New!
12.10.2018 19 new posts under International Summary (9), Morning Note (9), CAPIS Headlines (1)

International Summary

News Trading Desk

International Summary

"CAPIS Global Markets 12 6 2018"

posted by Matthew Kiselica on 12/06/2018 at 9:06 am

by Matthew Kiselica

12/06/2018 at 9:06 am

Asian Markets

The story of the day is the arrest of Huawei Tech CFO Meng Wanzhou.    Apparently, she has been arrested in Canada at the request of the United States.  Reports indicate the arrest occurred while Pres. Trump and Prem. Xi were conducting trade talks!  China is voicing its outrage and calling for her immediate release.  Here are more details pertaining to the story.  Naturally, the markets are worried about the impact this will have on trade negotiations.

This drove all the Asian markets lower and most by well over 1%.  Sector performance was terrible.   All the major sectors were well to the downside.  Health care gave way by 3% with IT and telcos off by 2.5% or more.  Within IT, Apple suppliers ended the day down by 3.8%, as a whole.  (See Largan comments below.)

Other Important Headlines

  • The Huawei story wasn’t the only negative for the tech sector.  Apple supplier Largan Precision -9.95% sees December sales falling m/m.  This follows November sales which slumped 29.0% y/y.
  • Sources allege Softbank’s -4.9% IPO of its telecom unit is fully subscribed including the over allotment shares.  That is a total of 176b shares, raising c. $24b.  The shares commence trading on Dec. 19th.
  • Elsewhere on the IPO front, Tencent -5.2% supported software developer IDreamsky Tech -8.6% fell in its trading debut.  The IPO raised HK$ 745.3m.
  • Developer and property manager Hopewell Holdings +30.5% will be taken private by the Chairman of the company for $2.7b.

European Markets

Europe has been lower since the open and the markets have shown no inclination to recover.  Market internal have been terrible.  At one point, less than 10 names in the Euro Stoxx 600 were trading to the upside.  Currently, there are less than 20.  All the major sectors trade lower.  Those seeing losses of about 3% includes financials and basic resources.  Most other sector are down my at least 2%.

The energy markets are in focus with OPEC+ conducting its production meeting today.  There have been a number of comments made.  The most important of which was made by the Saudi oil minister.  He noted there is no agreement at this point to cut production.  Analysts see the need for a cut of at least 1m bpd to boost crude.  Announcement is expected today but will continue tomorrow as well.

Snippets from the Region

  • Huawei peers are trading in mixed fashion: Ericsson +1.5% and Nokia -2.0%.
  • VW -2.7% believes it will reach its operating return target of 6% by 2022.  That is three years ahead of its original target but that has is not helping the shares this morning.
  • Cardboard container maker DS Smith -4.3% crumpled on the open c. 6% before paring the loss.  The company’s plastic unit is not performing up to expectations and organic volume growth is contracting.
  • Investors are taking chips off the table in the U.K. gaming names: William Hill -3.8%, Paddy Power Betfair -3.0%.  They have agreed to cease advertising during live sports broadcasts.

On Our Side of the Pond

  • The Fed Beige Book was released yesterday.  The report shows all Fed districts are seeing “modest to moderate growth.”
  • Keep an eye on Apple and suppliers following the Largan sales noted in the Asian Markets section.  Our index of Apple suppliers listed overseas is lower by c. 4%.
  • Lyft is filing for an IPO.
  • Plenty of macro due this morning and all posted below.

Markets and Macro

Event Survey Actual Prior Revised
SK BoP Current Account Balance Oct $9190.3m $10831.4m
SK BoP Goods Balance Oct $10997m $13244m
JN Japan Buying Foreign Bonds 30-Nov ¥1053.5b -¥736.4b -¥736.0b
JN Japan Buying Foreign Stocks 30-Nov -¥75.0b ¥80.8b ¥79.5b
JN Foreign Buying Japan Bonds 30-Nov ¥733.1b ¥392.0b ¥368.3b
JN Foreign Buying Japan Stocks 30-Nov -¥137.9b -¥195.0b -¥203.5b
AU Trade Balance Oct A$3000m A$2316m A$3017m A$2940m
AU Retail Sales MoM Oct 0.30% 0.30% 0.20% 0.10%
HK Bloomberg Dec. Hong Kong Economic Survey (Table)
GE Factory Orders MoM Oct -0.40% 0.30% 0.30% 0.10%
GE Factory Orders WDA YoY Oct -3.10% -2.70% -2.20% -2.60%
GE Markit Germany Construction PMI Nov 51.3 49.8
US Challenger Job Cuts YoY Nov 51.50% 153.60%
US ADP Employment Change Nov 195k 227k
CA Int’l Merchandise Trade Oct -0.73b -0.42b
US Trade Balance Oct -$55.0b -$54.0b
US Nonfarm Productivity 3Q F 2.30% 2.20%
US Unit Labor Costs 3Q F 1.00% 1.20%
US Initial Jobless Claims 1-Dec 225k 234k
US Continuing Claims 24-Nov 1690k 1710k
US Bloomberg Consumer Comfort 2-Dec 60.6
US Markit US Services PMI Nov F 54.4 54.4
US Markit US Composite PMI Nov F 54.4
CA Ivey Purchasing Managers Index SA Nov 61.8
US ISM Non-Manufacturing Index Nov 59 60.3
US Factory Orders Oct -2.00% 0.70%
US Factory Orders Ex Trans Oct 0.40%
US Durable Goods Orders Oct F -2.40% -4.40%
US Durables Ex Transportation Oct F 0.10% 0.10%
US Cap Goods Orders Nondef Ex Air Oct F 0.00%
US Cap Goods Ship Nondef Ex Air Oct F 0.30%
US Household Change in Net Worth 3Q $2191b

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...

Subscribe to Stay Informed

Stay informed by subscribing to information that matters to you. We'll email you when we post new content you want to see.


DISCLAIMER

This communication is for informational purposes only and is solely intended for use by institutional investors. Use of this communication by others, including retail investors, is prohibited. No statement herein is to be construed as a recommendation to purchase or sell a security, or to provide investment advice. Certain products, including options and futures, may involve substantial risk and are not suitable for all investors. While the information and opinions presented in this material have been obtained or derived from sources believed by Capital Institutional Services, Inc. (CAPIS) to be reliable, CAPIS makes no representations concerning its accuracy or completeness, and accepts no liability for loss arising from the use of this material.