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International Summary

News Trading Desk

International Summary

"CAPIS Global Recap – 2/7/2019"

posted by Clayton Duff on 02/07/2019 at 6:55 am

by Clayton Duff

02/07/2019 at 6:55 am

Asian Headlines

Energy names led lower with losses of over 2% as Discretionary, Material, and Real Estate names also dipped at least 2% on the Nikkei. All sectors were lower but the index was supported by massive gains in Softbank Group.  Conversely Australia closed higher on broad gains with solid gains in Financials, Health Care, and Energy names. The Kospi closed flat on the session with the Kosdaq up nicely after being shut since last Friday.  And speaking of South Korea press there have reported the country will up by 8% it defense cost sharing with the US.  A contribution of roughly 1.0T Won is expected.

Post its announcement to repurchase 10% of its shares Softbank Group rallied 18%.   Additionally their Vision Fund reported they liquidated its position in Nvidia reaping nearly ¥400B.  The firm will also utilize ¥700B of funds raised in the IPO to pay down debt.

Japanese chemicals fell after Asahi Kasei -4.8% cut their FY forecast citing slowdown in China.  Specifically petrochemicals were a focus along with automakers and smartphones. Mitsubishi Chemicals slipped 6.1% after it disappointed on earnings.  Performance chemicals and petrochemicals saw lowered profit with scheduled maintenance weighing.  Higher fixed costs for display films was also mentioned.

India cut their repurchase and reverse repo rates by 25bps today which was not expected.   To sustain growth the move is a change of direction from “calibrated tightening to neutral”.  Gov Das said they have room to act if consumer inflation continues below 4% adding monsoon rains and Brexit are concerns.

Tomorrow, Hong Kong will reopen for trading.

European Headlines

After holding steady for a couple hours European indices have trailed off with losses of over a percent on the major indexes in Germany, Spain, and Italy.  Apart from a couple defensive sectors all are to the downside with Telcos, Basic Resources, and Banks leading lower.   The move lower was prompted by the EU Commission Winter economic forecast which pared growth rates for the region.  For the region GDP is seen at 1.3% for the year, down from 1.9% prior.  Germany growth rate was curtailed to 1.1% from 1.8% while Italy was pared to just .2% from 1.2% previously. Next year’s rates were mostly maintained by Italy’s was lowered to .8% from 1.3%. Inflation for the region was reduced to 1.4% from 1.8%.

Further on the economic front Industrial Production fell .4% in December on a MoM basis in Germany vs an expected growth rate of .8%. While still lower prior readings were revised up.  Home prices in the UK moved down by nearly 3% in January while Spanish Industrial Output continued to fall further.  The BoE left rates & asset/debt purchases unchanged.  In the short term inflation is running under target levels due to fuel prices.  They noted the economy is not ready for a no-deal Brexit while a removal of related uncertainties could help GDP tick up 50bps.

On the earning front Publicis is off 14% on disappointing earnings.  Ad spending in the US fell prompting selling in the space.  WPP -8%.  Publicis still sees organic growth of 4% next year post account wins with Glaxo +1.3% and Fiat Chrysler -10% (which reported slightly better 4Q numbers but disappointed on FY19 views).

Thomas Cook +12% is sailing higher as they see inline revenue.  The firm though is reviewing its group airline strategy which plans to enhance shareholder value prompting investors to bid the name up.

In the aluminum space Norsk Hydro is off 8% after they said they will not reach 2019 targets.  Higher input costs weighed with concern that their Alunorte plant may not be allowed to ramp up to full output in light of the recent Vale dam catastrophe.

Making headlines in the States, SunTrust Bank is teaming up with BB&T in an all-stock deal worth $66B.   Earnings are still front and center with IJCs and Continuing Claims on tap as well.

Event Survey Actual Prior Revised
AU 7) AiG Perf of Construction Index Jan 43.1 42.6
JN 8) Official Reserve Assets Jan $1279.3b $1271.0b
JN 9) Japan Buying Foreign Bonds 1-Feb ¥915.3b -¥102.6b -¥104.1b
JN 10) Japan Buying Foreign Stocks 1-Feb -¥395.1b -¥189.4b -¥190.4b
JN 11) Foreign Buying Japan Bonds 1-Feb ¥638.3b ¥604.3b ¥603.3b
JN 12) Foreign Buying Japan Stocks 1-Feb -¥123.8b ¥166.6b ¥164.9b
IR 13) Consumer Confidence Index Jan 98.8 96.5
AU 14) NAB Business Confidence 4Q 1 3
JN 15) Tokyo Avg Office Vacancies Jan 1.82 1.88
JN 16) Leading Index CI Dec P 97.9 97.9 99.1
JN 17) Coincident Index Dec P 102.2 102.3 102.9
SW 18) Maklarstatistik Swedish Housing Price Data (Table)
AU 19) Foreign Reserves Jan A$61.3b A$76.3b
IN 20) RBI Repurchase Rate 7-Feb 6.50% 6.25% 6.50%
IN 21) RBI Reverse Repo Rate 7-Feb 6.25% 6.00% 6.25%
IN 22) RBI Cash Reserve Ratio 7-Feb 4.00% 4.00% 4.00%
FI 23) Trade Balance Dec P -425m -25m
DE 24) Industrial Production MoM Dec 12.60% -0.50% 0.60%
GE 25) Industrial Production SA MoM Dec 0.80% -0.40% -1.90% -1.30%
GE 26) Industrial Production WDA YoY Dec -3.40% -3.90% -4.70% -4.00%
NO 27) Industrial Production MoM Dec -1.00% -1.50%
NO 28) Industrial Production WDA YoY Dec 1.20% 2.60%
NO 29) Ind Prod Manufacturing MoM Dec 0.30% 0.50% 0.00% 0.10%
NO 30) Ind Prod Manufacturing WDA YoY Dec 2.50% 2.80%
SZ 31) UBS Real Estate Bubble Index 4Q 0.87 0.87
FR 32) Trade Balance Dec -4617m -4653m -5099m -4808m
FR 33) Current Account Balance Dec -1.1b -2.8b
FR 34) Survey of Industrial Investment (Table)
AS 35) Wholesale Price Index MoM Jan -0.60% -2.20%
AS 36) Wholesale Price Index YoY Jan 0.80% 2.20%
SP 37) Industrial Output NSA YoY Dec -4.20% -2.80% -3.20%
SP 38) Industrial Output SA YoY Dec -2.20% -6.20% -2.60% -3.20%
SP 39) Industrial Production MoM Dec 0.40% -1.40% -1.50% -1.80%
SZ 40) Foreign Currency Reserves Jan 731.3b 741.5b 729.0b 728.7b
UK 41) Halifax House Prices MoM Jan -0.70% -2.90% 2.20% 2.50%
UK 42) Halifax House Price 3Mths/Year Jan 1.50% 0.80% 1.30%
SW 43) Average House Prices Jan 3.111m 2.686m 2.975m
SW 44) Budget Balance Jan 8.7b -78.3b
IC 45) Unemployment Rate 4Q 2.40% 2.20%
IT 46) Retail Sales MoM Dec -0.20% -0.70% 0.70% 0.60%
IT 47) Retail Sales YoY Dec 0.80% -0.60% 1.60% 1.70%
EC 48) ECB Publishes Economic Bulletin
GR 49) Unemployment Rate Nov 18.50% 18.60% 18.70%
EC 50) European Commission publishes Economic Forecasts
CC 51) CPI YoY Jan 1.98% 1.70%
CC 52) CPI MoM Jan -0.94% -1.35%
IR 53) Live Register Level SA (000’s) Jan 200.3 204 203.5
IR 54) Live Register Monthly Change Jan -3.2k -3.0k -2.5k
UK 55) Bank of England Bank Rate 7-Feb 0.75% 0.75% 0.75%
UK 56) Bank of England Inflation Report
UK 57) BOE Corporate Bond Target Feb 10b 10b 10b
UK 58) BOE Asset Purchase Target Feb 435b 435b 435b

About the Author

Clayton Duff headshot
ClaytonDuffFVP,Senior International Trader

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. He earned his bachelor’s degree from the University of Texas Arlington. Clayton maintains Series 3,...

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