09.30.2022 11 new Morning Note posts under Morning Note (10) and CAPIS Insights (1)

International Summary

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International Summary

"CAPIS Global Recap – 2/5/2019"

posted by Clayton Duff on 02/05/2019 at 6:48 am

by Clayton Duff

02/05/2019 at 6:48 am

Asian Headlines

Australia’s central bank was in focus today, leaving their cash rate target unchanged at 1.5%.  Light inflation was still a concern with lower oil prices again targeted but should gradually pick-up.  For 2019 they see underlying inflation running around 2.00%, moving to 2.25% next year. Wage growth continues to lag leading to weak household consumption but unemployment continues to decline.  To the upside business investment is on the increase as is spending for public infrastructure.   The AUD$ moved higher on the day but has pared some gains.

PMI Services in the country held steady at 51.0 with retail sales contracting slightly.  Banks there rallied with the government not cracking down as hard as expected in relation to years of probes covering bank charges to sales of inappropriate products.  The 76 recommendations by the Royal Commission did not include a forced split between banks and wealth management/financial advice units.  Westpac rallied 7.4% with Commonwealth Bank of Australia up 4.7%. Australia & New Zealand Bank rose 6.5%.   Not all was rosy in the financial space with mortgage brokers lower after trailing commissions were banned.  Mortgage Choice ended down 25% with Australian Finance Group off 30%.   In the building space James Hardie rose nearly 6% after upping the lower level of the FY net operating range it expects for the year. The firm sees North American ebit margins in the middle of expectations for the Fiber Cement segment as input costs and the US Dollar strengthen.

Japan closed down small with Energy names giving back some of their recent gains. In the consumer space Fast Retailing fell 2.9% post reporting Uniqlo sales down 1% YoY in January. Panasonic slipped 2.5% on weak 3Q operating income with appliance and auto sales weighing.  The move prompted Nomura to cut the name to Hold.

Apart from the market a UN Sanctions Monitor report noted North Korea is continuing its ballistic missile and nuclear programs adding they are also violation an arms embargo.  The country is also sidestepping sanctions by using ship to ship transfers to obtain oil and coal.  Related, the US has agreed to a compensation deal with South Korea to pay for US troops stationed there.  The deal is expected to cost SK less than $1.0B.

European Headlines

Europe has steadily worked higher today with all sectors moving up.  Energy names lead with a strong performance from BP while Construction and Banks share in the rally.  PMI Service numbers are mixed with gains by the EU overall along with France and Spain while heavyweights Germany and the UK miss.

The PMI services reading fell to 50.1 in the UK, to its lowest level in over 5 years, leading to a tepid 50.3 Composite reading.  While better than hoped the same reading in France continued to hold under the expansion line with protests no doubt weighing.  The Pound is trailing off today, under the 1.30 level with the Swissie also weaker as the Dollar/CHF rate moves up through parity.

On the earnings front BP +4.9% is running on all cylinders today after 4Q earnings crushed estimates.  Output increased with the firm increasing efficiency at existing and new sites.  Refining profits were solid with the firm hoping to pare debt levels brought on by shale acquisitions in the US and payments related to the Deepwater Horizon explosion. Their CEO noted payments last year related to the disaster in the Gulf were $3.2B and expected to fall to $2B this year.

Pandora +15% is seeing a surge higher today despite noting they see organic revs lower by 3-7% this year. The company though reported 4Q and FY numbers with ebit margins for the year between 26-28%.   The company dropped its long-term estimates while noting they are paring promotions and rebates.  They are also beginning a two-year transformation that is expected to increase demand for their products even amid slumping retail demand. Buoying the stock, the firm will repurchase DKK2.2B in shares.

Swiss tech firm AMS -13% saw better FY edj ebit but lowered its 1Q views.  Investors are disappointed in the fact they suspended their dividend.  Infineon is up  .7% on inline 1Q readings but did cut their FY19 growth to the lower end of the expected range.

Event Survey Actual Prior Revised
AU 16) AiG Perf of Services Index Jan 44.3 52.1
AU 17) CBA Australia PMI Services Jan F 51 51
AU 18) CBA Australia PMI Composite Jan F 51.3 51.5
AU 19) ANZ Roy Morgan Weekly Consumer Confidence Index 3-Feb 118.1 116.5
UK 20) BRC Sales Like-For-Like YoY Jan -0.20% 1.80% -0.70%
AU 21) Trade Balance Dec A$2225m A$3681m A$1925m A$2256m
AU 22) Retail Sales MoM Dec 0.00% -0.40% 0.40% 0.50%
AU 23) Retail Sales Ex Inflation QoQ 4Q 0.50% 0.10% 0.20%
JN 24) Nikkei Japan PMI Composite Jan 50.9 52
JN 25) Nikkei Japan PMI Services Jan 51.6 51
AU 26) RBA Cash Rate Target 5-Feb 1.50% 1.50% 1.50%
IN 27) Nikkei India PMI Services Jan 52.2 53.2
IN 28) Nikkei India PMI Composite Jan 53.6 53.6
IR 29) Investec Services PMI Ireland Jan 54.2 56.3
IR 30) Investec Composite PMI Ireland Jan 53.3 55.5
SW 31) Swedbank/Silf PMI Services Jan 54.1 56.4 55.8
SW 32) Swedbank/Silf PMI Composite Jan 53.3 55.1 54.7
SP 33) Markit Spain Services PMI Jan 53 54.7 54
SP 34) Markit Spain Composite PMI Jan 53.2 54.5 53.4
SW 35) Industrial Orders MoM Dec 3.10% -2.70% -3.60%
SW 36) Industrial Orders NSA YoY Dec 2.40% -2.40% -2.60%
IT 37) Markit/ADACI Italy Services PMI Jan 50 49.7 50.5
IT 38) Markit/ADACI Italy Composite PMI Jan 49.4 48.8 50
FR 39) Markit France Services PMI Jan F 47.5 47.8 47.5
FR 40) Markit France Composite PMI Jan F 47.9 48.2 47.9
GE 41) Markit Germany Services PMI Jan F 53.1 53 53.1
GE 42) Markit/BME Germany Composite PMI Jan F 52.1 52.1 52.1
EC 43) Markit Eurozone Services PMI Jan F 50.8 51.2 50.8
EC 44) Markit Eurozone Composite PMI Jan F 50.7 51 50.7
UK 45) New Car Registrations YoY Jan -1.60% -5.50%
UK 46) Markit/CIPS UK Services PMI Jan 51 50.1 51.2
UK 47) Markit/CIPS UK Composite PMI Jan 51.4 50.3 51.4
UK 48) Official Reserves Changes Jan $1535m $1387m
EC 49) Retail Sales MoM Dec -1.60% -1.60% 0.60% 0.80%
EC 50) Retail Sales YoY Dec 0.50% 0.80% 1.10% 1.80%
IR 51) Industrial Production MoM Dec -13.50% -7.50% -8.90%
IR 52) Industrial Production YoY Dec -17.80% -10.50% -11.30%
IR 53) Unemployment Rate Jan 5.30% 5.30%


About the Author

Clayton Duff headshot
ClaytonDuffDir,Director of International Trading

Clayton Duff joined the firm in 2008. He has worked in the industry since 1994 and held various trading and sales positions before CAPIS, including four years as a trader for First Southwest. Clayton was promoted to manager of international trading in 2019. He earned his bachelor’s degree f...

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