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11.15.2018 15 new posts under International Summary (13), CAPIS Headlines (1), Morning Note (1)

International Summary

News Trading Desk

International Summary

"CAPIS Global Markets – 11/7/2018"

posted by Clayton Duff on 11/08/2018 at 6:49 am

by Clayton Duff

11/08/2018 at 6:49 am

Asian Markets

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.

European Markets

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

Markets Snapshot

 

Event Survey Actual Prior Revised
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 Bankruptcies YoY Oct -8.54%
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 Oct $35.15b $31.69b $31.70b
CH Imports YoY Oct 14.50% 14.30%
CH Exports YoY Oct 11.70% 14.50%
CH Trade Balance CNY Oct 237.00b 213.23b
CH Foreign Direct Investment YoY CNY Oct 8.00%
GE Trade Balance Sep 20.0b 17.2b 17.1b
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 Trade Balance Sep -5833m -5632m
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 Housing Starts Oct 198.0k 188.7k
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 Continuing Claims 27-Oct 1634k 1631k
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%

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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