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 Markets 2/26/2019"

posted by CAPIS on 02/26/2019 at 11:18 am


02/26/2019 at 11:18 am

Asian Markets

The region saw some pullback from yesterday’s gains.  Initially, the mainland Chinese manged to advance but gave ground later in the session.  In addition to profit taking, geopolitical risk may have taken some bid out of the region.  India launched air strikes upon what it described as terrorist camps inside Pakistan.

Most sectors ended in the red.  Financials slid by more than 1% followed by IT, real estate and consumer discretionary names.  Defensives saw buying interest with healthcare improved by 0.5% and utilities also to the upside.

Regarding geopolitics, Pres. Trump and Sup. Leader Kim Jong-un are both in Hanoi for the their second summit.  The two will continue to discuss “denuclearization” of the Korean peninsula.

Other Important Headlines

  • Standard Chartered’s +2.4% results are reassuring compared to the recent release from HSBC -0.4%.  The bank’s FY adj. PTP $3.86b is just a touch light of consensus.  The CET1 ratio of 14.2% is inline.  It maintains the income growth target of 5.7%.  It expects expenses to grow but will aim to reduce them c. $700m in FY19 through FY 21
  • Kubota -2.9% sees higher steel prices weighing upon OP by c. ¥11B.  To offset this, the company will increase U.S. prices by 2-3%.  Bank of America cut its rating to underperform.
  • AAC Tech -14.0% collapsed following a profit warning.  The company sees Q1 profits lower by as much as 75.0% y/y.  Morgan Stanley notes competition will contract margins.
  • Here is some macro related commentary.  The IMF said it sees Macau GDP up 5.3% this year adding gaming industry growth will be moderate.  Activity in the second half of last year moderated with trade tensions weighing along with weaker investment.  Regarding China, BoJ Gov Kuroda said China’s economy has significantly slowed since the second half of last year, evidence that President Trump’s tactics have brought the country to the negotiating table.

European Markets

Europe opened to the downside hitting lows about 90 minutes into the session.  It spent the better part of the day down small.  However, following better than expected U.S. consumer confidence and support comments from Fed Chair Powell, the region moved into the green.  Most of the major indices closed at or near their respective highs.  London and Stockholm ended the day lower, lagging the other regional markets.

The currency markets are seeing the £ higher.  Earlier reports indicate PM May is willing to delay Brexit and take the “no deal” scenario off the table.  She is currently presenting to Parliament.  The stronger currency was one of the reason’s for the U.K. down session.

Important Snippets

  • The gains in the retail sector are driven by M&A news.  Mid-session Marks & Spencer +3.2% disclosed it is conducting talks with Ocado +11.7%.
  • BASF’s +4.3% Q4 adj. EBIT of €630m is above consensus.  The company sees slight growth for both sales and adj. EBIT during FY 19.  It is raising its FY dividend to €3.20 which is just shy of the €3.21 estimate.
  • Peugeot’s -2.9% FY recurring Oper. Income €5.69b is a touch ahead of consensus.  However, margin concerns weigh.  The company sees margins better than 4.5% in FY19 through FY21 but that is below current levels.
  • Persimmon +1.9% is providing some reassurance to investors following yesterday’s drubbing. FY Revenues are better by 4% and underlying PTP of £1.1b is a mild beat.  Travis Perkins +12.5%, a key supplier to the U.K. building sector, had very strong results.
  • It was the banking sector that took Stockholm lower.  Swedbank -3.9% disclosed its Estonian unit actively sought Russian clients.  This raised further money laundering concerns.

On the Markets Agenda for Tonight

  • Watch for continued headlines and reaction to commentary out of the U.K. regarding Brexit.
  • Macro items: Hong Kong will present its budget and GDP with various consumer confidence readings in Europe.
  • Earnings due include Rio Tinto, Bayer, HK Exch. & Clearing, Safran, NC Soft and Beiersdorf.  Byd reported after today’s local close.

Markets and Macro

Markets Snapshot

Event Survey Actual Prior Revised
SK Consumer Confidence Feb 99.5 97.5
AU ANZ Roy Morgan Weekly Consumer Confidence Index 24-Feb 114.1 115.2
GE GfK Consumer Confidence Mar 10.8 10.8 10.8
FR Consumer Confidence Feb 92 95 91 92
HK Exports YoY Jan -2.80% -0.40% -5.80%
HK Imports YoY Jan -2.20% -6.00% -7.00%
HK Trade Balance HKD Jan -30.1b -10.3b -51.2b
IN Fiscal Deficit INR Crore Jan 69388 -15168
US Housing Starts Dec 1256k 1078k 1256k 1214k
US Building Permits Dec 1290k 1326k 1328k 1322k
US Housing Starts MoM Dec -0.10% -11.20% 3.20% 0.40%
US Building Permits MoM Dec -2.60% 0.30% 5.00% 4.50%
US House Price Purchase Index QoQ 4Q 1.10% 1.30%
US FHFA House Price Index MoM Dec 0.40% 0.30% 0.40%
US S&P CoreLogic CS 20-City MoM SA Dec 0.30% 0.19% 0.30% 0.25%
US S&P CoreLogic CS 20-City YoY NSA Dec 4.50% 4.18% 4.68% 4.58%
US S&P CoreLogic CS 20-City NSA Index Dec 212.96 213.66 213.45
US S&P CoreLogic CS US HPI YoY NSA Dec 4.72% 5.19% 5.09%
US S&P CoreLogic CS US HPI NSA Index Dec 205.35 205.85 205.64
US Richmond Fed Manufact. Index Feb 5 16 -2
US Conf. Board Consumer Confidence Feb 124.9 131.4 120.2 121.7
US Conf. Board Present Situation Feb 173.5 169.6 170.2
US Conf. Board Expectations Feb 103.4 87.3 89.4

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