09.23.2022 11 new Morning Note posts under Morning Note (10) and CAPIS Insights (1)

International Summary

News Trading Desk

International Summary

"TGIF Global Markets 2/22/2019"

posted by CAPIS on 02/22/2019 at 6:46 am


02/22/2019 at 6:46 am

Asian Markets

The mainland Chinese indices outperformed with trade hopes pushing them higher.  Pres. Trump will meet with China’s Vice. Prem. Liu at 2:30 PM Eastern. There were also some comments regarding the securities industry that helped (see comments below).  However, the rest of the markets were mixed, ending with modest moves.

With Chinese names leading, all the major sectors finished to the upside.  Financials and IT improved by 1% or more.

On the macro front, RBA Gov. Lowe sees no argument for any rate adjustments in the “near term.”  He notes the outlook is more balanced than 6 months ago.  The RBNZ signaled proposals to increase lender capital requirements could lead to a rate cut.  Japan’s CPI readings were inline with estimates.  Home prices in China rose at the slowest m/m rate since April of last year. (All figures in macro section.)

Other Important Items from the Region

  • Chinese brokers saw heavy buying interest following word the Securities Assoc. of China (China’s version of FINRA) is seeking industry feedback regarding fee and tax reductions.
  • Both Chinese and Australian officials denied yesterday’s report of a ban upon Australian coal imports in the port of Dalian.
  • Newcrest Mining +0.6% has been named as a potential bidder along with Barrick Gold for Newmont Mining.  All three companies declined to comment.
  • Earnings and prospects at OCBC -1.5% and UOB -1.5% are being deemed to be less robust than the recent report by DBS +0.8%.  UOB’s CEO sees “global uncertainties” weighing “near term.”
  • Doosan Heavy -8.8% plans to sell new shares, intending to raise about KRW 543b.  It plans to use the proceeds to bolster the balance sheet but it will also increase its stake in troubled Dooson Eng. & Const. -3.3%.

European Markets

The markets started with a modest down tick.  However, they are trading to upside small ever since.  Most sectors advance with trade enthusiasm providing the boost.  Basic resources are the clear winner ahead by c. 2%.  IT is better by 1%.  Consumer staples are seeing selling pressure all session.

Regarding Brexit, unnamed EU officials say they expect PM May to request a 3 month delay to Brexit.  According to the report, the EU is willing to do so in order to give her more time to resolve issues with Parliament.  The issue continues to stir up controversy within the U.K. Labour (not a typo) Party.  Another MP has decided to resign from the party and act as an independent.

Important Snippets

  • The weakness in consumer staple sector is due to Kraft Heinz (more on this below).  Names trading off on sentiment include AB Inbev -3.5%, Reckitt Benckiser -1.5%, Unilever -1.3%, Danone -0.5%, Nestle -0.3%.
  • ASM Intl +9.0% is leading the semi sector.  The company’s Q4 net sales are better than the top end of the range.  The H1 outlook for this year is reassuring.  Specifically, the company sees consensus beating Q1 revenues in the range of €225m to €245m.
  • Saputo is making a recommended cash offer for Dairy Crest +13.0%.  The 620p all cash offer is an 11.7% premium to yesterday’s close.

On Our Side of the Pond

  • Kraft Heinz is lower more than 20.0% in pre-market trading.  The company’s Q4 results are light of consensus.  It is writing down the value of brands by $15.4b.  What is most worrisome for the entire sector, the company is seeing changes to consumer tastes.  It will cut its dividend from 62.5 cents to 40 cents.  The terrible icing on the cake is subpoenas received by the SEC.  Downgrades are hitting the tape with major price target cuts.
  • is faring even worse than KHC pre-market.  The company has lost its contract with the USPS!
  • Royal Bk of Canada’s EPS are inline and the bank will increase its dividend.  However, Q1 provisions for NPLs are higher than anticipated.

Have a great weekend!

Markets and Macro

Markets Snapshot

Event Survey Actual Prior Revised
SK PPI YoY Jan 0.20% 1.00% 0.90%
JN Natl CPI YoY Jan 0.20% 0.20% 0.30%
JN Natl CPI Ex Fresh Food YoY Jan 0.80% 0.80% 0.70%
JN Natl CPI Ex Fresh Food, Energy YoY Jan 0.40% 0.40% 0.30%
CH New Home Prices MoM Jan 0.61% 0.77%
CH Bloomberg Feb. China Economic Survey (Table)
SK South Korea Household Credit 4Q KR1534.6t KR1514.4t KR1513.9t
GE CPI North Rhine Westphalia MoM Jan -0.70% 0.00%
GE CPI North Rhine Westphalia YoY Jan 1.50% 1.80%
SP Trade Balance Dec -3247m -2569m
GE GDP SA QoQ 4Q F 0.00% 0.00% 0.00%
GE GDP NSA YoY 4Q F 0.90% 0.90% 0.90%
GE GDP WDA YoY 4Q F 0.60% 0.60% 0.60%
GE Private Consumption QoQ 4Q 0.10% 0.20% -0.30%
GE Government Spending QoQ 4Q 0.60% 1.60% 0.20% -0.30%
GE Capital Investment QoQ 4Q 0.70% 0.90% 0.80% 0.40%
CH FX Net Settlement – Clients CNY Jan 103.1b -56.0b
HK CPI Composite YoY Jan 2.60% 2.40% 2.50%
GE IFO Business Climate Feb 98.9 98.5 99.1 99.3
GE IFO Expectations Feb 94.3 93.8 94.2 94.3
GE IFO Current Assessment Feb 103.9 103.4 104.3 104.5
EC CPI Core YoY Jan F 1.10% 1.10% 1.10%
EC CPI MoM Jan -1.10% -1.00% 0.00%
EC CPI YoY Jan F 1.40% 1.40% 1.40%
UK CBI Retailing Reported Sales Feb 5 0 0
UK CBI Total Dist. Reported Sales Feb 14 13
CA Retail Sales MoM Dec -0.30% -0.90%
CA Retail Sales Ex Auto MoM Dec -0.30% -0.60%

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