Following the U.S. tech route, the Asian markets were lower across the board. Malaysia and Thailand were closed. The dominant theme was the impact of yesterday’s Wall Street Journal Apple report. Our basket of Asian Apple suppliers ended the day c. 1.8% lower. IT as a whole was off more than 2%. All the other major sectors were also to the downside, most more than 1%.
Other Important Headlines
- Following yesterday’s arrest of Carlos Ghosn, Nissan Motors -5.5% and Mitsusbishi Motors -6.9% were a focal point in Japan. While all companies involved are taking action to remove Mr. Ghosn from their respective boards, the market is pondering the future of the strategic, global alliance.
- Another theme carrying through from yesterday was the BAML report warning about slowing Chinese watch demand. Chow Tai Fook -1.5% and peers sold off.
- Fletcher Building -10.8% adds to concerns for the housing market Down Under. It sees a decline to H1 earnings noting a challenging Australian market.
- Xiaomi +8.4% bucked the day’s trend. Q3 revenues and NI beat as emerging markets offset slowing smartphone sales.
Europe started to the downside hitting a low of c. 1% a little more than 2 hours into the session. At one point, less than 10% of the Euro Stoxx 600 was green. The markets steadied a touch but moved to new lows following a profit warning from Covestro along with key earnings in the States. The best that can be said is Europe finished off the lows which were about 1.5%.
Chemicals, banks and basic resources fell by more than 2%. Most other sectors lost at least 1%. Utilities gained o.25% and most other defensives finished the day down small.
- Covestro -15.5% added to the day’s woes. The company issued a profit warning now seeing EBITDA below last year. Competition is hurting and low levels on the Rhine are causing higher logistical costs and production issues.
- The French government has stated it will ensure “corporate governance” of Renault -1.2%.
- However, Renault isn’t the only company involved in scandal. Deutsche Bk -4.8% admitted it may have unknowingly cleared some of the Danske Bk -3.5% money laundering cash due to a correspondent relationship with the Danish bank’s Baltic branches.
- Societe Generale -2.1% has settled a case with the U.S. for sanction infractions in the amount of $1.3b.
- Enel +0.8% provided some lift to today’s best sector. It’s strategic update targets FY ’19 EBITDA of €17.4b which is above consensus. It also will maintain a minimum dividend payout of at least 70.0%.
- Julius Baer -7.0% missed their AUM targets and margins declined.
- Compass Group +5.4% is a bright spot. The company sees organic growth in the middle of the 4% to 6% range. Jefferies indicates this compares favorably to Elior +0.9% and Sodexho -0.5%. Another positive is the company’s FY ’19 outlook and comments on disposals.
- Another of the day’s stars is specialty pharmaceutical firm BTG +34.1%. Boston Scientific -3.0% has agreed to acquire the company at a valuation of c. £3.3b. The bid of 840p/share is c. 36.5% premium to yesterday’s close.
On Our Side of the Pond
- Plenty of earnings on the tape especially in the retail sector. Those include Best Buy +4.1%, Campbell Soup +5.8%, Lowe’s -3.7%, Medtronic +2.4%, Target -9.9% and Ross Stores -6.0%.
- U.S housing starts were line while building permits were a tad stronger.
On the Markets Agenda for Tonight
- The European Commission will publish a report on member nation budgets. Naturally, Italy will be front and center.
- Earnings due include Gazprom, Thyssenkrupp, United Utilities and Hyundai Heavy.
- The macro agenda is fairly light. Japan releases various store sales and the U.K. public borrowing.
Markets and Macro
|AU||ANZ Roy Morgan Weekly Consumer Confidence Index||18-Nov||—||117.8||119.8||—|
|AU||RBA Nov. Meeting Minutes|
|FR||ILO Unemployment Rate||3Q||9.20%||9.10%||9.10%||—|
|FR||Mainland Unemp. Change 000s||3Q||—||22k||-48k||-44k|
|FR||ILO Mainland Unemployment Rate||3Q||8.90%||8.80%||8.70%||8.80%|
|JN||Convenience Store Sales YoY||Oct||—||-1.50%||3.50%||—|
|HK||CPI Composite YoY||Oct||2.70%||2.70%||2.70%||—|
|UK||CBI Trends Total Orders||Nov||-5||10||-6||—|
|UK||CBI Trends Selling Prices||Nov||—||9||10||—|
|US||Housing Starts MoM||Oct||2.20%||1.50%||-5.30%||-5.50%|
|US||Building Permits MoM||Oct||-0.80%||-0.60%||-0.60%||1.70%|
|AU||Westpac Leading Index MoM||Oct||—||—||-0.06%||—|
|AU||Skilled Vacancies MoM||Oct||—||—||-0.60%||—|
|SK||South Korea Household Credit||3Q||—||—||KR1493.2t||—|
|JN||All Industry Activity Index MoM||Sep||-0.90%||—||0.50%||—|
|JN||Supermarket Sales YoY||Oct||—||—||1.90%||—|
|JN||Nationwide Dept Sales YoY||Oct||—||—||-3.00%||—|
|JN||Tokyo Dept Store Sales YoY||Oct||—||—||0.30%||—|
|SK||Imports 20 Days YoY||Nov||—||—||31.40%||—|
|SK||Exports 20 Days YoY||Nov||—||—||26.00%||—|
|IT||Istat Releases Economic Forecast for 2018 and 2019|
|UK||PSNB ex Banking Groups||Oct||6.1b||—||4.1b||—|
|UK||Public Sector Net Borrowing||Oct||5.6b||—||3.3b||—|
|UK||Central Government NCR||Oct||—||—||14.7b||—|
|UK||Public Finances (PSNCR)||Oct||—||—||15.8b||—|
|EC||OECD Economic Forecasts|
|US||MBA Mortgage Applications||16-Nov||—||—||-3.20%||—|
|CA||Wholesale Trade Sales MoM||Sep||0.30%||—||-0.10%||—|
|US||Durable Goods Orders||Oct P||-2.60%||—||0.70%||—|
|US||Durables Ex Transportation||Oct P||0.40%||—||0.00%||—|
|US||Cap Goods Orders Nondef Ex Air||Oct P||0.20%||—||-0.10%||—|
|US||Cap Goods Ship Nondef Ex Air||Oct P||0.30%||—||-0.10%||—|
|US||Initial Jobless Claims||17-Nov||215k||—||216k||—|
|US||Bloomberg Consumer Comfort||18-Nov||—||—||60.5||—|
|US||Bloomberg Economic Expectations||Nov||—||—||58.5||—|
|US||Existing Home Sales||Oct||5.20m||—||5.15m||—|
|US||Existing Home Sales MoM||Oct||1.00%||—||-3.40%||—|
|US||U. of Mich. Sentiment||Nov F||98.3||—||98.3||—|
|US||U. of Mich. Current Conditions||Nov F||—||—||113.2||—|
|US||U. of Mich. Expectations||Nov F||—||—||88.7||—|
|US||U. of Mich. 1 Yr Inflation||Nov F||—||—||2.80%||—|
|US||U. of Mich. 5-10 Yr Inflation||Nov F||—||—||2.60%||—|