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

International Summary

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International Summary

"CAPIS Global Markets 11/27/2018"

posted by Matthew Kiselica on 11/27/2018 at 7:42 am

by Matthew Kiselica

11/27/2018 at 7:42 am

Asian Markets

A mixed day around the region as the markets had some conflicting trade related comments balanced by a strong start to the U.S. holiday retail season.  A perfect example of the mix in the indices is Greater China.  Hong Kong and Shanghai ticked down small while Shenzhen and Taiwan advanced.  JP Morgan is cautious on Chinese equities over the next 3-6 months.

Here is a recap of the trade banter highlighted above.  Pres. Trump indicates additional tariffs may be imposed upon $267b of goods.  That could include a 10% tariff on mobile phones and laptops manufactured in China.  The markets had a mild uptick when a spokesman for China’s Foreign Ministry stated Pres. Trump and Premier Xi had reach an agreement.  However, he was referring to the call held back on Nov. 1st.  Equities quickly gave back the advance once that became apparent.

All the above created the following sector performance.  IT, consumer discretionary and telcos were better by more than 0.5%.  Within IT, Apple suppliers were mixed.  Those with manufacturing in Chine lagged while those in operations in other markets outperformed.  Consumer staples and health care gave way by about 0.5%.

Headlines from the Region

  • Australian bankers are breathing a sigh of relief.  Australian regulators have extended the timeline to meet more stringent capital requirements until 2022.  They were originally planned for 2021.
  • The Nikkei reports Line Corp. +12.9% is teaming up with Tencent +1.9% for mobile payments.
  • Hyundai Motor +6.2% has a strong day with the new Santo model receiving over 38k bookings in a month.
  • As we flagged yesterday, Mitsubishi Motors +1.4% removed Carlos Ghosn from the chairman position.
  • On a related note, the hits keep coming for “Japan Inc.”   Japan Exchange -0.15% CEO Kiyota  violated company investment rules pertaining to investment funds.  He indicates it was a “misunderstanding” and he will donate proceeds to charity.
  • Denso +1.1% post the purchase of the stake in Infineon +0.2%.
  • L’ Occitane -7.9% has been downgraded to neutral at KGI Sec. following its results and failure to declare an interim dividend.
  • Also seeing downgrades post results is Tingyi Cayman Holdings -17.7%.  CIMB, UBS and BAML all cut ratings and the shares are at their lowest level since 1998.
  • Macro news includes Chinese industrial company profits rose 3.6% y/y in Oct. to CNY 548b.  Japan’s October PPI was a touch ahead of expectations.

European Markets

Europe has spent most of the session to the downside and is currently near its lows.  The mining sector is off 2% and is creating the biggest drain.  Citigroup sees 2018 bulk commodity prices including iron ore as the “high water mark.”  Most other sectors are also lower with health care, chemicals and travel and leisure off by c. 1%.  Utilities and telecoms have been proving support all more with gains c. 0.5%.

Pres. Trump sees the current Brexit proposals as a win for the EU.  He also believes it would have a negative impact upon trade between the U.S. and U.K. if implemented in its current form.  The vote in Parliament has been set for December 11th.  PM May is kicking off a tour of the nation to garner support.

Snippets from the Region

  • Its a tough day for Thomas Cook -23.0%.  The travel company is cutting its profit outlook for the 3rd time.  The company is scrapping its dividend to offset a weaker than expected, critical summer season.
  •  While the Thomas Cook news is impacting many within the travel and leisure sectors, Accor +1.8% buck the trend.  At its investors day, the company is targeting to double EBITDA by 2022.
  • Its a bright day for Osram Licht +16.0%. Sources allege Bain Capital is mulling a bid.

On Our Side of the Pond

  • Keep an eye on Apple following Pres. Trump’s tariff comments.
  • United Technologies is expected to announce a restructuring post the Rockwell merger.
  • Lamb Weston, Maxim Int. and Diamondback will be added the S&P 500.
  • Amazon says Cyber Monday sales were the largest in its history for any day.
  • Up in the Great White North, EPS at Bank of Nova Scotia are below consensus.  Provision for NPLs are higher than anticipated.

Markets and Macro Data

Markets Snapshot

Event Survey Actual Prior Revised
SK Consumer Confidence Nov 96 99.5
AU ANZ Roy Morgan Weekly Consumer Confidence Index 25-Nov 118.6 117.8
JN PPI Services YoY Oct 1.20% 1.30% 1.20% 1.10%
CH Industrial Profits YoY Oct 3.60% 4.10%
FR Consumer Confidence Nov 94 92 95
IT Manufacturing Confidence Nov 104 104.4 104.9
IT Consumer Confidence Index Nov 116 114.8 116.6 116.5
IT Economic Sentiment Nov 101.1 102.6 102.5
UK CBI Retailing Reported Sales Nov 10 19 5
UK CBI Total Dist. Reported Sales Nov 18 17
SP Spain Budget Balance YtD Oct -8.38b -13.24b
US FHFA House Price Index MoM Sep 0.40% 0.30%
US House Price Purchase Index QoQ 3Q 1.10%
US S&P CoreLogic CS 20-City MoM SA Sep 0.20% 0.09%
US S&P CoreLogic CS 20-City YoY NSA Sep 5.20% 5.49%
US S&P CoreLogic CS 20-City NSA Index Sep 213.72
US S&P CoreLogic CS US HPI NSA Index Sep 205.81
US S&P CoreLogic CS US HPI YoY NSA Sep 5.77%
US Conf. Board Consumer Confidence Nov 135.9 137.9
US Conf. Board Present Situation Nov 172.8
US Conf. Board Expectations Nov 114.6

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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