Current Account Balance||Sep||—||—||-1.6b||—|
|FR||Survey of Industrial Investment|
|SP||Industrial Output NSA YoY||Sep||—||—||1.20%||—|
|SP||Industrial Output SA YoY||Sep||0.80%||—||1.20%||—|
|SP||Industrial Production MoM||Sep||-0.50%||—||0.70%||—|
|EC||ECB Publishes Economic Bulletin|
|EC||European Commission Updates Its Economic Forecasts|
|CA||New Housing Price Index MoM||Sep||0.00%||—||0.00%||—|
|CA||New Housing Price Index YoY||Sep||0.20%||—||0.40%||—|
|US||Initial Jobless Claims||3-Nov||213k||—||214k||—|
|US||Bloomberg Consumer Comfort||4-Nov||—||—||60.3||—|
|US||FOMC Rate Decision (Upper Bound)||8-Nov||2.25%||—||2.25%||—|
|US||FOMC Rate Decision (Lower Bound)||8-Nov||2.00%||—||2.00%||—|
|US||Interest Rate on Excess Reserves||9-Nov||2.20%||—||2.20%||—|