Following yesterday’s Fed minutes, the markets were mixed and most ended the day with minor moves. Word regarding Sino-U.S. trade talks remains positive. The two parties are said to be drafting 6 MOUs on key issues. However, a strengthening yuan and comments from Chinese Prem. Li caused the mainland exchanges to give back earlier gains.
Premier Li reiterated the always prudent “prudent policy” statements. He added the domestic economy would not be flooded with liquidity. Additionally, the local press downplayed chances of a rate cut by the PBoC in the near term. The measure would only be used as a “last resort” if the local economy slowed “sharply.” Elsewhere on macro related issues, Japan’s preliminary Feb. Manuf. PMI is below the contraction mark. This is the first contraction since Aug. 2016. Australia’s composite PMI also fell below 50 but employment gained more than anticipated.
This resulted in muted sector changes. Consumer discretionary and IT gained less than 0.5%. A subsector that outperformed is the Chinese airlines thanks to the yuan strengthening. While a handful of sectors ended the day lower, those declines are minimal.
Other Important Headlines
- Miners outside of Australia, especially Chinese names, gained with reports indicating the port of Dalian is refusing Australian coal shipments. This has supposedly started at the beginning of the month.
- Samsung Elec’s +0.1% foldable smartphone is creating mixed reaction from analysts. To sum that link up: High marks for innovation but not for profitability.
- Lenovo’s +11.9% Q3 NI is well ahead of consensus and marks the 4th consecutive quarterly beat. The company is benefiting from falling memory chip prices and a turnaround in its mobile unit. CEO Yang pledges the company will continue to address unprofitable businesses.
- Santos +0.5% saw y/y increases on both the top and bottom line during FY18 and NI moved into the black.
- Wesfarmers +6.9% also posted y/y increases and will pay a special dividend of A$1.00 per share.
- Citing calls to various officials, Morgan Stanley says China will cease all local subsidies for electric and plug-in hybrids this year.
The region’s markets are mixed and down small most of the day, as a whole. The day offers a cornucopia of earnings. Those results are driving sector performance. Banks are off more than 1% with basic resources off by about that mark followed by telecoms. Media advances more than 0.5% followed by insurance and food/bevies.
There has also been plenty of macro out in the region and they raise slowdown issues. The Markit German Feb. manufacturing PMI fell to contraction territory and missed consensus. The same reading for the EU unexpectedly came in below 50. To underscore growth woes, the ECB has stated growth in the region will be “below potential” for several quarters.
On the Brexit front, both PM May and the EU’s Juncker said yesterday’s meeting and talks were constructive. Today, the negotiating teams for both side meet once again to work on the Irish backstop. Conversely, the EU’s Kurz stated his meeting with Pres. Trump regarding EU/US trade talks were “contentious.”
- Swedbank -9.0% arranged a conference call following yesterday’s Danske Bk % related money laundering allegations. However, CEO Bonnesen’s comments have not alleviated investor concerns. Analysts say little new information was provided other than previously released statements.
- Axa -1.6% saw earnings plunge last year due to “abnormally high” natural disasters and higher exposure to the commercial property and casualty arena due to its XL acquisition. However, outflows ended in during the second half of the year which is better than many peers. Revenues improved by 4% with underlying revenues higher by 6%. The company will pay a dividend of €1.34/sh and maintains its FY20 outlook.
- AP Moller -9.0% is sinking following a profit warning. The company now sees its sees FY19 EBITDA c. $4b vs. the prior outlook of $4.7b. The company noted higher fuel prices hurt while trade worries are dampening activity.
- A profit warning form Centrica -12.0% is creating a number of concerns. The company sees its operating cash flow in jeopardy due to outages and government imposed price caps. Investors expect estimates to be cut and are worried about the company’s dividend.
Plenty more out there, mind your eye!
On Our Side of the Pond
- TechnipFMC’s French line is trading down by roughly 7% after the company posted an unexpected Q4 loss even when adjusting for one offs.
- Johnson & Johnson confirms it has received talc related subpoenas from both the DoJ and SEC.
- Nike is performing some damage control this morning following yesterday’s UNC vs. Duke basketball game. Duke star Zion Williamson had his Nike show tear apart resulting in a “mild” knee injury.
- U.S. jobless claims and durable goods due.
Markets and Macro
|AU||CBA Australia PMI Mfg||Feb P||—||53.1||53.9||—|
|AU||CBA Australia PMI Services||Feb P||—||49.3||51||—|
|AU||CBA Australia PMI Composite||Feb P||—||49.7||51.3||—|
|JN||Japan Buying Foreign Bonds||15-Feb||—||¥193.7b||¥992.4b||¥996.6b|
|JN||Japan Buying Foreign Stocks||15-Feb||—||-¥59.1b||-¥114.3b||-¥114.4b|
|JN||Foreign Buying Japan Bonds||15-Feb||—||¥84.3b||¥906.1b||¥882.2b|
|JN||Foreign Buying Japan Stocks||15-Feb||—||-¥52.9b||-¥102.0b||-¥101.9b|
|SK||Exports 20 Days YoY||Feb||—||-11.70%||-14.60%||—|
|SK||Imports 20 Days YoY||Feb||—||-17.30%||-9.50%||—|
|JN||Nikkei Japan PMI Mfg||Feb P||—||48.5||50.3||—|
|AU||RBA FX Transactions Market||Jan||—||A$337m||A$1622m||—|
|AU||RBA FX Transactions Government||Jan||—||-A$546m||-A$1735m||—|
|AU||RBA FX Transactions Other||Jan||—||-A$5637m||A$1611m||—|
|AU||Full Time Employment Change||Jan||—||65.4k||-3.0k||-9.5k|
|AU||Part Time Employment Change||Jan||—||-26.3k||24.6k||26.4k|
|JN||All Industry Activity Index MoM||Dec||-0.20%||-0.40%||-0.30%||-0.50%|
|JN||Supermarket Sales YoY||Jan||—||-3.40%||-0.70%||—|
|JN||Nationwide Dept Sales YoY||Jan||—||-2.90%||-0.70%||—|
|JN||Tokyo Dept Store Sales YoY||Jan||—||-2.90%||-1.10%||—|
|JN||Machine Tool Orders YoY||Jan F||—||-18.80%||-18.80%||—|
|GE||CPI MoM||Jan F||-0.80%||-0.80%||-0.80%||—|
|GE||CPI YoY||Jan F||1.40%||1.40%||1.40%||—|
|GE||CPI EU Harmonized MoM||Jan F||-1.00%||-1.00%||-1.00%||—|
|GE||CPI EU Harmonized YoY||Jan F||1.70%||1.70%||1.70%||—|
|FR||Production Outlook Indicator||Feb||-11||-5||-11||—|
|FR||Own-Company Production Outlook||Feb||—||6||9||10|
|FR||CPI EU Harmonized MoM||Jan F||-0.60%||-0.60%||-0.60%||—|
|FR||CPI EU Harmonized YoY||Jan F||1.40%||1.40%||1.40%||—|
|FR||CPI MoM||Jan F||-0.50%||-0.40%||-0.50%||—|
|FR||CPI YoY||Jan F||1.20%||1.20%||1.20%||—|
|FR||CPI Ex-Tobacco Index||Jan||102.67||102.67||103.16||—|
|FR||Markit France Manufacturing PMI||Feb P||51||51.4||51.2||—|
|FR||Markit France Services PMI||Feb P||48.5||49.8||47.8||—|
|FR||Markit France Composite PMI||Feb P||48.9||49.9||48.2||—|
|GE||Markit/BME Germany Manufacturing PMI||Feb P||49.8||47.6||49.7||—|
|GE||Markit Germany Services PMI||Feb P||52.9||55.1||53||—|
|GE||Markit/BME Germany Composite PMI||Feb P||52||52.7||52.1||—|
|HK||Unemployment Rate SA||Jan||2.80%||2.80%||2.80%||—|
|EC||Markit Eurozone Manufacturing PMI||Feb P||50.3||49.2||50.5||—|
|EC||Markit Eurozone Services PMI||Feb P||51.3||52.3||51.2||—|
|EC||Markit Eurozone Composite PMI||Feb P||51.1||51.4||51||—|
|IT||CPI FOI Index Ex Tobacco||Jan||—||102.2||102.1||—|
|IT||CPI EU Harmonized YoY||Jan F||0.90%||0.90%||0.90%||—|
|GE||CPI Hesse MoM||Jan||—||-1.00%||-0.10%||—|
|GE||CPI Hesse YoY||Jan||—||0.90%||1.40%||—|
|GE||CPI Brandenburg MoM||Jan||—||-0.50%||0.30%||—|
|GE||CPI Brandenburg YoY||Jan||—||1.30%||1.60%||—|
|GE||CPI Bavaria MoM||Jan||—||-1.00%||0.00%||—|
|GE||CPI Bavaria YoY||Jan||—||1.70%||2.20%||—|
|UK||Public Finances (PSNCR)||Jan||—||-25.4b||21.3b||21.6b|
|UK||Central Government NCR||Jan||—||-25.8b||18.2b||—|
|UK||Public Sector Net Borrowing||Jan||-11.1b||-15.8b||2.1b||—|
|UK||PSNB ex Banking Groups||Jan||-10.0b||-14.9b||3.0b||—|
|GE||CPI Baden Wuerttemberg MoM||Jan||—||-0.90%||0.00%||—|
|GE||CPI Baden Wuerttemberg YoY||Jan||—||1.60%||2.00%||—|
|GE||CPI Saxony MoM||Jan||—||-1.00%||0.40%||—|
|GE||CPI Saxony YoY||Jan||—||1.40%||1.90%||—|
|CA||Wholesale Trade Sales MoM||Dec||-0.20%||—||-1.00%||—|
|US||Philadelphia Fed Business Outlook||Feb||14||—||17||—|
|US||Initial Jobless Claims||16-Feb||228k||—||239k||—|
|US||Durable Goods Orders||Dec P||1.70%||—||0.70%||—|
|US||Durables Ex Transportation||Dec P||0.30%||—||-0.40%||—|
|US||Cap Goods Orders Nondef Ex Air||Dec P||0.20%||—||-0.60%||—|
|US||Cap Goods Ship Nondef Ex Air||Dec P||0.00%||—||-0.20%||—|
|US||Bloomberg Consumer Comfort||17-Feb||—||—||60||—|
|US||Bloomberg Economic Expectations||Feb||—||—||44.5||—|
|US||Markit US Manufacturing PMI||Feb P||54.8||—||54.9||—|
|US||Markit US Services PMI||Feb P||54.3||—||54.2||—|
|US||Markit US Composite PMI||Feb P||—||—||54.4||—|
|US||Revisions: Existing Home Sales|
|US||Existing Home Sales||Jan||5.00m||—||4.99m||—|
|US||Existing Home Sales MoM||Jan||0.20%||—||-6.40%||—|