05.24.2019 16 new International Summary posts under Morning Note (10) and International Summary (6)

International Summary

News Trading Desk

International Summary

"CAPIS Global Markets 11/20/2018"

posted by Matthew Kiselica on 11/20/2018 at 11:09 am

by Matthew Kiselica

11/20/2018 at 11:09 am

Asian Markets

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.

European Markets

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.

Important Snippets

  • 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

Markets Snapshot

Event Survey Actual Prior Revised
SK PPI YoY Oct 2.20% 2.70%
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%
GE PPI MoM Oct 0.30% 0.30% 0.50%
GE PPI YoY Oct 3.30% 3.30% 3.20%
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 Oct 1228k 1228k 1201k 1210k
US Housing Starts MoM Oct 2.20% 1.50% -5.30% -5.50%
US Building Permits Oct 1260k 1263k 1241k 1270k
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 Continuing Claims 10-Nov 1650k 1676k
US Bloomberg Consumer Comfort 18-Nov 60.5
US Bloomberg Economic Expectations Nov 58.5
US Leading Index Oct 0.10% 0.50%
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%

About the Author

MatthewKiselicaFVP,Manager of International Trading

Matthew Kiselica joined CAPIS in 2010 and has over twenty-five years of industry experience. Prior to CAPIS, he was vice president of Cazenove’s global sales trading desk in New York. Matthew is a board member for the National Psoriasis Foundation. He earned his bachelor’s degrees in fina...

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