If you missed, the Asian markets traded to the upside while Europe was down small. Here is yesterday’s recap.
Asian Markets Today
There were several factors which caused the region to trade lower. The markets had a negative bias following yesterday’s cut to global growth forecasts by the IMF. Selling increased following a meeting between Chinese Pres. Xi and other of the nation’s top leaders. After the meeting, Pres. Xi made a pledge to “maintain stability.” This comment along with the meeting fanned growth/slowdown worries. The icing on the cake is Chinese criticism of reports the U.S. is seeking the extradition of Huawei’s CFO.
The majority of sectors ended the day lower. IT, materials and energy gave way by c. 1%. Among healthcare names, Chinese pharma companies traded lower due to a government pledge to reduce prescription prices. Utilities managed to hold steady.
Other Important Headlines
- Despite seeing FY ’18 earnings higher 123% to 132%, Petrochina traded lower. Credit Suisse cut its EPS outlook and Huatai Financial cut its PT on the shares by 40%.
- Sources allege, Takeda Pharma +0.25% is mulling the sale of up to $3b in emerging market assets. This would be to reduce the debt burden following the Shire acquisition.
- Both Tencent -1.2% and Netease failed to make the cut on China’s latest list of approved online games.
- Naver -0.75% has elected to forego entry into the Korean online banking sector.
- S. Korea continues to see strong tourist data. Visitors rose rose 16.8% y/y to 1,324,119 during December. Chinese visitors increased 25.2% y/y while those from Japan surged 33.5% y/y.
- OTHER MACRO NEWS: The BoJ is in the midst of its two day policy meeting. S. Korean Q4 GDP rose more than anticipated q/q.
Europe started to the downside but managed to erase the losses after c. 2 hours. However, the markets have given back that advance following German ZEW confidence readings which were sharply below expectations. Sectors are evenly split in terms of performance. Banks are off more than 1% with miners and energy of about that mark. They have pared some of the day’s losses. Travel/leisure is better by c. 1% with media and retail better by more than 0.5%.
Late yesterday, PM May presented her “what is next” for Brexit case to Parliament. She says it is not a foregone conclusion Article 50 will be delayed. However, many are criticizing the updated agenda saying “Plan B sounds much like Plan A.” Labour (not a typo) Party leader Corbyn is taking steps to trigger a 2nd referendum! So the story remains as opaque as ever.
- UBS -4.0% is providing a scare to the financial sector. The bank suffered $12.8b in outflows during Q4 at it wealth and asset manager units. Adding to worries, CEO Ermotti notes Q1 is murky and the bank is unable to provide guidance.
- Hugo Boss +4.9% leads the retail sector. The company’s Q4 sales rose 6% which is the fastest growth the company has seen in 4 years.
- EasyJet’s +6.3% Q1 results have provided relief to the discount airline sector following Ryanair’s +3.9% disappointing results from last week. EasyJet notes Q1 revenues are better by 14.0% and forward sales are “robust.”
On Our Side of the Pond
- The earnings rollout continues with Schlumberger, Johnson & Johnson and IBM among those due to report today.
- Up in Canada, Barrick Gold noted Q4 gold production of 1.26m and total FY ’18 production was inline with guidance.
Markets and Macro
|AU||ANZ Roy Morgan Weekly Consumer Confidence Index||20-Jan||—||115.7||116.8||—|
|SK||GDP SA QoQ||4Q P||0.60%||1.00%||0.60%||—|
|SK||GDP YoY||4Q P||2.70%||3.10%||2.00%||—|
|JN||Tokyo Condominium Sales YoY||Dec||—||15.20%||2.80%||—|
|JN||Supermarket Sales YoY||Dec||—||-0.70%||-2.50%||—|
|HK||CPI Composite YoY||Dec||2.50%||2.50%||2.60%||—|
|UK||Claimant Count Rate||Dec||—||2.80%||2.80%||—|
|UK||Jobless Claims Change||Dec||—||20.8k||21.9k||24.8k|
|UK||Average Weekly Earnings 3M/YoY||Nov||3.30%||3.40%||3.30%||—|
|UK||Weekly Earnings ex Bonus 3M/YoY||Nov||3.30%||3.30%||3.30%||—|
|UK||ILO Unemployment Rate 3Mths||Nov||4.10%||4.00%||4.10%||—|
|UK||Employment Change 3M/3M||Nov||87k||141k||79k||—|
|UK||Public Finances (PSNCR)||Dec||—||21.3b||4.4b||2.7b|
|UK||Central Government NCR||Dec||—||18.2b||8.4b||6.7b|
|UK||Public Sector Net Borrowing||Dec||1.1b||2.1b||6.3b||—|
|UK||PSNB ex Banking Groups||Dec||1.9b||3.0b||7.2b||7.1b|
|GE||ZEW Survey Current Situation||Jan||43||27.6||45.3||—|
|GE||ZEW Survey Expectations||Jan||-18.5||-15||-17.5||—|
|EC||ZEW Survey Expectations||Jan||—||-20.9||-21||—|
|CA||Wholesale Trade Sales MoM||Nov||-0.30%||—||1.00%||—|
|CA||Manufacturing Sales MoM||Nov||-1.00%||—||-0.10%||—|
|US||Existing Home Sales||Dec||5.24m||—||5.32m||—|
|US||Existing Home Sales MoM||Dec||-1.50%||—||1.90%||—|