A solid day for the markets following all the positives we highlighted on Friday including the Chinese reserve ratio cut. Most of the major indices opened near their highs but then pared the advance over the course of the session. Investors now await word regarding the Sino-U.S. trade talks which are being conducted today and tomorrow in China.
All the major sectors gained. IT led the way better by c. 2.8% following a 2% advance for industrials. There were a plethora that ended the day higher by more than 1% including consumer discretionary, telcos, basic resources, real estate, energy and health care.
- Press reports allege Samsung Elec. +3.5% will target smartphone production below 300m units for FY ’19. The company is due to report earnings tomorrow with consensus looking for a 12% y/y decline in Q4 OP.
- Apple suppliers were up more than 3% as as whole despite news stories indicating Apple will cut iPhone XR production by 50% during H1 of ’19.
- Familymart Uny -4.2% fell despite raising its profit outlook for the FY by 10%. However, the new outlook lags Bloomberg consensus by 2.5%.
- Takeda Pharma +7.5% will issue 770m new shares at ¥7,601 per share to fund the Shire (suspended) acquisition.
- The Macau gaming names underperformed with Morgan Stanley cutting the sector to inline. The broker now sees FY ’19 gross gaming revenues -2% y/y vs. a prior outlook of +5%.
The markets opened to the upside but have been slowly and steadily working there way lower. At present, personal goods and food/bevies are off more than 1%. Providing support this morning has been tech and basic resources which are better by more than 0.5%.
- BT Grp +0.6% is said to have hired advisers to ward off a potential bid from Deutsche Telekom -0.2%.
- Los Echos indicates the EU will oppose the Siemens -1.9%/Alstom -2.4% rail unit merger.
- Sanofi -1.6% has restructured a collaboration agreement with Regeneron. The French pharma company also provided a pricing update. The company sees price increases lagging the rate of medical inflation.
On Our Side of the Pond
- The U.S. budget impasse remains with now end in sight.
- Consolidation in the pharma sector continues. Eli Lilly has agreed to purchase Loxo Oncology for $8b. The bid price of $235 per share is c. 68.0% premium to Friday’s close.
- Late on Friday, reports indicated Apollo is mulling a bid for GE’s jet leasing unit.
- Ford is recalling 1m vehicles. Prompting many to break out the old joke regarding their name: Fix Or Repair Daily.
Markets and Macro Data
|AU||AiG Perf of Mfg Index||Dec||—||49.5||51.3|
|JN||Loans & Discounts Corp YoY||Nov||—||3.66%||3.30%|
|JN||Monetary Base YoY||Dec||5.80%||4.80%||6.10%|
|JN||Monetary Base End of period||Dec||¥505.8t||¥504.2t||¥501.6t|
|JN||Nikkei Japan PMI Composite||Dec||—||52||52.4|
|JN||Nikkei Japan PMI Services||Dec||—||51||52.3|
|JN||Vehicle Sales YoY||Dec||—||-4.40%||8.30%|
|GE||Retail Sales MoM||Nov||0.40%||1.40%||-0.30%|
|GE||Retail Sales YoY||Nov||-0.40%||1.10%||5.00%|
|GE||Factory Orders MoM||Nov||-0.10%||-1.00%||0.30%|
|GE||Factory Orders WDA YoY||Nov||-2.70%||-4.30%||-2.70%|
|GE||Markit Germany Construction PMI||Dec||—||53.3||51.3|
|UK||New Car Registrations YoY||Dec||—||-5.50%||-3.00%|
|IT||Deficit to GDP YTD||3Q||—||1.90%||1.90%|
|EC||Sentix Investor Confidence||Jan||-2||-1.5||-0.3|
|EC||Retail Sales MoM||Nov||0.20%||0.60%||0.30%|
|EC||Retail Sales YoY||Nov||0.40%||1.10%||1.70%|
|IN||GDP Annual Estimate YoY||2019||7.20%||—||6.70%|
|CA||Bloomberg Nanos Confidence||4-Jan||—||—||55.1|
|CA||Ivey Purchasing Managers Index SA||Dec||—||—||57.2|
|US||Factory orders/durables data postponed by government shutdown|
|US||ISM Non-Manufacturing Index||Dec||59||—||60.7|