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International Summary

News Trading Desk

International Summary

"CAPIS TGIF Global Markets 2/15/2019"

posted by Matthew Kiselica on 02/15/2019 at 7:01 am

by Matthew Kiselica

02/15/2019 at 7:01 am

Asian Markets

Following yesterday’s disappointing U.S. sales data, the region traded lower.  However, there are other reasons the markets saw selling pressure.  Rumors indicate both parties still have significant hurdles to overcome to reach a Sino-U.S. trade accord.  (More on this later.)  Macro concerns also raised their head again.  Both Chinese CPI and PPI fell short of consensus.  The PPI slowed for the 5th consecutive month during January.

The selling was widespread and all the major sectors ended the day to the downside.  Losses of 1% or more were experienced in real estate, financials, telcos, real estate and materials.  Macau gaming stocks were out of favor.  Chinese actions to reign in shadow banking activity especially pertaining to foreign currency transactions are a major concern.

Other Important Headlines

  • Coca Cola Bottling Japan -8.9% suffered an even worse drubbing than its parent following results.
  • Kubota’s -7.0% FY results for OP and NI are light of its own projections by 7.2% and 4.4%, respectively
  • Dai-Ichi Life -4.7% increased it FY sales outlook but they remained a touch below consensus.
  • Lotte Shopping’s -1.8% Q4 OP is KRW 90.28b, missing the lowest analysts estimate.
  • BAIC Motor -3.2% sees FY 2018 NP higher 95% y/y citing growth of at Beijing Benz.
  • After the close, Bridgestone released results and announced a buyback while Hon Hai published Jan. sales figures.

European Markets

Europe had a mixed, flattish start.  For one, investors were awaiting the press conference of Spanish PM Sanchez which occurred one hour into the day.  He is calling for elections following the failure to reach a budget deal.  They are scheduled for April 28th.   The markets moved higher after his announcement.  But what is providing the biggest impetus are comments from Chinese Pres. Xi.  Following the trade talks he stated further talks which will be held next week.  The U.S. has essentially provided the same message about 7:30 AM Eastern.

The news has had a dramatic effect on sectors.  Almost all are now trading to the upside.  Currently, miners, autos, industrials, media, chemicals, construction, et. al. are better by at least 1%.  The auto sector reversed early losses which we will address below.  Utilities are down small and been so throughout the day.

Snippets from the Region

  • The auto sector had valid reasons to lag earlier in the day.  EU new car sales are lower by 4.6% during January.  That is bad enough but it is also the 5th consecutive month sales have fallen y/y.  The icing on the cake is a negative report on the sector by Morgan Stanley.  The broker discusses the potential tariff impact.
  • EDF -5.6% is the primary reason utilities are weaker.   The company’s FY ’19 EBITDA forecast range is below consensus of €16b.
  • Vivendi +6.2% had solid results especially at Universal Music Group.  That bodes well for the partial spin-off which it is preceding with.
  • Merger news includes DSV +2.3% upping its offer for Panalpina +3.8% and Scout23 +12.5% accepting a private equity bid.
  • MUFG has placed its entire 6% stake in Standard Life -6.0% today.

On Our Side of the Pond

  • The White House has scheduled a press conference for Pres. Trump at 10 Am Eastern to discuss the budget/border issue and he is expected to declare a national emergency.
  • Berkshire Hathaway disclosed its latest holdings.  Of note, it no longer holds Oracle, reduced its Apple exposure while increasing its stake in JP Morgan.
  • Facebook is facing a major FTC fine.
  • Earnings include Deere and Pepsico.

Have a wonderful weekend!

Markets and Macro

Markets Snapshot

Event Survey Actual Prior Revised
SK BoP Current Account Balance Dec $4819.3m $5063.4m $5223.6m
SK BoP Goods Balance Dec $6529m $7974m $7486m
JN Japan Buying Foreign Bonds 8-Feb ¥992.4b ¥915.3b ¥915.6b
JN Japan Buying Foreign Stocks 8-Feb -¥114.3b -¥395.1b
JN Foreign Buying Japan Bonds 8-Feb ¥906.1b ¥638.3b
JN Foreign Buying Japan Stocks 8-Feb -¥102.0b -¥123.8b -¥124.0b
CH CPI YoY Jan 1.90% 1.70% 1.90%
CH PPI YoY Jan 0.30% 0.10% 0.90%
SK Bank Lending To Household Total Jan KR828.7t KR827.6t
JN Industrial Production MoM Dec F -0.10% -0.10%
JN Capacity Utilization MoM Dec -1.90% 1.00%
JN Industrial Production YoY Dec F -1.90% -1.90%
CH Aggregate Financing CNY Jan 3307.0b 4640.0b 1589.8b
CH New Yuan Loans CNY Jan 3000.0b 3230.0b 1080.0b
EC EU27 New Car Registrations Jan -4.60% -8.40%
CH Money Supply M2 YoY Jan 8.20% 8.40% 8.10%
CH Money Supply M1 YoY Jan 1.90% 0.40% 1.50%
CH Money Supply M0 YoY Jan 10.00% 17.20% 3.60%
SP CPI Core MoM Jan -1.50% 0.00%
SP CPI Core YoY Jan 1.00% 0.80% 0.90%
SP CPI MoM Jan F -1.30% -1.30% -1.30%
SP CPI YoY Jan F 1.00% 1.00% 1.00%
SP CPI EU Harmonised MoM Jan F -1.70% -1.70% -1.70%
SP CPI EU Harmonised YoY Jan F 1.00% 1.00% 1.00%
IT Trade Balance Total Dec 3658m 3843m 3847m
IT Trade Balance EU Dec -613m 513m 516m
IT General Government Debt Dec 2316.7b 2345.3b 2345.4b
UK Retail Sales Ex Auto Fuel MoM Jan 0.20% 1.20% -1.30% -1.00%
UK Retail Sales Ex Auto Fuel YoY Jan 3.20% 4.10% 2.60% 2.90%
UK Retail Sales Inc Auto Fuel MoM Jan 0.20% 1.00% -0.90% -0.70%
UK Retail Sales Inc Auto Fuel YoY Jan 3.40% 4.20% 3.00% 3.10%
EC Trade Balance SA Dec 15.7b 15.6b 15.1b 15.8b
EC Trade Balance NSA Dec 17.0b 19.0b
IN Imports YoY Jan 0.00% -2.40%
IN Trade Balance Jan -$13550.0m -$14725.6m -$13077.3m
IN Exports YoY Jan 3.70% 0.30%
CA Int’l Securities Transactions Dec 9.45b
US Empire Manufacturing Feb 7 3.9
US Import Price Index MoM Jan -0.20% -1.00%
US Import Price Index ex Petroleum MoM Jan -0.10% 0.30%
US Import Price Index YoY Jan -1.60% -0.60%
US Export Price Index MoM Jan -0.10% -0.60%
US Export Price Index YoY Jan 1.10%
CA Existing Home Sales MoM Jan -0.60% -2.50%
US Industrial Production MoM Jan 0.10% 0.30%
US Capacity Utilization Jan 78.70% 78.70%
US Manufacturing (SIC) Production Jan 0.00% 1.10%
US Mortgage Delinquencies 4Q 4.47%
US MBA Mortgage Foreclosures 4Q 0.99%
US U. of Mich. Sentiment Feb P 93.7 91.2
US U. of Mich. Current Conditions Feb P 111.6 108.8
US U. of Mich. Expectations Feb P 85.5 79.9
US U. of Mich. 1 Yr Inflation Feb P 2.70%
US U. of Mich. 5-10 Yr Inflation Feb P 2.60%
US Net Long-term TIC Flows Dec $37.6b
US Total Net TIC Flows Dec $31.0b

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...

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